S4 Ep1: The Secret to Owning More Than 100 Wingstops and Little Caesars
Welcome to Season 4 of Franchise Empires. Meet the owner of 29 Wingstops and 79 Little Caesars, following in the family footsteps.
Shalin Patel is the Founder and Chief Investment Officer of Vibe Restaurants, who opened their first restaurant back in 2005. It has since grown to become one of the largest franchisees of Little Caesars and now operates across 11 states.
The Wolf and Shalin sit down to talk about the need to scale and not just ‘buy your own job’, why goal setting can and should change, and some of Shalin’s personal and professional highlights as a franchise owner.
You’ll also hear how Shalin got into franchising, inspired by his dad’s career.
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Episode Transcription
Shalin Patel:
40 to 45 like to be financially stable. And for me, I just to have an end goal really helps you kind of set your path, I think. And with Little Caesars, I go where opportunity goes. I was young, I was only 25, so I didn’t really have anything to hold me back. I’ve been in Texas my whole life. I was willing to go anywhere where I went for this first location, it was at East Texas, about two hours from my home, so it wasn’t like a too far away.
The Wolf of Franchises:
Welcome to Franchise Empires, where aspiring entrepreneurs learn exactly what it takes to become a successful franchise owner from one location to 10 and beyond. I’m the wolf of franchises.
Hey everyone, it’s The Wolf. Today on the show we have Shalin Patel. Shalin owns 108 franchises across two different brands. 79 of those locations are Little Caesars, and the other 28 are Wingstops. Shain also gave us a heads up that he’ll soon be purchasing, so he’ll be adding a third brand to his portfolio. He’s been doing this for 17 years and now has an executive team surrounding him as well for his platform. This is an awesome conversation that dives into his journey from going from managing One Little Caesars as an owner operator while living in a motel to a full-fledged hundred plus unit platform. Enjoy
Narrator:
The Wolf of Franchises is the CEO of Wolf Pack franchising, as well as a creator at Workweek Media. All opinions expressed by the Wolf and podcast guests are solely their own opinions and do not reflect the opinion of Pack franchising or workweek. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. The Wolf Workweek and Wolf Pack franchising may maintain positions in the franchises discussed on this podcast.
The Wolf of Franchises:
All right, so you just opened a wing stop yesterday you said. So that brings you to 29 Wing Stops, 79 Little Caesars locations. We can get into kind of how you got to where you’re today obviously, but before you even got into the franchise game, what were you doing professionally and what brought you to the point where you decided, hey, I want to start buying franchises?
Shalin Patel:
Yeah, so I would say going back to when I was 14, I started working in the restaurant industry, mainly in my dad’s restaurants. He had church’s chickens and subways. So yeah, so I started working at his restaurants, went to university, kind of did my own thing for a little bit a year out really. Just when I graduated I took a year off, kind of just kind of assessed what I wanted to do kind of going forward. I knew it was not a nine to five job. I wanted to do something entrepreneurial and my dad’s buddy gives him a call and saying, Hey, little Caesars is taking applications now. They’d gone bankrupt in the nineties, I think, and that is new five up dollar hot and ready concept that was coming out. And my dad mentioned that to me and I was like, you know what?
This kind of excites me. So we gave Little Caesars a call, applied, kind of got on board. I had to move to Nacodoches, Texas opened that first one there and then pretty much lived in a motel room for a year and managed that first location. So Wow, you call me manager. Yeah, I mean, I hired Fired, did accounting, did all the payroll, pretty much everything, construction. I gcd my own project as well, just to learn everything. But yeah, so that’s kind of where I started. Didn’t really work for anybody prior to the restaurant industry. I just always had the entrepreneurial spirit to do something.
The Wolf of Franchises:
How many churches, chickens, and subways in total did your father own when you were growing up?
Shalin Patel:
He had two, three subways, maybe five churches. He’d sold ’em all pretty much on the college. He got rid of all his restaurant businesses.
The Wolf of Franchises:
And did you ever think before buying that First Little Caesars, it better than most <laugh> restaurant margins aren’t necessarily the highest. Was there any concern there in maybe say thinking, hey, I’ll pick, I like franchises, but maybe a different industry? Or did you just kind of believe in the repeatability and scalability of it from day one?
