Thursday, December 4, 2008

Great advice from George Naddaff

I met with George Naddaff today -- he took Boston Chicken public and is currently the Chairman and CEO of UFoodGrill, which apparently combines taste with health. At 5 Guys, we don't exactly position ourselves that way. Five Guys' head of NE Franchise Development is named McGuire; legally he's Matt McGuire, but his business card has only one name it. I heard him tell an ICSC audience "We're not healthy", to which half the people in the darkened room stood up and cheered.

Anyway, George was very generous with his time and gave us some advice on making sure that our business is successful and that our customers are happy. Here are some of the highlights:

  • Burgers, chicken and pizza are forever
  • 5 Guys is a great concept - Most businesses never get to first base, but you just bought your way onto 3rd base. That's great. But it's not 5 Guys' job to get you to home plate. Follow their formula to the letter. Your job is locations and people.
  • Make sure the first store is a huge success - the cash from store #1 is what enables the buildout of store #2 and the ability to raise subsequent debt. It is easy to get excited about the challenge of opening so many stores in such a small amount of time, but don't. Get that store right before tackling too many others.
  • Hire really good food people - don't skimp on talent who knows the quick serve business. Get someone who knows how to train in languages other than English. I love the food business, and you seem like smart guys and are asking the right questions, but food is the hardest business in the world.
  • Don't pick free-standing spots - in your territory, most of them are abandoned gas stations anyway.
  • Rent should be no more than 10% of your sales, and preferably closer to 7%.
He then passed on a great candidate, offered help with real estate sites and selection, and offered personally to drive out and check out our first site. A real mensch, and if he can get over the fact that we're not going to lower his cholesterol, the burger and fries are on us.


Anonymous said...

Why the recommendation to steer clear of free standing spots? Did he elaborate?

Peter Biro said...

"This area's been picked over for 30 years. Most of what's left in Middlesex County are gas stations that moved 300 feet down the street because they've spilled a lot of oil into the ground and they don't want to clean it up"

Not a perfect transcription, but close.