Saturday, October 30, 2010
Opening our first Subway Franchise
In 1997, we ventured to West Seattle to purchase our first business. It was a large Subway with low sales. It was fairly new and had never reached it's full potential in sales or profit. Consequently, it was for sale at a bargain price. We had very little money, but just enough to give the bank a down payment. The challenges to become profitable are often daunting. If we could look forward into a crystal ball, we may have made a decision to not go forward. Thank God we didn't have one. That would have been a mistake. The problem with a crystal ball, is that you need another crystal ball just to tell you when to look into the future. Pick the wrong time, and the challenges may seem overwelming. You have to know who you are and know if you'll rise to the occasion.
When checking the value in purchasing an existing franchise, there are definate things to look for. Is the company brand solid, are their opportunities for growth, is it profitable, and how about that location? In this case, Subway, as a brand, was solid and growing. Jared had not yet become a public story. The Subway was just off a main intersection, challenged by city tree's (that can kill your visibility) and poor parking (due to high traffic at Starbucks, Windermere Real Estate, and a Drug store). The service was ok, but there were big opportunities. There were just four employees and the manager (Now a Subway owner and good friend) was tired and worked long hours. Profit was negative and sales were rock bottom. Let's recap: Location has potential, service can be improved, sales & profit suck, Lorri and I can afford it, ok... deal!
I went through Subway's testing and soon was approved by both Subway and the bank. In early September, I flew to Milford, CT for training. I remember talking to my kids on the phone. It was one of the first times away from them. My eyes filled with water. I was ready to get home and anxious to start. I came back from training ready to go. It was sandwiches. What could go wrong?
When purchasing a proven franchise, most problems have been ironed out, so it's more about meeting the customers and building a base. Not to say, we didn't have some problems. Two of my favorite stories are about gloves and having surgery.
Gloves were still new to the industry and had just been made mandatory by Subway when I returned from training. I have short stubby fingers. None of the sizes available would fit me. I would try to get the gloves on, but to no avail. Most of the time the gloves would just rip in half. Other times, I would get them on my hands, but the fingers would hang off two inches from my fingertips. One time, after finishing making a sandwich, I noticed that one of my glove fingers was missing. This raggedy Andy thing wasn't working. The customers would look at me thinking "Come on!" as I struggled by the sink. The whole spectical would take minutes from my life that I will never get back and cause panic to swim uncontrollably inside my head. It was the OJ court scene over and over. After my Subway field consultant had a good laugh watching me, Subway gave me special permission to delay wearing gloves until they had more sizes available. After that, as much as I would scub my hands, my customers wanted someone with gloves to help them. This was very embarrasing. It took a month for the company to find a size of gloves that would fit me and make them available for purchase.
After a month, things were really starting to go well. We had really stepped up service. My employees were great, my customers were spreading the word, and sales were slowly growing. That's too easy though, right? Six weeks after taking over the Subway, I woke up sick. Turns out that I needed emergency gallbladder surgery and would be out for a week. I had been working 60+ hours a week and had too small of a staff to replace myself. Lorri called her job and arranged to cover the vacant hours. Problem is, she had her own job, and hadn't had the time to learn much about the Subway. From the hospital bed phone, I coached her on opening & closing duties, how to use the POS, and in our biggest challenge, how to weave party bread and make a 6 foot sandwich. She was a trooper. When I went in for surgery, the restaurant called. They were bombed and short handed. Lorri called our daughter Justine, who was 12 years old at the time, and told her to be ready. She smiled like everything was ok as she sent me in for the surgery. The moment I was wheeled around the corner, she ran to the car, picked up Justine at home, and drove the 35 minutes to West Seattle. Quickly they caught the restaurant up, cleaned and stocked, and headed home. She dropped Justine off at the house and quickly found a place in the hospital waiting room as if she had never left. It was like a scene in a hollywood comedy. The doctor had looked for her after surgery and was a little agitated that he couldn't find her. Hey, we're small business owners. That's how we roll!
Here are two of the best things we did in West Seattle to make the Subway profitable.
Location and Signage: As I previously mentioned, we were just off a busy corner. By car, you couldn't see us at the intersection. I purchased 3 sidewalk signs for $800. Lorri had a fit. We didn't have $800. I promised her that they would make a difference. I put the sidewalk signs on the corner and even across the street. Eventually the city would tell me to knock it off. Problem, I had spent $800 on signs and wasn't about to tell Lorri I couldn't use them. I had to show her they worked. Instead, I found clever ways to defy the city and use my signs. Periodically I would put the signs out for two days and then bring them in before the city would have a chance to respond. The city doesn't want signs in front of other businesses and that makes perfect sense; however, I needed to start making some money, and politics weren't a big priority for me. City tree's are an entire different issue. The city plants tree's along the streets to beautify the neighborhood for it's residents. They also encourage new business growth to bring in tax money to help pay the city bills. The tree's are embraced and loved by the community and secretly hated by the small business owner. I shared my building with Satrbuck's and two other tenants. Everyone else had one tree, but I had two. Starbuck's tree was conveniently away from their sign, but my business was not so fortunate. My trees covered and blocked the entire store front. If you looked hard to your right or left when passing the store, you might catch a glimpse of our sign through the trees. I would call the city to trim the trees every week. They would tell me we were on the schedule. One night, I had had enough. I dressed in my darkest Ninja outfit and trimmed the tree's myself. My heart was racing the entire time, but when I was done, you could see our Subway from the intersection for the first time. My sales went up almost immediately. The tree was still beautiful, it just didn't effect my business as much. The city could have done that too. Signage is one of the best investments you can make. That $800 initial investment and my never compromising effort to insure people could see us, helped our sales improve by 30% over the previous year.
Service: Service and food are your best attributes as a small business restaurant. Subway already had the food, I just needed to keep it fresh. I was able to meet almost every guest. I wanted their business. Treating them like royalty was a natural thing for me. Teaching my employees to do likewise was more of a challenge, but surrounding yourself with people that share your values is a must. I have spoken to many struggling small business owners that droop through their day. Their not making money and the competition is killing them. The competition is usually a big box business with more dollars to advertise. Big business's often don't make those personal connections that many people crave. The small business owner has this wonderful opportunity to connect to each customer and their community. When you get that, and start making those connections, profits can soon follow.
It took us three years to become profitable at our first restaurant. Three years of hard work. We would go on to open five more Subways. Each brought new challenges. Part 2 "A Good Problem to Have" coming next week.