Shalin Patel:
Yeah, I really liked the Little Caesars in particular just because of the simple model they had. Literally they sold four products and I thought that was amazing. Pizza nationally is the number one selling product, so I knew it was the right kind of industry to be in. When it comes to food, people are always going to eat pizza. And just like with any other franchise, you got to do your research. Once you apply, make sure you talk to other franchisees, right? For me, that was the most valuable part of the whole process is get to that part where you’re talking to other franchisees on the phone and really learning the p and l because that’s really what’s driving in the end’s, going to drive that decision for you to invest the funds into that franchise concept. So just learning a lot about the p and l.
And for me, I was the owner operator, so I didn’t have that manager salary up front. So that was really helpful too. I mean, when you’re at the site every day for a year, I mean you’re not only controlling labor, but you’re controlling everything in the store. So customer satisfaction, being hot and ready, you’re really just driving the business. And that was the best way for me to start was being in the store every day because I knew it would be successful if that was the case. If that first one doesn’t do well, you’re not doing that second one. So it’s very critical for that first one to be in there every day and busting your butt so that way when you are ready to leave, you have a bench set up and can go open that second one.
The Wolf of Franchises:
No, for sure. Yeah, and I totally agree that speaking to existing franchisees is the best resource you can have before buying. And I say that as someone who pretty much every day at this point between a DM on Twitter or a newsletter replies, someone’s asking me for advice on a franchise and I may know someone and have spoken to people in the industry about a brand, so I might have some insights to offer, and I might know the F D D information off the top of my head, but I always say that it, it’s just, Hey, take this with a grain of salt. The best person you can really talk to isn’t the franchisor, isn’t me, isn’t any broker consultant. It’s someone who’s already operating the business. So we love that you mentioned that. All right, so for that first Little Caesars, did you that you acquired an existing location? Oh no. You said you built it from scratch, right?
Shalin Patel:
Yeah, so I always tell people we did it the hard way. We <laugh> new store, developed the first 50 locations. So the
The Wolf of Franchises:
First 50,
Shalin Patel:
Yes. Wow,
The Wolf of Franchises:
That’s a lot. Okay, nice. Yeah,
Shalin Patel:
Site selection, leasing, construction, hiring. I mean we were involved in all those phases. So
The Wolf of Franchises:
For that first location, did he have to take out a loan? What was kind of the funding process? Cause that’s a common hurdle that once you get over it can make things exponentially easier, but that first location for a lot of people can be tough to have the financial means to do it.
Shalin Patel:
Yeah, I get asked this question a lot and then SBA is the way, so I’d say if you’re starting off, I mean for them to give you up to 5 million at a 10% down. For me, I think if you’re a beginner, that’s the best product out there. It’s a little bit more paperwork, it might be a little bit more expensive, but to be able to put down 10% on any project, I think most people with cash is the main issue. So if you can put down 10%, it’s a win-win. And not only that, SBA will also fund you working capital. So if you put that working capital in dollar high enough, that money that you put down, that 10% essentially coming back to you as a slush fund for you to get your business started. So for me, it’s almost a hundred percent financing if you look at it that way. And I would highly take advantage of that. And it’s a very repeatable program once you do the first one with the lender. The second one is just, it gets easier. You’re not doing all the same amount of paperwork, it’s just an ad location. So we also do that with a couple acquisitions. When we got further down line, we use SBA loan for those two, and that was a hardware process because of the valuation process that they do the same thing 10% down. I mean, you can’t beat that.
The Wolf of Franchises:
Definitely. No, it’s a fantastic option and we’ll wait for people to become a business owner with minimal cash down. I think the important thing, if someone’s newer to the podcast, they might not know this, but for the SBA to fund 90% of a business, it’s pretty much only the national proven brands that they’re going to do that with, that have some serious proof of concepts. So Little Caesars definitely fits that criteria, but your upstart franchise with maybe 10, 20, 50, even anywhere before a hundred locations, it could be tougher to get financing via the sba. So just food for thought for folks out there that with the big brands, it can definitely work like that but the smaller, lesser known ones, it’ll be tougher. But anyway, so going from that first location, I guess before we even get to the business side of it, I kind of want to learn in from what was going on inside of your head, right?
