1263: Eric Reed, Chief Development Officer at Layne's Chicken Fingers

0:00A couple of things before we get started today, first, thank you so much for showing up week after week, making my vision for restaurants unstoppable come true. Your downloads are allowing me to do the show the way I've always wanted to do it. Boots on the ground, word of mouth, leaders referring leaders, giving the industry an uncensored no BS platform to share their perspectives and truth, that's on you. Thank you so much. And we're just getting started. So if you're enjoying what we're doing here and you want to help us do it even better, please subscribe to this podcast on your platform of choice. And if you do that, I promise to do everything in my power to continue to improve the show. I'll deliver the restaurant tours you want to hear from and will continue to make everything you love about the show better. Thank you. Welcome to Restaurant Unstoppable. For 10 years and over 1,000 episodes, I've been traveling in the country chasing word of mouth leads and having in person only long form discussions with the industry's finest

1:03owners and operators. Our mission is to inspire, empower and transform the restaurant industry by bridging the gap between this generation's leaders and the next. Listen to today's guests and so many others and get one step closer to becoming unstoppable. This episode is brought to you by Restaurant Technologies, the leader in automated cooking oil management. Their total oil management solution is an end-to-end closed loop automated system that delivers monitors, filters, collects and recycles your cooking oil, eliminating one of the dirtiest jobs in the kitchen. Restaurant Technologies services over 45,000 customers nationwide. See your oil and elevate your kitchen by visiting rti-nc.com or call 888-779-531-4 to get started. This episode is made possible by Sir Boni. You're all in one bookkeeping and financial solution.

2:04We're talking about reliable tax preparation, business incorporation, seamless payroll and compliance reports, strategic CFO services that drive business growth, detailed custom reporting for complete financial clarity, dedicated support for restaurants in multi-location businesses. Did I mention bookkeeping leg? Sir Boni handled the number so you can focus on the vision call. Sir Boni today at 281-888-2413 to schedule your free 30 minute consultation and discover how Sir Boni can streamline your operations and boost your bottom line, limited time offer and exclusive to restaurant stopable listeners. Open this message and get 20% off your first month of services. This episode is in partnership with Giving Kitchen. The restaurant industry takes care of people that's what we do, but historically we haven't always been great about taking care of our own. That's why I want you to know about Giving Kitchen. They're a national nonprofit supporting food service workers facing real crisis, medical issues, accidents, unexpected hardship, the kind of thing that can really derail a career.

3:09Since 2013 they've helped more than 35,000 restaurant workers across the country and awarded over 17 million in financial assistance in stability resources. If you're an operator chef or anyone food service, this resource is worth knowing. A lot of restaurants choose to rally around Giving Kitchen because at some point everyone in the business knows someone who needs it. Go to Giving Kitchen.org to learn more and see how you can be a part of it in your own way. This episode is made possible by US Foods running a successful restaurant takes more than just great food. With US Foods you can expect more high quality products, advanced tools and flexible deliveries to grow your business. Their industry leading Moxie platform also does more than just place your US Foods order. It uses AI to help you take control, save time and increase profitability. Visit usfoods.com slash expect more to learn how to become a US Foods customer one more time. That is usfoods.com slash expect more with excitement. Allow me to introduce you today's guest partner and chief development officer at Lane's

4:15Chicken Fingers. Eric Reid, my man Eric, are you feeling unstoppable today? Yes, absolutely. I'm stoked to have you here. It was about a year ago. I had your brother, Garrett Reid, and Samir Watt, Wattar. Am I saying that correctly? Wattar, yes. It was episode 1193 in 1197. I was really pulling back the layers on care and I was trying to get into his mind about site selection and development and he's like, really, my brother's the guy to talk to on that. There's nobody that I know who knows more about engineering a location for a restaurant than my brother. I tried then to get you to get on the show. We couldn't make it happen. I was the only town for a little bit. But we're back. We're making it happen. I can't wait to dive into your story, your expertise, and I know it's going to be good. But before we dive in, let's get that motivational inspirational ball rolling with a success quote or mantra what he got for us. So let's protect the brand, protect the franchisee, which is 100% always stand by every day.

