🍟 12/12/2022 – The Flynn Flywheel


The Flynn Flywheel

In 1994, Greg Flynn graduated from Stanford Business School. He didn’t start a world famous company, become a venture capitalist, or work at a tech company. 

Instead he bought 8 Applebee’s.

Fast-forward to today, and he’s the largest franchise owner in the WORLD. 

His operating company, Flynn Restaurant Group, owns 2,356 restaurants, has 73,000 employees, and will do over $4 billion in revenue this year. 

His portfolio includes:

  • 369 Arby’s
  • 192 Wendy’s
  • 130 Panera’s
  • 441 Applebee’s
  • 283 Taco Bell‘s
  • 941 Pizza Hut’s

For context, with 2,356, restaurants, Flynn Restaurant Group has a larger footprint than plenty of famous franchise brands in their own right, such as:

• Cinnabon


Jersey Mike’s

Here’s the story of how a Stanford grad became the king of the restaurant industry, with added insights from my recent podcast interview with him.

Learning Through Experience

Greg Flynn’s Stanford classmate founded World Wrapps, a restaurant that “started the whole wraps phenomenon”. Flynn became a licensee of sorts, and agreed to build stores under the World Wrapps brand in Seattle. By 1999, Flynn had opened 14 locations.

But the entire time, Greg Flynn struggled with the realities of owning an upstart brand, where all of the following is more difficult: 

• Convincing banks to provide financing

• Getting customers to come through your doors

• Convincing landlords you’ll be able to pay rent

So he left World Wrapps behind in search of an easier path. He eventually heard a 70 unit Applebee’s owner was selling 8 locations in Seattle.

Flynn inquired, and had his eureka moment: Applebee’s was a national brand with a proven model.

Banks would finance him, landlords *wanted* to lease him, customers already knew the brand, etc. 

So Flynn took out a loan for 100% of the purchase price, and acquired the 8 locations. 

How Did You Secure A Loan For 8 Applebee’s?!

In the early 2000’s, it was a rare moment in time when you could borrow 100% of the capital needed to purchase a big chain restaurant. On top of that, they even loaned you the money for the closing costs (so effectively 102% of the purchase price). 

The late 90’s – early 2000’s was also the height of casual dining popularity, which made it even easier. Today however, lenders are far stricter and have more requirements – you need serious equity (i.e. cash) to be able to afford it.

How would you recommend someone start from scratch today?

Find a franchise you like, vet it out, and talk to other franchisees. Franchisees are very collaborative and will share insights on what the process of building and operating that franchise has been like.

If you can raise money from friends and family, do that as well. Start with increments of $25,000 checks if you can, but make sure to structure it in a way that you keep your equity. 

Tell them ‘I’ll take your money, and pay you back when I can with a good return on your investment. But once you return their investment, you get the equity back in the business.

You don’t want to give up equity in the business that you’re dedicating your career to.

From 8 To 400 Applebee’s

Between Flynn’s experience with World Wrapps, and the ease of operations that came with a mature and proven brand, he grew to 400+ Applebee’s over the next decade.

How were you able to grow so quickly?

  1. Focus

Focus makes you better.  When we got into Applebee’s, we decided that’s all we wanted to do until we were really good at it. That’s why we stuck with just Applebee’s for 12 whole years. Only when we were exceptionally good at it, did we think to invest in other brands.

  1. The Flywheel

Ever since that initial loan I took for the original 8 Applebee’s, we’ve grown the entire business (aside from a few select scenarios) with additional debt, and reinvested cash flow. We’ve effectively taken no money out of the business this entire time.

The beauty of it is, that as your portfolio of businesses grows, you have more cash flows to reinvest into new locations. But you can also borrow more and more against your existing cash flows. So the flywheel accelerates as you keep expanding – because you borrow against your own business. 

Expanding Beyond Applebee’s

After he conquered Applebee’s, Flynn decided it’d make sense to build his restaurant portfolio to mimic the industry at large. 

At the time in 2011, the industry was 60-70% fast-food, and 20-25% full service restaurants. This is why we’ve seen Flynn expand to fast-casual restaurants like Panera, but also plenty of fast food restaurants such as Pizza Hut, Taco Bell, Wendy’s and Arby’s. 

What is Your Secret Sauce?

Culture and structure. Most multi-unit franchisees are hierarchical, in a classic pyramid structure. 

Our company however is a decentralized structure that pushes real authority as close to the field as possible – and we spread the wealth generously. 

My mindset is “local operators run the best restaurants”. And so we want our leaders in charge of the restaurants to act like, and feel like – and in fact truly be, the local owner-operator.

This is why we have a flat structure, similar to a federal and state model. The federal level includes all the services that help the state level operators – things such as HR, IT, purchasing, finance, and real estate.

Ultimately, the company has almost a flat structure that I’m convinced is only successful today because of how we let it grow organically over the past ~25 years.

What Does The Future Hold For Flynn Restaurant Group?

The obvious ones – growing locations of our existing brands, and buying new restaurant brands. But we’d also love to operate internationally – we’re the only major food franchisee that currently operates in just 1 country. 

There are also adjacent industries that are franchised – fitness, home services, hospitality, etc. These are areas we should and we *ARE* looking at them – it’s something we haven’t done before so we are intentionally slow – but we are looking at these opportunities. 


Dunkin’ Deal Of The Decade

The owner of 100 stores in Florida sold to Exeter Capital, a PE firm based out of Boston (can’t say I’m surprised a Boston firm bought Dunkin’ locations!). According to a law firm that specializes in resales of Dunkin‘ locations,  the brand typically sells for 7-10x EBITDA per unit.

This was a massive payday for the owner!

The Owner of Applebee’s Just Acquired A Taco Franchise

Dine Brands Global, which operates IHOP and Applebee’s, acquired 138 unit franchise Fuzzy’s Taco Shop for $80 million in cash. While I don’t love the image of “Fuzzy tacos”, the acquisition makes sense, as there’s plenty of growth potential at just 138 units, and the brand boasts a healthy average unit volume of $1.5 million.

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