Because you’re recent ish college graduate at the time, it sounds like you moved, relocated your life to a degree, to the area of the Little Caesars lived in a motel, I think you said, I mean just personally and emotionally, how did you kind of manage that? Because I think of that and it’s like, I don’t know if, were you close to family, did you have a significant other at the time? What’s going through your head and what is driving you? What’s the vision that’s telling you, okay, this is worth it to make some sacrifices for the business?
Shalin Patel:
Yeah, great question. I think for me, going into college, I kind of knew I was going to be an entrepreneur and that my end goal to retire was 40 to 45 to be financially stable. And for me, I just, to have an end goal really helps you kind of set your path, I think. And with Little Caesars, I go where opportunity goes. I was young, I was only 25, so I didn’t really have anything holding me back. I’ve been in Texas my whole life. I was willing to go anywhere where I went for this first location, it was in east Texas, about two hours from my home. So it wasn’t like a too far away. So if I needed to come for a weekend or for a day, whatever, I can just drive back. So it wasn’t too crazy. So still close enough to call home, I would say.
So that was a good opportunity right there. But I think just having that long-term plan and goal kind of just gets you focused a little bit. And I was being young, I was young, and really when you’re young, you just don’t think about really being set to a certain spot and being held hostage. So you got to be able to take up, be able to leave if you need to pack up and leave. My dad says that I told him after I opened the first one that I was going to be done after six. I don’t remember telling him that, but that’s what he said. Yeah, so it always reminds you of that. And you know, can always have a goal, but it always changes, man. Once you get to a certain point, then you just, a new goal comes and you’re just continuing growing and things like that.
But at the age of 25, when I saw the p and o for Little Caesars, I was like, man, if I can make six figures in my first restaurant while operating it, imagine if I had five or six of those. And that’s kind of where you kind of start thinking like, Hey, I need to get to this five or six. I can afford somebody to supervise them and I’m not the one supervising. So to get to that first level of scale was the most important factor I would say for me, especially when it comes to picking a brand. You don’t want to do it for one because for me that’s just buying a job. You want to make sure you can scale to at least five or six where you can afford the overhead support or you’re not doing the day-to-day.
The Wolf of Franchises:
Yeah. So I guess along those lines, so you’re the owner operator, that first location. And I guess at what point did you scale to a second location And maybe did you build multiple after the first and one shot, or could you paint a picture of how you went from one to multiple while also managing the debt servicing from that SBA loan?
Shalin Patel:
Yeah, so the first one it was doing really well. I didn’t open the second one until two years afterwards, so it was a pretty long time. And the main reason for that was I needed to establish cash flow with my first little Caesars. So that takes some time for the lenders to start seeing that. And second, to hire the right manager for when I do go open that second one. That took a longer process, I went to about two of them actually before I found the right one. So those two factors really kind of delayed. The second one, I’m happy that I did that. I think building the foundation was really critical for the future growth. So about two years took to build that second one. And then after that, about a year, about one every year for the first five, essentially five and five years is where I settled that for those locations. So I did it really slowly and made sure that I had the right people at each restaurant before I opened the next one.
The Wolf of Franchises:
Okay. So after that first one, did you ever go back to being in one of the stores most days? Or did you find at that point you had the cash flow where you could afford? It was kind of like every store just had a dedicated manager and you were the one overseeing all those stores as you grew?
Shalin Patel:
Yeah, after we opened the third one is where I kind of designated one of my best manager to oversee all of them while he was managing one location, if that makes sense. So we found a hybrid kind of guy. Since I hired really good managers at that time, they didn’t need as much oversight. Cause my main focus honestly was on all the other stuff, not operating a business, really focusing on the leasing, the real estate, marketing and hiring. Make sure if you had any turnover, I’d hire the manager just focusing on the other stuff besides making pizzas. So that’s kind of where my focus was. Honesty, after store number three.
The Wolf of Franchises:
And with those managers, were you pitching them, especially at that early stage on this vision of, hey, we have three locations now, but this is going to grow bigger and bigger and bigger. And did you use that narrative of your ambitions effectively to help with retention?