5:15Man, this is a brand that is consistent. I'll tell you that. What does that mean to you, though, specifically protecting the brand and protecting the franchisee? Well, that's our job at the end of the day. We've got to protect the brand, everything about the brand. Just look, it's feel how the public sees us, how they're served as our guests, and the protecting the franchisee is doing everything we can to make sure that they are set up for success in any way possible. And how does that look from your role as chief development officer? What are you doing to protect the franchisee? Because I think you're, would you say you're closer to the brand in terms of the design, the culture, or are you closer to working with the franchisee to empower them? Which would, or you're right in the middle, where would you say that? I mean, I'm in both, obviously, I think probably protecting the franchisee, maybe a little bit more. I mean, protecting the brand is more, you know, the design of the location, how it looks. This is the layout, the consistency of all that. So when you walk in a lane, you know, and one part of the country, you walk in a lane, another part, you know, it's a lane. Yeah.

6:16Doesn't it say, is this the same lane? I don't know. Is it a different group? Which does happen with some brands. Protecting the franchisee is probably a lot to do with us going in and making sure that they're selecting locations where they can be successful. There's a lot of, there's a lot of variables going to that. Which I think we'll get through as a group of the day, but yeah, there's, there's a lot to protect them. We like to say in our, in our, in our Discovery days, our franchisee is that we say no a lot as a, as a, as a development department. We say no a lot and, and sometimes I can be very frustrated with the franchisee. And what we've got to kind of convey to them is that, look, we've got expertise, we, you know, our, our job is, is development. You know, your job is to run restaurants, right, and then hire the right people and do all those things. But our job is to help you on the real estate side of the development side. We had the expertise in that, you know, trust us as we kind of take you through this journey. Right. That we're protecting you from yourself. Well, when you're buying into a franchise, as a franchisee, you're, you're purchasing the systems, the intellectual property, the brandy, but you're also buying into the extended

7:19network of specialists, right, that you're getting access to, let them do their job. Right. You know, trust that the, the entity, the, the franchise that you invested in has surrounded themselves with the right people to make you successful. And that's how it should be. Yes. So, great way to get this thing started. I love the read story because you guys, the cool thing about the restaurant industry is that there are an infinite amount of ways to break into this industry. So you and, and Garrett have a background in real estate development. Yes. That's how it started for you. So, take us to where it makes sense. Okay. I've always, I've always said the greatest thing about Geronizer's two of us, so it's kind of like, you know, double the experience going through. Our passwords were, we're very similar. So, you know, if you want to go way back to us working in Wendy's together, we're in high school, right? That's kind of our first, you know, jump into the restaurant world. But, you know, post, post, uh, college, once I got out of school, um, Garrett actually

8:22was doing, uh, real estate radio shack on the corporate side and said, man, you're like, I know this role say things really great. Talk me into it. Um, I went to work for Sally Beauty Supply. When the reason I went to work for them is because they basically hire you with no experience. And that was just the, that was just the bare bones it was. What did you go to school for? What school for finance? Okay. So you're working for Sally's in the finance department? No. No, I was working for Sally's in the real estate department. Oh, okay. So, yeah. So, so, I got my degree in finance because they didn't have a degree in, in, uh, and real estate back then. Uh, I didn't know 100% I was going to want to real estate at the time, but I knew I didn't want to be an accountant like my dad and with the business degree, finance made sense. Yeah. Like math. Uh, so I went to work for Sally Beauty and just got started off, I mean, the most basic things leasing, you know, just finding every Walmart, every target I could and putting you know, you know, 1400 square foot inline space. The leases were very basic, but I learned what at least was, I learned what triple nets were. I learned all the, the basic things, how to negotiate with landlords and all these kind of things. Um, and then in the industry, people like to call it Sally U, like Sally University because

