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Godfather of Barbecue


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  • | 4:43 a.m. May 13, 2011
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Over more than three decades, Paul Peden has opened more than 20 different restaurants, from an oyster bar in the fishing hamlet of Matlacha to a fancy restaurant in downtown Fort Myers.

But Paul Peden's legacy will be the Rib City barbecue chain of 28 restaurants he's built with his son, Craig Peden, 41.

In an industry that experiences a higher-than-average rate of failure, the Pedens stand out as sharp operators who managed to grow their company despite a brutal recession that hit consumers' discretionary income.

What's the secret to Rib City's success? “It's reproducible, easily,” says Paul Peden, 63, who began his career as a waiter at the legendary Bern's Steak House in Tampa. A Rib City restaurant costs less to capitalize than other kinds of establishments, the menu is simpler and prices are competitive.

Consider the experience of Mike Spradlin, who sold his Fort Myers roofing company to open five Rib City restaurants in Colorado under a franchise agreement in recent years. “The first two stores we retired the initial debt in 30 months,” Spradlin says. “The franchise model they've created is better than most of the big boxes before you start.”

The father-and-son team shares a passion for the restaurant business that leaves them little time for outside interests, except the occasional fishing trips.

“What comes to my mind is Paul has a passion for the total restaurant experience. That's his life,” says Rob Wells Jr., who has known the Pedens for 35 years. Wells owns Cabbage Key, a barrier island with a bustling restaurant and bar, and Tarpon Lodge at Pineland on Pine Island with a four-star restaurant.

People who know the Pedens well say they never seem to stop to rest, even on the rare fishing trips. “Paul is not patient when it comes to anything,” chuckles Wells, his fishing partner. “We don't tolerate sitting around waiting for bites. We want it to happen or we're going to be moving. This is the aggressiveness that Paul has for the restaurants. That passion creeps into whatever it is.”

“Paul gave me a quote,” Spradlin recalls when he first started discussing the Rib City franchise opportunity with the Pedens. “In the restaurant business, there's never a finish line. It's a race all the time.”

Run the numbers
To run an efficient operation, you have to know the numbers and you can't go by gut instinct. “If you can't measure it, you can't manage it,” Paul Peden says. “And you can't manage it if you can't document it.”

But the Pedens don't have a costly and complicated computer system to figure this out. Restaurant managers write their sales reports by hand and fax them into the company's headquarters above the Veranda restaurant in Fort Myers. Hand-written weekly sales reports demand more accountability. “It's more personal when it's written and signed,” says Paul Peden.

“Sales justify everything we do,” Paul Peden says. The staff of each restaurant is accountable for daily, weekly and 14-day goals for sales-per-employee.

So you can understand the Pedens' dismay when one of their former franchisees couldn't produce a profit-and-loss statement for three months. “We're big on accounting,” says Craig Peden, Rib City's president. “If we get the reporting, we can tell where they're at.”

That experience taught the Pedens a valuable lesson. To wit: Just because someone invests a lot of money in a Rib City franchise, it doesn't mean they share your vision.

The sales numbers are the key to properly staff the restaurants and buy the right amount of food. They're constantly tweaking the productivity of the staff by counting minutes they spend on each task.

With decades of experience in the restaurant business, Paul Peden can negotiate below-industry prices for food supplies, though it certainly helps when you buy 528,000 pounds of baby-back ribs each year. “The longevity that he has in the business has allowed him to develop these relationships,” says Spradlin. “He's like the godfather of barbecue.”

But despite their relentless focus on the numbers to be efficient, the Pedens are quick to say that employees are financially rewarded on quality and service from “mystery shopper” reports. “It's not about volume, but quality of service of food,” says Paul Peden.

Besides, it wouldn't be fair to judge employees on sales volume alone. In fact, some lower-volume restaurants routinely score higher on quality measures than high-traffic locations.

And as much as they scrutinize the numbers, the Pedens have learned to delegate. “They're not a heavy-handed franchisor,” says Spradlin. “They let that entrepreneurial spirit in the person who runs the franchise too.” For example, Spradlin is trying a new dessert at his restaurants that he thinks will be a hit.

Pere et fils
Generational issues sometimes lead to company failure, but much of the growth of Rib City can be attributed to Craig Peden, whose relentless drive mirrors that of his father. “It's a mutual respect thing,” chuckles Craig Peden. “We stopped yelling at each other a couple years ago,” his father cracks.

But the advantage that Rib City has in being a privately held family business is that it can react more quickly than its publicly traded competition. That was particularly the case when the Pedens recognized the severity of the recession early on and virtually halted the franchise expansion. “We have the luxury to not do anything,” Paul Peden says.

Looking back, Paul Peden acknowledges forecasting the downturn. “We had a little foresight,” he says modestly. “We reduced debt and we cashed up.”

Instead of adding new locations, Rib City focused on improving its operations during the downturn, as evidenced by sales increases year after year. “You need to be better at what you're doing,” Paul Peden says.

Fortunately, people who ate at expensive restaurants shifted to more value-oriented restaurants like Rib City. “I'd hate to be selling king crab legs and filet mignon right now,” says Colorado franchisee Spradlin.

Still, a couple of franchises are in the works now, backed by loans by the U.S. Small Business Administration. Capitalizing a Rib City takes about $250,000, less than many competitors in that price range, and the Pedens say the restaurant is usually profitable in its first month of operation.

Besides the obvious benefits of growth, the Pedens believe Rib City's expansion is a key to retaining and attracting good employees. They prize loyalty and growth, and the franchise offers their star employees the opportunity to follow a career path with the company.

There's even a plan to grow the company overseas. The Pedens are exploring expanding the chain to Panama and Colombia.

What worries the pair most is government interference in their business, especially healthcare legislation that could turn their profits into losses. What's more, the current political uncertainty means they're going to be extra cautious about spending cash to expand. “It affects what we do,” says Paul Peden.

 

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