Franchise Players is Entrepreneur’s Q&A interview column that puts the spotlight on franchisees. If you're a franchisee with advice and tips to share, email firstname.lastname@example.org.
When David Peterman and Mitch Roberts opened up their first Panera Bread, customers had never heard of the now widely known bakery-café. Instead, the business partners were forced to invest the time to educate potential customers, pounding the pavement to hand out free samples and menus. Now, the duo owns 34 Panera Breads across New England. And, they're only going to get deeper in the fast-casual business – they recently signed on as franchisees for the new fast-casual pizza concept, Blaze.
Here's what these Peterman and Roberts have learned in the last 16 years about fast-casual franchising.
Name: David Peterman and Mitch Roberts, partners in PR Restaurants LLC
Franchise owned: Panera Bread with 34 bakery-cafes in Massachusetts, New Hampshire and Maine
How long have you owned a franchise?
Franchising affords one the opportunity to align with a brand instead of the more difficult task of creating a brand. It thereby reduces many of the startup risks. It allows the franchisee to concentrate on their core strength, which in our case was real estate selection and operations.
What were you doing before you became a franchise owner?
My partner and I were senior executives of development and operations at Au Bon Pain, which at the time owned Panera Bread.
Why did you choose this particular franchise?
We knew the Panera brand well and understood the universal appeal of the concept with consumers. We also recognized early on the powerful nature of what is now called the “fast casual” dining segment.
How much would you estimate you spent before you were officially open for business?
Startup costs looked something like this: legal/permit: $50,000, architecture: $15,000, building/equipment: $700,000, pre-opening labor: $30,000, operator start-up salaries/benefit: $100,000
Where did you get most of your advice/do most of your research?
Panera Bread supplied a large amount of information about site selection, design, and construction. We also spoke to many owners and operators of other franchises, bankers and business owners. And we chose to appoint a real board of directors from the outset. Our board is comprised of a franchisee of a service company, an MIT business professor and several senior operations people with extensive restaurant experience.
What were the most unexpected challenges of opening your franchise?
The difficulty of building brand awareness was extremely challenging. Panera Bread was new to New England and consumers didn’t understand what it was. Our first bakery-café initially produced low volume and experienced negative cash flow for the first year of operation. We spent lots of time pounding the pavement in the trade area handing out free product samples and menus to offices, schools, churches and synagogues among others in order to educate the area on what Panera Bread was. Ironically, that first location ultimately became our highest volume cafe.
What advice do you have for individuals who want to own their own franchise?
This is simple. First, be adequately capitalized. Plan that everything will cost more than you expect and conservatively forecast your sales and cash flow. Second, select a franchise that offers a brand and support that is truly worth the royalty you will pay. This includes feeling confident not only about the products or services you will sell but also the strength, experience and integrity of the franchisor’s leadership team.
What’s next for you and your business?
We recently signed a franchise agreement to develop Blaze Pizza. Blaze is the leader of a new category of high quality, built-to-order individual pizzas that are baked in less than three minutes. It is an exciting new restaurant category that everyone will be aware of over the next few years.