9:25most of you that go to Sally, beauty supply move on from there, so it's kind of a lodging pad. Yep. Went from there to pay less shoes, a little bit bigger box, a little bit different, learned a few more things, but my next stop was the one that really kicked me out from the restaurant world, which is I went to Brinker, which was, uh, they own chilies. And at the time, they own chilies on the border, macaroni girl, a lot of brands, but I was on the chili side. So that was my first opportunity to start working for restaurants or for a restaurant and going in and finding actual dirt and building a building ground up. Who's the older brother? I've never done that before. Who's the older brother? Garrett. Okay. He's two years older. And so he was in real estate ahead of you. Because that was a half he took. He was doing this for radio shack. Yes. Right. Did seeing him do this was that part of the draw, the appeal of having like, like, or had he always wanted to do real estate? Now, he fell in love with the real estate when he was in college because he had a real estate professor. Yeah. Um, that he just, just thought was an amazing mentor and he shares the story again. If you guys want to go, if you have not checked out Garrett's episodes, 1,193, if you

10:27want to get that side of the story, yeah, with Dr. Bang. Yeah. And so Dr. Bang actually mentored a lot of guys that are in the business today that are, that are, that are very successful. So Garrett was in, you should get into this, this world and I did, um, about a year after he did. So he was in the business about a year before I got into it. Um, and then, uh, but I was working at, I was working at Chili's. He had since moved on radio shack. I think he was doing Starbucks at the time. And so now we're in the restaurant world. Now we're doing ground up development. I was going out to small towns. We believe it or not, but the younger listeners, there was no Google maps back then. Yeah. You couldn't zoom in. There was a lot of apps go, which is a book that had all the streets in it. And I was going through Oklahoma, Arkansas, Texas, you know, going to these towns trying to find a suitable piece of land to, to purchase or to ground lease, uh, and so we could build a Chili's. Yeah. And then presenting the case to the real estate committee back at Brinker on why we would be successful there. Yeah. So that was really cut my teeth on, on ground up development and the restaurant world.

11:29One of the things I hope to get out of this conversation is something I, an area that I could really educate myself on more is the, the game of real estate development and the strategy of developers and how to get in with these developers. And it seems like, in my travels across the country, like I, I drive by these developments that look like they probably are the, you can tell that there's a similar design that there might be a correlation in the Midwest between these developers going into different markets. And it's like, I've seen this before, but it's just in a different place. Right. And you also notice that the same brands are in those locations. Yes. And is it, like, I guess, is there, like, what is the, what is the game that the developers playing? Like, like, if I can get into the mind of a developer, how are they approaching this? So there's, there's, I could bring it on two different types of developers. So there's the, there's the developer that, uh, we all wanted to be when we were developers. Yeah. It seemed to achieve that is, is the developers that run with, uh, the anchor tenants, right?

12:35The, the big developers that, that developed target, they develop, uh, Kroger, they develop, um, for Walmart. Um, they're kind of these preferred developers who's large anchors. Okay. And so those guys have the ability, they'll go in and they'll buy, you know, a huge track of land, um, for target, right? So target goes in there and then they're going to build, then that developer, I mean, they almost give it away to target, right? I don't know exactly how the whole thing works, but it's, you know, the, the rumors are that it's kind of, they're almost doing that like the loss leader, right? Because then they now have the right to build all the shadow space near that target. And then also carve out all the pads out on front of the street. And then, excuse me, and then on the pads, what do you mean by pads, uh, pads are, um, so you got, you got the target here, you got their parking lot and then the streets out here, they just, they carve out tracks of dirt. So you got the giant building that's attached to Walmart or a target. Or yeah, targets, and those are like the adjacent, right? And then the, the pads are the standalone units that are surrounded.