Shalin Patel:
No. At that age, no. Okay. I mean for me it was just like, Hey, I got a viable candidate here, let’s hire this person, let’s move on. I mean, I never thought we would own 117 restaurants or whatever it is today. Six was the number magic number for me. You back in the early days. So
The Wolf of Franchises:
Well, okay. If there is a moment where that sticks out in your mind, I mean for folks who are listening to this and maybe driving around or whatever, if you go to vibe restaurants.com, that’s vibe as in V I B e restaurants.com website of I guess the HoldCo, right? That owns all these restaurants and it says it right in the front page, 107 locations in 11 states. So how do you go from just six Little Caesars in Texas to that? Is there a cash injection? Did you raise money at some point? I mean, because this is a serious platform that you’ve built now, so yeah. Is there any just some key moments that have really gotten you to this point?
Shalin Patel:
Yeah, I’d say the key moments financially is we are self-funded 100%. And I’m really proud of that. I mean, we probably, I’d like to joke to people, we live paycheck to paycheck cause we do reinvest a hundred percent of our, I mean a hundred percent, but most of our funds back into the business. Defining moments for me personally is when I partnered up with my two business partners. Having them part of the team. I mean one person can do one person’s work, but three people can do five people’s work. And without those two guys and kind of dividing what we’re doing as part of our company has been amazing to have two other guys that are aligned. I am in our vision to be able to agree to disagree on certain things and not take it personal. Yeah, they’re like my brothers now. So it’s really great when you have two business partners that you can trust and not really have to worry about.
It’s like just divid and conquer kind of thing. I trust you to do your job and they trust me to do my job. And that, I think that’s really, really been critical to where we’re at today. Cause we all have our strengths and our weaknesses and we play to ’em really well. So people, processes and profits, man, those are the three things that our CEO preaches and that’s kind of what we live by. You get the right people and the right places and you have the right processes in place and the money will come where you can start reinvesting and grow your business. So the people aspect has definitely been the most critical.
The Wolf of Franchises:
And I guess let’s start just with the founders that are listed on Vibe restaurants are they friends or how did you meet them and how did you know they were the right fit to help you grow your organization?
Shalin Patel:
Yeah, so Fazel both active, they’re both brothers and they’re college buddies of mine actually. We all went different paths after college. Faso went to work in some clothing place in California. Air Fund went to divide to work for hotel consulting out there for jll, their families, family’s also entrepreneurial spirits. And we’ve been buddies since college and I just knew that we both had different I would say personalities that really bounced off each other. Well, I’m the more analytical kind of C F O type back office guy. Faso loves new shiny things, so new development and things like that. And Airon is, he loves to talk and that’s why he is a great CEO and he works in the passion and the culture and all that. So it really works out well. We all took a personality test way early 10 years ago and really pinpointed what our strengths and weaknesses are, and that’s how we divided our roles and responsibilities. So
The Wolf of Franchises:
Very cool. Yeah. So it sounds like you thought intelligently about the different skill sets you guys had, but could you talk about the, let’s call it the financial flywheel? Cause I don’t think enough people fully understand how it works. And I had Greg Flynn on the podcast a few weeks ago and he somewhat went into it, but just how does the funding work where a little Caesar’s cost, I think anywhere from, at least according to their F D D, anywhere from 400 K to 1.7 million. So pretty big range there. But are you just building each new store or when you’re acquiring new stores that are already open and operating, I mean, is that purely from the profits of your other stores or are you taking loans out against the profits and even maybe against the property and equipment of those other locations? How does this flywheel work and do you mind just giving people a primer on how it accelerates as you get bigger and bigger?
Shalin Patel:
Yes, I think it’s the exact opposite. I think the less stores you have, the easier to get money and the bigger you get, the harder it is to get money. That’s why I look at it personally. But yeah, so mainly, and that comes down to back in my day, in early days it was $250,000 to build Little Caesars wages were lower, commodity prices were lower. You can do low volume and still make decent cash. So as you continue growing, what’s going to happen is that cash that you’re making, the bank’s going to put a number on it and let’s just say four x is kind of what they’ll lend on. The gross leverage is what they call it to just start off. So they’ll take your EBITDA times four. So as that says it’s $320,000, that’s usually what they’re willing to give you as far as a loan.
