🍟 3/3/2022 – Meet The Owner of 7 Pizza Franchises
MEET A ZEE
Nick Panos: Mellow Mushroom
Nick Panos grew up in the restaurant industry. Early memories of his childhood include spending weekends helping his father do payroll.
His father, a restauranteur from South Africa, moved the family to Atlanta where he acquired TWO Mellow Mushroom franchises at once back in 1995.
After graduating college and doing a stint on Wall Street, Nick officially joined his Dad in 2018 to help grow their franchise portfolio.
Mellow Mushroom is a regional pizza franchise with about 200 locations nationwide, and is known for serving specialty pizza and specialty cocktails. The brand focuses heavily on its eclectic vibe in each restaurant, and designs every location a little bit differently.
After the acquisition of the first two locations in 1995, Nicks father went on to build 4 locations over the following 10 years to bring the portfolio to 6 restaurants. Fast-forward to 2015, he acquired another Mellow Mushroom, making it 7 franchises total – the amount the family still owns today.
After Nick left Wall Street he did extensive training with the franchisor, a bootcamp of sorts at the family’s locations, and he now finds himself as an integral part of the senior management team.
Through our conversation, 3 key themes emerged from Nick’s experience thus far:
- Maximizing “unused capacity”
- The beauty of B2B revenue
- Building for the long term
Every business has what Nick calls “unused capacity”. It’s basically untapped output that is available within the current operations of a business.
Nick tapped into Mellow Mushroom’s unused capacity by building up a ~$250,000 catering revenue stream at close to ~50% profit margins.
It works like this: their restaurants open up for customers at 11am, but the peak in-store hours are typically late afternoon and dinner hours. This means they have plenty of down time to utilize, and via catering they now make the most of those hours by prepping massive lunches for a growing roster of corporate clients.
The best part is, aside from the COGS for the food, and the labor involved in the delivery, it’s effectively all profit. They’re already paying the fixed costs of rent, a GM’s salary, etc. so they’ve seen bottom line profits increase by over $100k just from this portion of their business.
Because of his success with catering, Nick’s realized the power of selling B2B.
“In a B2C transaction, the consumer wants to avoid regret. In a B2B purchase, the buyer wants to avoid blame. If you want to grow the B2B, side, elevate credibility and trust.”
By showing up on time, helping bring the food inside the corporate offices, and having a smile on his face (customer service 101!), Nick’s built a ton of trust with his corporate clients. So much so that his restaurants receive orders routinely from these customers.
Businesses such as Home Depot, whose HQ is in Atlanta, are always entertaining visiting clients or employee departments, making catering as close to recurring revenue as you can get in the restaurant world. Granted, this revenue stream has taken a hit from covid, but Nick expects it to recover.
And unlike your average Joe who dines at a restaurant, corporate customers are far less price sensitive. Why? Because the buyer isn’t spending his/her own money!
Other B2B Revenue Streams
Regardless of what industry you’re in, there are B2B revenue streams you can likely capitalize on:
- Home Services –> expand to commercial clients
- Fitness –> partner with businesses to offer discounted gym memberships
- Auto Repair + Car washes –> target trucking companies with corporate fleets
Bringing it back to Mellow Mushroom, just think: what’s easier, selling 1 slice of pizza to 100 customers? Or selling 100 slices to 1 customer?
Nick believes it’s the latter. I can’t disagree.
Building for the Long Term
“You have to always think in terms of, if every customer you turn away, it’s not just a lost sale. It’s a lot of lost sales because it’s not just them coming back, but it’s them telling everyone else to come as well.”
This quote is reflective of the way Nick thinks about customer service. Whatever their store hours are, they honor the time they are open, so if a customer comes in at 9:59 and they close at 10pm, the ovens are ready so they can serve them.
Not only does this give that customer a chance to taste what Nick believes is an amazing product from Mellow Mushroom, but it also leads to that person telling others about it, helping build a local reputation via word of mouth.
His long term mindset also applies to the way him and his father think about hiring. They focus intently on identifying their great employees, and making sure they take care of them.
Outside of picking a franchise brand with longevity, hiring and retaining talent is directly correlated to your financial success as an owner.
If you’d like to learn more from this awesome conversation, click here!
FRANCHISE OF THE DAY
- Founded in 2008, franchising since 2010
- Based in North Carolina; 194 territories as of 2021
- Mobility and accessibility equipment sales and services
Fees + Investment
- Royalty: 5-7% of gross sales
- Brand Fund: 1.25% of gross sales
- Franchise Fee: $35,00 – $60,000
- Initial investment: $120,790 – $218,620
- The below information is based on 48 franchisees operating 149 territories (referred to as APR’s)
- For franchisees operating multiple territories, they divided their total annual sales by the number of territories operated
The Wolf’s Take
Mobility 101 is a service business operating in a highly fragmented market. Unlike HVAC, plumbing, and other service franchises with tons of competitors, there’s not too many businesses solely focusing on mobility and accessibility.
As you can see with the numbers, there’s some very high performers within the system. Any franchise owner that’s in the top 3 quintiles is generating a significant return off of what is a maximum ~$220k investment.
A big reason I like this franchise though? It’s built for baby boomers!
Not throwing shade here folks…but facts are facts. The baby boomer generation is getting older. Some quick numbers:
- By 2030, all boomers will be age 65 or older
- There are 73M boomers nationwide, aged between 57-75 years old
- Until 2030, 10,000 baby boomers will hit retirement age every single day
To me it’s a numbers game. The more people that are getting older, the bigger your total addressable market is for a business like Mobility 101.
Not only that, according to the US Census Bureau, 90% of seniors plan to live in their homes for the next 10+ years. They’re not looking to ditch town right away for endless bingo nights at some retirement facility.
Just like I’ve spoken about in the pet industry, this is a rising tide lifts all boats scenario.
Mobility 101 may not be as sexy as other franchises out there, but savvy operators will be capitalizing on the demand that’s there right now, which will only continue to grow over the next decade!
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