13:37Right. And then that's where you get the bank on the hard corner. You get, or Chick-fil-A or whatever you get McDonald's. And that's where you see, you're seeing all those same, like you said, you see the same, uh, tenants in each one. So, and that is the, the, the, one of the two types of tenants we're talking on, two types of developers. Developers, thank you, which is the tenant developer. The one that, yeah, the one that controls the anchor, I call it anchor, yes, anchor, tenant developers. So, uh, what is the, the other example? So the other example is the other guys is kind of what Garrett and I did when we were developers. And that was trying to get the land across the street from the target or the land, caddy corner from the target, right? You're, you're not going to get on the parcel that the guy that builds targets on. So can we get right across the street? Can we, you know, you're the lows approach. Exactly. Go right next door, right? Yeah. So, like let somebody else do all the research and we're just going to kind of, uh, kind of like how you see those fish that draft the, like, shark. Yes. You know, like, get close to the shark. The shark is going to eat up a bunch of business, but there's going to miss some

14:37crumbs and we're going to pick up those crumbs. We're going to be close enough that we can benefit from the existence of the shark. Right. Exactly. And then inevitably, like, say McDonald's goes in, Chick-fil-A goes in in front of the target. Yeah. I like using Norgas example because they're very popular. And then, you know, Bank America goes on there and so does Chili's. Okay. Well, those guys are going to rest, they're going to restrict, like Chase is going to restrict Bank America and all the other banks because they would say we want to be the only bank in the shopping center. You know, Chick-fil-A is going to restrict, you know, other chicken users, right? Right. McDonald's will restrict burger users and yeah. Okay. So then, well, Burger King still wants to go there. You know, Bank America wants to go there. So they want to go right across the street, right? They want to be as close as they can to that main anchor. Right. So then everyone's trying to scramble to gobble up all the property that the anchor developer didn't get. Got it. So your approach as the, I'm going to call this the across the street developer versus the anchor developer, the opportunistic developer. Yeah. So you guys are just kind of paying attention to market trends.

15:39And as like you're hearing noise of a developer or a Walmart going into an area, you're like, okay, like, let's go scout it and see what we can pick up to be close to this. That's that's one way of doing it and some developers do it that way. The way Garrett now has did is we would approach the tenant. Because we both had a, we both had experience being on the tenant side, right? We worked in House for Chili as he worked in House for Starbucks. So we had the knowledge of how to develop land, how to do all the things that we needed to do. So what we do is we go to a tenant. I'm trying to think the Starbucks is an example that's who we built for them. I also built for some, some casual dining clients as well. We would go to them and say, hey, how many Starbucks do you need to develop this year? In what areas? And then we would go scout the sites out, take them back to Starbucks and say, hey, here's five potential sites that you could do. Yeah. We can, we can buy the land. We can build you the building and you sign a long term lease with us. And then we have become your landlord.

16:41It's a build-to-suit program. Okay. So I want to make sure I understand. Your, this is main in the main. This is main in the main, yes. And when was that established? What year was it? 2004, I think. And your approach is you are contracting yourself out to Starbucks and Chili's or... Well, this is after, this is after Chili's, right? Yeah, this is, yeah, I didn't do that for Chili's, but yes. So you were cutting your teeth, learning the game, working under Chili's and Garrett was doing the same working for Starbucks, right? So you guys developed this ability to negotiate tenant leases and contracts and you learn the game of real estate. You see there's an opportunity in the market to start your own company where you take these newfound skills and you go and you find clients that you go work to acquire property for. Right. Exactly. Help them achieve their goals. And you're, you're purchasing the property. Right. You own the dirt. Yes. And that client becomes your, you're the landlord for that client.