Now if you’re in for $200,000, that means you have $120,000 of space left on your leverage. So what can you do with that $120,000? Well, maybe you go open a new location and use that 120 as the down payment for your new location. So now you’re not putting any of dollars down in that new location and you’re getting it essentially a hundred percent financed. Or you’re doing an acquisition and it’s a one store acquisition and you’re going to need to put a hundred thousand dollars down to buy it with some debt. Well, you just have 120 here sitting in embedded equity that can help cover. So now you just bought another restaurant with $0 down and that’s how you can really double and triple in size over time and compound. You could do that. You can really realistically double in size every five years if you’re patient, then do it that way.
Pay off some debt every few years and when you’re ready to buy something, just refinance the debt and use that embedded equity. You have all that debt you paid off, you use it to buy more stuff, more restaurants or open more restaurants. So it’s really a compounding kind of waterfall effect, but you just got to be patient and be really patient. It’s taken me 17 years of overnight success to get to this level. So I mean we were able to double in the last two and a half years just because of that compounding over time and just compounding and compounding.
The Wolf of Franchises:
So, cause I’ve actually never heard that. How does what you said first, which is that it could be in a way you think of it, it gets tougher as you scale up. Would the banks, are they not or whoever, whoever’s doing the lending, they’re not just right, if they’re giving you a loan based on four times, your EBITDA wouldn’t like, right. As you have more stores that even a number goes higher, so then the multiple just gets higher or does it work differently?
Shalin Patel:
No, the multiple stays the same, but there’s another ratio that really comes into play once you get into a million dollars or maybe even 500,000 EBITDA or above, when you start dealing with restaurant lending groups or franchise lending is the lease adjusted leverage ratio. So that ratio is a very critical ratio when it comes once you get to a scale for a restaurant group it’s what every restaurant lender kind of bases they’re lending on. And what it essentially does, it’s a calculation where it takes your future rent payments and your future debt payments and kind of does a calculation based on your EBITDA and your rent. I can give you the more exact formula if you need it, but that ratio has been the most critical ratio for growth because what that does, it tells you what your capacity you have to grow as far as that embedded equity that I was talking about earlier with that four x gross leverage, that number gets thrown out and the L A L R is like the golden number once you get to scale, and every lender has different appetites for that ratio should be, and it’s all priced in the rate.
So like Wells Fargo or something like that, they, they’ll be like a five or a five and a quarter L A L R, well, their interest rate be really cheap, but then that gives you less capacity to grow. But you can go to another lender that’s a six L r higher interest rate, but it gives you capacity to grow, it gives you more ability to take on debt essentially. So I’ve learned a lot about that ratio just because once you have a certain scale, lenders are definitely more critical of your p and l because they’re talking about bigger dollar amounts and they’re not only going to be lending on the p and o, they’re going to be lending on the person as well and the company. So because there will be one every five years, they’ll be a bad time. That lender relationship’s going to be very critical.
You don’t want them to call your note, but they need to work with you as a person and a company to get you through the tough times. And that’s been very helpful for us to have that relationship with a lender that’s been able to work with us because it’s happened a couple times where food costs have been crazy high for a year or now we’re busting our ratios. Well, at least the lender knows it’s temporary and not permanent and we’ll get back to where we need to be next year. They might give you less money for growth temporarily, but at least they’re not turning off the faucet a hundred percent.
The Wolf of Franchises:
Okay, so that makes sense then effectively, right? It comes down to then as you scale the future rent payments, obviously that number gets a lot bigger, so that’s throws the ratio off, not necessarily in your favor. Yeah. Okay. Understood. All right, well, that’s good to know. All right, so just moving along in the journey of vibe restaurants then. At what point did you expand to the second concept, which is Wingstop, and what was the thought process there going from pizza to now buying and being involved at the second brand that obviously it’s not necessarily competitive with Little Caesars?
