A pair of burger entrepreneurs have run into a stale story — financing challenges. They plan to attack it with a fresh strategy.
Five Guys Burgers and Fries franchisees John and Tricia Baylis rolled their eyes recently when they heard a trainer from the corporate office was going to visit them once a month.
The couple has owned a pair of Five Guys stores in Manatee County for two years, so they initially likened the appointments to a checking up trip.
But the visits have turned into a confirmation, not a confrontation. That's because the two stores are doing so well in sales, procedures and benchmarks that the visits are a breeze.
“They see what we do here in these stores,” says Trish Baylis, “and say this is what we want to do with other stores.”
Both stores rank among the top of the 700-store chain in sales, says John Baylis. The first one they opened, in a busy Manatee County shopping center on University Parkway, has been in the top 5% since its first few months.
John Baylis, who left a sales job with a software firm in Washington D.C. to open Five Guys with his wife, says he's pleasantly surprised the stores have done so well in the downturn. One key is the price point.
“We aren't Ruth's Chris,” says Baylis. “People aren't cutting back on eating. They are cutting back on where they eat.”
Another integral element to the success that Baylis has learned during 2010 is the simplicity of the Five Guys concept. It's burgers, fries, soft drinks and not much else.
The simplicity has allowed the Baylises to concentrate on growing their franchise base, a task that's proven to be far more of a challenge than day-to-day operations. The first goal is to open five more stores in their territory, which covers Sarasota and Manatee counties. The couple would also like to run their own independent restaurant someday.
But the entrepreneurs have hit several roadblocks, especially in the form of landlords and bankers. On the former, John Baylis says he has had difficulties with a few commercial property owners over terms, including the length of the lease. Baylis says he looks for a 10-year lease with two five-year options and doesn't want to get into a center with high turnover.
The financing side of expansion has also been a challenge. The Baylises say they had one loan set to go earlier in 2010, actually, but it fell apart when a deal for the space in Sarasota never came together.
The couple hopes 2011 is the year they solve the financing issue. Their strategy is now to seek private equity investors, not banks.
The couple's first attempt to secure private equity funding, however, ended badly. They drove to Miami in early fall to meet with a group of potential investors. Upon reading the documents, though, the Baylises determined the investment was a thinly disguised attempt to take over the business.
Despite that experience, the Baylises remain undaunted. “We don't stop,” says Trish Baylis. “We won't stop.”