🍟 3/31/2022 – From Restaurant Manager To Owning 13 Five Guys

MEET A ZEE

Lucas Mitchell: Five Guys

This was one of my favorite conversations I’ve had on the podcast so far.

Lucas is a genuinely great person, and also has a super inspiring story. He went from being a restaurant manager at Five Guys, to owning 13 locations in just 5 years.

If you want to hear his amazing story in full, click the button above! Otherwise, here’s my top 3 learnings from our conversation:

1. Great Managers Make Great Owners

Lucas got his first taste of Five Guys as a manager of 1 restaurant. He was originally running a web design agency with his brother, but needed supplementary income from Five Guys until his firm could pay the bills.

Turns out he had a knack for management, and the franchise owner he worked under promoted him to oversee all 8 of their locations. Overseeing the operations for 8 stores, and leading all those employees gave Lucas an incredible hands-on understanding for how to run the business inside & out.

When he made the transition to being an actual owner, there was certainly a learning curve as far as managing the finances and other aspects of the business.

But what better preparation for franchise ownership than actually working in the business prior to committing?

2. Be Scrappy When Raising Money

There’s really no other way to put it – Lucas simply hustled his way to acquiring his first 5 locations.

He had the experience of running a multi-unit operation, but having the money to fund locations (new or existing) is a totally different story.

Lucas raised a combination of debt and equity to get it done. This involved going through multiple lenders before finding the right one for him, and attending finance conferences to meet people who had the cash to back him in a friends and family round of $750,000.

This allowed him to pay the owner a fair market rate for the first 5 restaurants he acquired.

3. How to Scale

Lucas realized that year 1 with a new restaurant is incredibly important. You need to physically be there and show your employees you know what you’re doing and can perform even the lowest level role.

So he spends a ton of time in the first 12 months training the managers of each location. The training goes beyond operations, as it’s also a chance to set an example for the culture he’s looking to build in each store, and his system as a whole.

By providing the right incentives (paying them well, providing room for upward mobility as the system grows, etc.), and showing them how to command the restaurant, Lucas’s goal is to be hands off after year 1.

Not only does this give him the ability to focus on more growth, it gives his managers full-autonomy and ownership – which is a level of trust you can appreciate if you’ve ever had a boss.

Listen to the full conversation here!

FRANCHISE OF THE DAY

No-H20

Fast Facts

Background

  • Founded in 2007, franchising since 2012
  • Based in Fort Lauderdale; 70+ territories sold internationally
  • On-demand car washes that doesn’t require water and instead uses a proprietary environmentally-friendly solution

Fees + Investment

  • Royalty: 8% of gross sales
  • Brand Fund: 0% for first 3 yers, 2% each year after
  • Franchise Fee: $49,500
  • Initial investment: $119,600- $139,250

Financial Performance

None Disclosed

The Wolf’s Take ðŸŸ

This is the first time I’ve ever covered a brand that DOESN’T have any disclosed financials. I usually don’t do this because I view it as a red flag for an emerging brand.

If franchisees have to pay $10k-$100k+ on a franchise, why aren’t you [the franchisor] disclosing any performance data to them?

So Why No-H20?

They’re an international brand (originally from Dublin, Ireland) and just recently moved to the US, forming their LLC here in 2020. They have 50+ franchises sold internationally, but don’t operate a US based franchise.

Regulation here in the US prevents franchises from sharing data from locations in other countries, so there’s an easy explanation for why they don’t have any financial data from their international franchised outlets. 

Given these circumstances, the uniqueness of the model, and recent territories sold, I think No-H20 worth highlighting.

On-Demand Car Washing?

That’s right! Rather than bringing your car to the car-wash, No-H20 brings the car-wash to your car! Not only that, they don’t use water – meaning you don’t any hoses or drainage set up.

Instead, they offer proprietary cleaning solution that is waterless, which saves (according to No-H20) 35 gallons per car wash, and makes for an eco-friendly selling point.

They’ve built a mobile app for users to request on-demand car washes too, but if I had to guess that’s likely not where any of the value is. After all, how many failed Uber-for-X ideas has the world seen? 

To me this opportunity is similar to Crushr, Smash My Trash, and a few other franchises I’ve covered, where it’s primarily a B2B service that offers more scalable revenue. 

The Revenue Streams

1. B2B 

No-H20 franchise owners can work with companies of any size and shape and offer their services to the employees.

You may not necessarily win a contract that the company pays for on behalf of their employees, but it could be a way to get in front of a high-volume of people.

Not only that, it’d also make the cleaning route far more efficient if you clean a bunch of cars all located in the same parking lot.

2. Pop-Ups

Just like a B2B client has a high customer volume in a concentrated area, part of No-H20’s strategy is to offer pop-up services at retailers, grocery stores, etc.

People are busy, so while someone may not be willing to stop at an actual car wash, they may be willing to have their car washed while getting some shopping done. 2 birds, 1 stone.

Overall, this is an interesting brand that provides a much more affordable alternative compared to traditional car washes, which cost in the region of $2 – $5 million. 

While I’d proceed with caution to determine how the newest franchisees are trending, I do think the brand is worth a look!​​​

Resources

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