Shalin Patel:
Yeah, so we’ve always looked at other brands in the past, just being entrepreneurs. We always wanted to see what the next big shiny thing is. We looked at Pinkberry at one point, we did open some witch witch sandwiches, but we got out of that business and then we looked at Wingstop. We really wanted to focus at, especially after looking at pink bearing, which we really wanted to focus on a brand that had at least 800 to a thousand locations nationwide. So that was very critical for us. And then also to have just higher volumes and historical volumes. Wingstop is publicly known as, had 20 years of same store sales increases. Amazing. Those franchisees stayed on for so long because they were doing really low volumes for a long time, but man, they’re kicking butt right now. So for us, that was very critical. They got to have mass that way. We know it’s been tested in many sites, many locations. We don’t want to be the guys being the Guinea pigs and things like that. And we love the simplicity of it. You’re just frying wings and selling french fries. Once again, it comes down to the Little Caesars model. It’s just, it’s simple. And we really liked Wingstop because there’s no national competition to wings with other brands.
The Wolf of Franchises:
Maybe Buffalo Wild Wings, but that’s more of a sit down and a bar and everything.
Shalin Patel:
Yep. Yeah, exactly. Yep. They just advertise beer and football.
The Wolf of Franchises:
Yeah. So when you got in, was there let’s see, what is it, 28, 29 wingstops. So did you acquire existing ones? Did you do new builds there? What was kind of the journey just specifically within Wingstop?
Shalin Patel:
Yeah, so we started that in 2020, right before Covid hit, or in the mid heart of Covid. So out of those 28 in the last three years or two years, actually, wow, it’s been, oh crazy. Time flies. It’s about half and half new store development and acquisitions. So it’s been a good hodgepodge. It’s been great to have the acquisition opportunities this time versus the Little Caesars just, it kind of helps leverage our G a lot quicker. And they’re also in markets that we’re planning to grow. So it just made sense geographically for us. So yeah, 28 and two years is kind of where we’re at.
The Wolf of Franchises:
It’s amazing. And on the note of gi, right? I mean, cause you have g and a that is it’s general and administrative expenses for anyone who isn’t familiar, but with the scale you’re at, is there, I guess if you’re willing to share it, be curious generally what percentage your G and A costs are as a percentage of revenue. And I’m just curious too if, do you find any operational synergies, right, between the two concepts?
Shalin Patel:
Yeah, so A is always a rollercoaster number depending on your size and what your future growth plans are. But typically around three to 6% is kind of where your g A is going to lie. You’ll get to the five, 6% when you’re at a bigger scale and you really want to ramp up your growth because you’re hiring so many people in advance. You don’t want to be reactive, you going to be proactive. So you really are spending a lot of money on your G A. But I think three to 6% is a good rule of thumb, just depending on where you are in your growth stage and if you’re hands on or not in the business.
The Wolf of Franchises:
Is there operational symmetries between the two brands?
Shalin Patel:
Yeah, not really operational. More in the back office, maybe accounting and things like hr, right? Marketing, but operational, really keep the two brands separate. We don’t want people wearing multiple hats with multiple brands. It just can, it’s just for us, you don’t get the focus you need out of that employee. Then maybe facility maintenance. We do kind of have some synergies, but I would say up to maybe the director level, there’s probably no synergies. We try to keep it separate, really.
The Wolf of Franchises:
Yeah, I could see that, especially from a focus perspective. That makes total sense. I’m curious because we’re talking about two national brands, pretty much everyone knows if Little Caesars and Wingstop and Little Caesars especially was they were the sponsor of the nfl, I think for a few years, and I’m, oh wait, no, did they just become the sponsor and Pizza Hu got dropped?
Shalin Patel:
Yeah, first time every, yeah, this year.
The Wolf of Franchises:
Yeah, that’s it. Okay, so now they are, yeah. And obviously Wingstop has celebrity backing of Rick Ross and they’re running national TV campaigns as a franchisee, do you monitor these national campaigns or do you just see commercials and you’re like, oh, that’s my brand, and do you monitor, but do you feel the effects of it? Do you think that there’s a noticeable difference right when Little Caesars becomes the N F L sponsor versus before that?
