🍟 10/17/2022 – From Wall Street to…Wendy’s?


From Wall Street To Wendy’s

Aneil Lala is a Duke graduate, has an MBA from Wharton, and is a former equity analyst and private equity associate.

Neal Wadhwa graduated from the University of Pennsylvania’s Wharton Business School, and has worked at hedge funds such as Citadel.

From the outsider’s perspective, Neal and Aneil have standout resumés, and were well positioned for careers of massive financial success.

But they’ve since left the glamour and fast-paced lifestyle of Wall Street behind.

They’ve traded in their suits in exchange for restaurant uniforms. And these days, a company happy hour might involve a frosty instead of a bourbon.

Today, Neal and Aneil are the co-founders and Managing Partners of Legacy Capital, the proud owners of 10 Wendy’s.

Legacy Capital

Legacy Capital, in the words of Neal and Aneil, has “an investment horizon in decades, not years”. They’re a patient capital partner in search of enduring businesses.

Given their investment thesis, it’s no surprise that their first endeavor has been an acquisition of 10 Wendy’s in the New England region. 

Wendy’s recently surpassed Burger King to become the #2 burger chain globally in terms of revenue. It’s a brand known far and wide, from their square patties, to their sassy online persona.

Stepping into ownership of 1 franchise would require a transition period for many – but 10 franchises is an entirely different challenge. 

Neal and Aneil share below (in their own words) what it’s like to live life, and succeed as multi-unit franchise owner.

From managing daily operations to making strategic decisions around financing and expansion, multi-unit franchise owners are juggling a complex set of responsibilities and priorities– sometimes even faster than the food can be cooked!

We might be planning a multi-store remodeling plan in the morning and engaging with municipalities on new development projects that same afternoon.

While it’s difficult for franchise owners to anticipate what each new day will bring, there are several best practices that can help your business create a positive workplace culture and identify continued opportunities for growth.

Working “in” The Business

The time we spend with our boots on the ground – in our restaurants – supports what feels like a daily operational miracle – serving 200-300 cars and 100+ in-store customers with high quality hot food in under 200 seconds.

You never know exactly what a given day might bring, but these are the most important ways we spend our time on the ground: 

1) Build culture through experience

With employee turnover one of the biggest challenges QSR owners face, great culture can play an integral role in engaging and retaining workers. 

A strong culture is something that develops best by working side-by-side with employees, taking the time to connect more meaningfully and infusing humanity into interactions and relationships. 

For example, with pick up window convenience a necessity for a customer on the go, receiving just a report on slow pick-up-window times is very different from first-hand employee feedback explaining the contributing factors to the lag. 

Culture building is not an activity, but the byproduct of the time you spend with your teams and the deliberate decisions that you make. 

When executing a longer term playbook, the daily hustle requires wearing a few different hats– one day you may play the role of cheerleader and another day a firefighter. 

What matters most is when you commit to creating a culture of humanity, your whole organization can become part of a scalable playbook that drives success.   

2) Encourage honest communication at all levels

Having a culture that promotes open and honest communication requires actively removing obstacles. 

It’s imperative that information flows both ways through direct and regular conversations with the business team – from the Director of Operations to the front line staff. 

Together, everyone’s voice contributes to the mosaic of decision making. 

As a franchise owner, it’s your responsibility to make sure that everyone not only has a voice, but it is actually heard. 

For example:

A valued manager recently submitted their resignation. Only through direct and honest communication were we able to unearth the underlying reason as a temporary need for greater flexibility to tend to a family matter. That manager could have easily become a costly turnover statistic, but instead, a solution was found that was a win for the manager and the business. 

3) Enable the free flow of information

Providing good, trusted information helps leaders connect with employees at all levels so every employee understands the “why” behind what they are being asked to do. 

The free flow of information provides critical insight into what is truly driving performance, information that would be difficult, if not impossible, to unearth at arms length. 

Many more established QSRs are not equipped with the latest in data sharing tools, but we have chosen to invest in enabling restaurants with technology that puts information in the hands (or smartphones) of all employees. 

Our data strategy is not one of pure oversight, but of shared responsibility that infuses a sense of entrepreneurship into our culture.

4) GMs to operate like CEOs of their business

Our systems and culture ensure employees have the best and most reliable information to act upon, but they may not be accustomed to doing so. 

Our time in the restaurants reinforces the loop of empowered decision making, which contributes to improved performance, employee connection and loyalty. 

For example, rather than an assistant manager requesting additional employees for understaffed busy periods and having to “wait for corporate” to make a decision, we spend time together, reviewing the same real-time data to make the best decision for the business. 

The experience leaves both parties more apt to trust in their own decisions based on a shared version of the truth and rationale for how to move the business forward. 

With access to the right information, GM’s can effectively operate like the CEO of their store.

Working “On” The Business

With systems in place that enable store leaders to operate with greater autonomy, we are better able to take a multi-unit view of the operation. 

Whether it’s expanding operating hours to meet today’s customer needs or creating energy efficiencies, these are some of the most important ways we work across the portfolio: 

1) Managing Macroeconomic Factors

The current macroeconomic environment is creating a lot of opportunities to re-evaluate any busines. 

For example, with more customers back on the road, expanding operating hours may be necessary to meet today’s customer needs. Now that live sports are back, it may be worth seeking out ways to support local teams in our communities. 

The bottom line is that multi-unit franchise owners need to take time to track and respond to macroeconomic factors and constantly look for ways to improve results.

2) Reviewing and responding to market and competitive analysis

Time spent in the market helps to identify strong and scalable opportunities for improvement and growth. 

The valuable data gathered at the store level provides invaluable insights that help shape strategic decision-making, evaluate competitive threats and identify new best practices. 

Always monitor the big moves of major competitors, but make sure to stay focused on related events that can have a big impact. 

For example, the closing of a nearby retailer that might impact recruiting strategy or the addition of a new highway sign can add unplanned customer traffic. 

The opening/closing of a nearby military base or fine-tuning a local marketing initiative around a new product can change results significantly.  

3) Reinvesting in the brand

With a deep understanding across the entire operation, multi-unit franchise owners are in a unique position to evaluate and deploy capital toward opportunities with high impact –

  • New real estate development
  • Store remodel capital investments
  • Managing our balance sheet

It is imperative to spend time providing financial analysis, forecasting and budgeting to ensure planning, not just for the next month or quarter, but for decades to come. 

It’s hard to accurately capture the complexity of being a single or multi-unit franchise owner– day by day or even month by month.

 It requires a delicate balance between the “here and now” and the future. 

It is not just possible, but necessary to play at both levels of the business. 

Franchise owners who are intimately familiar with the ins and outs of daily operational responsibilities, regularly gather on-the-ground intelligence and use those insights to create new opportunities will be much more likely to stay at the top of their game and steer their business toward long-term growth and success. 

Learn more about Legacy Capital here.


A Look Inside Inspire Brands

Inspire Brands is the 2nd largest restaurant company (behind Yum! Brands) in the world. They oversee ~32k restaurants and $30B in systemwide sales via their portfolio that includes Buffalo Wild Wings, Rusty Taco, Sonic, Jimmy John’s, Dunkin’, Baskin-Robbins, and Arby’s.

Their journey officially started in early 2018 – take a look at how it’s been going here.

The Whataburger Story

If you’re from the Southwest, you’re definitely familiar with the orange and white awnings and massive burgers of Whataburger. If you’re anywhere else in the country, you may have never even heard of them. The burger franchise has ~850 locations, but is still the 22nd largest restaurant in the world in terms of revenue. I wrote about their story on twitter.

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