Dennis Tase has taken an unconventional approach to growing Galardi Group Inc.
Instead of trying to compete with national fast food chains and appealing to a mass market, the president and COO has capitalized on niche markets to promote its three brands — Wienerschnitzel, The Original Hamburger Stand and the recently acquired Tastee-Freez.
That approach has worked. Galardi Group posted revenue of almost $300 million last year and has 375 stores, 100 Tastee-Freez locations and 7,000 employees systemwide.
Smart Business spoke with Tase about how he finds the right locations for his stores and the right people to franchise and staff them.
On finding locations: We’re no different than anybody else in the franchise world. We look at demographics, households, traffic patterns and what have you. But when we’re growing new stores, we try to have some synergy. And in order to get that, you need to build in a market where you have current presence, or at least brand awareness.
We’re building in areas where we have existing stores and expanding out from there. We pick a market where we have stores existing, and we try to grow that market out for the benefit of the advertising. As we’re growing it out … we try to keep within two to five miles of existing stores.
On choosing franchisees: It needs to be someone that’s been in business for themselves before. We really put our prospective employees through quite a thorough process of where they’re coming from, what does their business plan look like, what kind of energy level do they have and what are their future plans?
You have one foot in the door if you’ve been in the food business, but sometimes it’s a lot better when you have someone that’s never been in the food business so they don’t have some predetermined ways of doing business. You never know until you’ve made that hire, until they’ve walked in this door and worked there for a year or so or longer, that you’ve made the right hire.
We don’t dictate that we want you in the store so many hours a day. I think you should dictate that yourself if you’re motivated to improve your business. We have operators that probably show up every three or four months, but they have management that is superior.
I’m not concerned about who’s running the business; I’m more concerned about how it’s run. We have standards. As long as those standards are being met, then we’re OK with it. If they don’t increase their sales and make money, we don’t succeed.
And so everything we do is all about what we can do to improve the franchisees’ bottom line. From that standpoint, we’re very, very hands-on.
On co-branding: I’ve never been a major proponent of co-branding. I believe that the strength in my brand is within my brand, so I never went out and sought out a lot of co-branding partners. But when I did find one that I thought was compatible (Tastee-Freez), I felt it was in our best interest to purchase that concept versus being a partner with a co-brander. Then, we can set the guidelines, we can set the sense of urgency for that particular brand instead of relying on someone else to do the marketing and do the operational piece and set the priorities.
On increasing sales: The idea is to improve the frequency with our existing customers. How do I plan to do that? With new flavors, new tastes, new sandwiches. Our customers are basically the heavy, heavy users of fast food. And they don’t necessarily just frequent us, they frequent multiple franchises each week, but they come to us quite often.
On product development: We do quite a bit of R&D. I do a lot of traveling and I find products everywhere. And if they look like they make sense for us, then we test them. We get a lot of input from franchisees. Marketing comes up with ideas — even our suppliers. We bring our suppliers in several times a year to give us ideas of what they think is the new trend, the new taste, the new flavor. We will test it corporately in a couple of corporate stores and then we’ll move it out into some franchise stores and eventually move it out into a market where we can advertise it. Then we’ll bring it to the franchisees.
On attracting talent: Initially, I think people come in because they want to make X amount of dollars. And we keep our turnover rate down because we treat people the way we’d like to be treated, because it is a people business. If you look at all the research, people leave a job not necessarily because of pay but primarily because of the way they’ve been treated. We have a great training department that stays focused on how we treat people. It starts from the top. And if I believe it, then everybody else starts to believe it.
On training: It’s gotten to a point now where the younger people, they’re not real familiar with sitting in classrooms. They’d rather see it on TV or through DVDs, online. We’ve already incorporated other methods of teaching. Our new computers in the stores are very friendly. The registers are very easy to use because they’re computer-friendly. We make everything fit the current environment — not the current environment of the store but the environment in which we all live.
On change: Nobody likes change. But once they understand the reason for change, they adapt to the change. Any time you make a change, I think you have to advise people of why you’re making that change, why it’s beneficial for the company and why, perhaps, it might be beneficial to them. HOW TO REACH: Galardi Group Inc., (800) 764-9339