Shalin Patel:
Oh, for sure. The commercials are something that Little Caesars and Wingstop, the whole was sent to us prior to broadcasting just to show us what’s coming out because they’re always aligned with the LTO that’s coming out, the limited time offer. So yeah, they’re always going together, so they just want to show you, just to give you an idea of what’s going out there as far as marketing pieces, which is nice. So these campaigns are all about driving traffic to the restaurant. So yes, the NFL has been great for us so far, so glad we did that. And then with Wingstop, just their marketing is on point. I mean, they did do an amazing job with all the colors and flavors and yeah, there’s still a young brand in my eyes, and I’m still a lot of awareness that needs to happen in that brand, but they’re doing a really great job of hitting that. I feel it more with my friends because on a daily basis, they’re not really Little Caesars customers, but they’re Wingstop customers and they’ll see the Little Caesars commercials. And talk to me about that. <laugh>.
The Wolf of Franchises:
Okay. Yeah, that’s funny. Yeah. And when you look at your organization, is there a specific hierarchy structure that you have in place from the store level? Is it Oftentimes, I find multi-unit owners have, it’s almost like a pyramid structure where every store has their own manager, and then there’s like area directors or regional managers, whatever you want to call it, where then someone oversees maybe five to eight locations and then that rolls up maybe to the corporate office. Is there a specific structure that you have in place?
Shalin Patel:
Yeah, I think you pretty much summed it up there. We have a store manager, and then we have what we call ops coach that sees five to eight locations just doing on geography. And then we have a market coach that handles about four to five ops coaches. And then above that we have our kind of director who handles three to four market coaches. That’s kind of how it’s set up.
The Wolf of Franchises:
And does Little Caesars or Wingstop, or is there anyone who kind of coached you as the big franchisee to do that? Or is that just something you figured out over time?
Shalin Patel:
So we made a critical hire in 2017 to bring on a seasoned coo. And he’s really implemented a lot of his past learnings and experiences into our company. So he’s really been driving all these operational changes and building the pyramid essentially in the world chart mean we have a learning development manager. We have, he just in our HR department, we have five people. We have a corporate recruiter that’s a hundred percent of the job is just to recruit for people. And now we hired somebody who’s a associated relationship manager who’s really just focusing on our employees and making sure they’re happy. So these are all things that he’s kind of brought to the table from his past experiences. So we’re not the experts. We’re good at being entrepreneurs, so we hire the experts to kind of do their thing now, but in the early days we know we were just doing it as we go on the fly.
The Wolf of Franchises:
No, for sure. That’s great though, that kind of just hired that expertise effectively. So wrapping up here, I’m curious too, cause this is a question I sent a tweet out this morning just to crowdsource some questions. And a big recurring theme was just, especially today, how do you manage the, at the store level, right? I mean, shift workers, part-time workers, it’s hard to retain talent, especially in QSR right now. So do you offer above market rates, or I mean, or is it just a dog fight every day and you’re kind of struggling the rest of the folks out there?
Shalin Patel:
Yeah, going back to your tweet, I had three buddies send me a screenshot of that tweet, and they’re like, is that you? I was like,
The Wolf of Franchises:
Wow. Alright. That’s kind of crazy. Yeah, I kept it pretty generic. I guess I did. I put the exact numbers, so that’s funny.
Shalin Patel:
Well, they know me. Yeah, yeah, yeah. They’re my buddies. So yeah, man. Going back to hiring. So yeah, during Covid it was challenging. After Covid it became less challenging, but man, the last two months have been the toughest in what we’re doing is first we invested in that corporate recruiter and secondly, invested in that association’s relationship manager. But the corporate recruiters, I mean, she’s going online and really figuring out a lot of ways to bring applicants to the store, Facebook ads. I mean, you think about anything you can do online to promote that site for applicants. And another thing we’re doing is really over-hiring, especially when it comes to new locations and things like that, knowing that people are going to quit because the attrition rate right now is just, I think every person that people we bring in, at least one is leaving or close to that within a week.
I mean, it’s crazy. There’s no magic formula right now. Luckily we have a large organization and for us, we tell people that you’re picking a career and there’s a lot of growth opportunity in our company. And I think that’s a big advantage for us because we are a growing company. We’re adding a third brand in Whataburger. So that’s going to be a great concept. And we’re growing heavily in both brands we’re in currently. So we’re all young guys, and people work for people, and if they know they have a great opportunity to grow in their company they’re willing to take that chance and stick it out. We revamped our whole culture a few years ago, and it’s all about, it’s called experience, vibe, experience life. So we kind of want to reward our employees through experiences now, and not just cash, because I mean, they’ll remember kind of, Hey, the first time they went on a plane or on a cruise or even movie tickets or whatever, it’s whatever level it’s at, you want to just treat them through experiences so they have something to remember and not just not monetary. So that’s kind of been a huge focus for us in the last few years as well. And that’s really, it really helps bring loyalty to your company when you do things like that. We sent our facility maintenance guy last year and his seven kids to Disney for a week, and he deserved it. But just doing things like that will help bring retention like crazy. That’s
The Wolf of Franchises:
Great.
Shalin Patel:
And we do overpay. We overpaid. I mean, there’s no minimum wage anymore. Yeah, it’s market wage, so you just got to pay more. And that’s just the name of the
The Wolf of Franchises:
Game. You’re the experience aspect. That’s really smart. I haven’t heard of anyone doing that, but you’re right, it is more memorable and love to hear that. And it’s also interesting too that because my final question was going to be just long term, what’s the vision for Vibe? And it sounds like you’re going to be adding a third brand in Whataburger, so that’s pretty cool. But yeah, is there a long-term vision? Do you want to Greg Flynn and just keep growing forever? Or is there a potential exit in the future that you’d see more brands that beyond Whataburger, how do you see this playing out over the next decade or even longer maybe?
Shalin Patel:
Yeah, I feel like my partners and I talk about this for every week. It’s hard. It is easy for one person to get aligned. It’s hard for three people to get aligned on this, but I think we’re all young, so we definitely want to do this for at least the next 10 years. What happens after that? We don’t know. But we’re willing to blow this thing up. We’ve built the platform now for 17 years, and we have all the people in the right places, and we’re ready to just take this thing to the next level. We’re in two great brands, join a third one. We’re happy with all three of them. There’s a lot of opportunity in them. So I think we’re just going to focus on those three. Maybe down online. We can buy a brand one day, who knows? We’ve always thought about that. But it’s easy to be a franchisee and to execute. You’re not really thinking about much. It’s a lot less risk. It’s been done for you. All you’re doing is executing it and doing the easy part when you start owning brands and starting your new brand and all that. It’s a lot of work and a lot of risk. But we’re all young, so we’re just looking to blow this thing up as big as possible, at least in the next 10 years.
The Wolf of Franchises:
Yeah, I mean, it’s going to be exciting to see what you can do, but it’s also, it shows I think a level of patience too, right? Because I mean, at 107 total stores, that would command a pretty big price if you did decide to sell it, and you didn’t take any outside capital. So I And your two founders there, I mean, you’re deferring, I don’t think if someone’s familiar with deals in the franchise space, I mean a hundred locations at this size, that’s going for nine figures. So well over a hundred million dollars I would imagine, right?
Shalin Patel:
Yeah. We haven’t tested the market yet, but I would assume so with the growth we have coming up. So yeah, climbing a sell is very, very hard. Okay. But yeah, I would say it’s not bad.
The Wolf of Franchises:
Yeah. All right. Well it’ll be fun to watch, and I’ll be looking out for the announcements for that Whataburger acquisition. Yes,
Shalin Patel:
Sir.
The Wolf of Franchises:
But yeah, look, this has been fun. Thanks so much for coming on and sharing your story. Is there anywhere online where people could follow you or vibe, restaurants that they can just keep tabs on?
Shalin Patel:
Yeah, we’re very active on LinkedIn, so just follow Vibe, restaurants, LinkedIn page, or you can follow mine as well too. We have already active on there, so.
The Wolf of Franchises:
Beautiful. All right, awesome. Yeah, folks, we’ll plug Vibe, restaurants, LinkedIn page in the show notes, and yeah, thanks again, Shalon. We’ll talk soon. Well, thanks Wolf. Thanks for having me. Thanks for listening to Franchise Empires. We’re coming to you soon with actionable insights to take the next step on your franchise journey. So make sure to subscribe on Apple, Spotify, Google, or wherever you listen.