17:45Yeah, there are tenants. There are tenants. Cool. So you don't want to be in the business of running restaurants. You wanted to be in the business of creating land for restaurants and then to, to have tenants. Yes. That was your business model. Where'd you learn this? Like, what was the inspiration for this? The inspiration for, I mean, I mean, developers have been developers for a long time, right? So it was how do, how do we get in that game to where we can be the one that owns the building and collects rent every month? Yeah. How many buildings did you get up to during the peak of Manimane? Is Manimane still going today? Uh, yes. We still have a few things going on in Manimane. We're just working with one client now with one client left. Peak, I don't know. But we've done what we typically do with, we would sell the property after we built it and the tenant took place because how it would work is we put a piece of property under contract, right? And then during the due diligence phase of the contract, we would make sure that we got it approved of the city, got all the plans done, all those kind of things, right? Then we would build the building and, or GG Starbucks, the example Starbucks moves in, they start paying rent and they're going to sign a long-term lease.

18:46So say it's a 10-year lease. So now, what we own at the end of the day is we own a building and the dirt and we own an income stream for the next 10 years guaranteed by Starbucks. Right. So then we'll take that and we'll go sell it to a passive investor. Someone who wants to own a Starbucks wants to collect rent every single month without lifting a finger of work and they'll pay us a really good price for that. So we get a spread between what we, what it costs us to buy the dirt, build the building versus what they're willing to pay for it. Let me make sure I understand. So you don't own the Starbucks. You own the dirt and the building and you are collecting rent from Starbucks. And then you're selling that to somebody who wants to own a Starbucks. But you don't own, how are you able to sell Starbucks if you don't own it? They're not buying Starbucks. They're buying the building and the land. And the tenant. And they're getting the rent. They're becoming the landlord. So we're selling, we're selling them the building and land. So now they're the landlord, not us. So if I'm, I guess guessing here, the play is you're going in your buying dirt before it has value.

19:50And then as that dirt becomes valuable because of what gets built up around it, you can go in by cheap. You have the, you know, the frictionless network of people that want to buy that dirt. So you can fill it fast. And then as it increases in value because the space around it over 10 years has been built up, that property becomes more valuable. And you can basically cash out like a net positive. Not really. No, this is why I don't make a subject. No, it's a great, no, it's a great way to look at it. But the value, the value is given to the dirt because there's a Starbucks on it. Right. And they're getting a rental stream every month. There's already passive income tied to it. There's a passive income tied to it. So when, when that investor comes to buy that, that building and land from us, they don't, I mean, it's a little important to them what's around and everything else, but they're going to them, they're saying Starbucks didn't want a bad location. Starbucks is a dumb, they would do a good location. They're paying, I'm just going to throw out a number, they're paying 100 grand a year in rent.

20:53So if I buy this building and dirt, I'm going to get 100 grand a year in rent. Every month, I get a check for 8,000, whatever the math works out to you, right? And so that's good for them because they got millions of dollars, they need to invest. And it's a great return on their money. And then at the end of the 10 years, Starbucks most likely will renew their lease, right? Most likely at a higher price. So the hedge is against inflation a little bit. And then if Starbucks ever does go away, you still own a building and dirt that you can lease to someone else or sell to someone else. Right. So it's a great investment for a passive investor that doesn't want to have to go out, find locations, get the drawings done, go through the permitting process, and build the whole thing, which is what we do. Right. But generally, I'm assuming in most cases, the asset that you invest in originally is a piece of dirt. You build something of value that looks good on a number. And I'm assuming that after you've bought the dirt, after you've built the Starbucks,

21:55after you have a tenant in that Starbucks or the tenant, that snapshot of the value of that property on year one is probably lower value than 10 years later. That whole asset is probably appreciating in value, I would assume. It is appreciating in value, yes. But again, it's, if you're selling me a brand new Starbucks that just signed a 10-year lease, and I buy it from you today, I've got 10 years of guaranteed income. If I buy it from you five years from now, I only have five years of guaranteed income. Right. So it's actually worth a little bit less to me to buy it later in the process. So these buyers that are out looking for a triple net properties, that's what we call them. These buyers, they're wanting to buy as soon as that rent check starts coming in, right? They want to get it real honest, because they want to get all 10 years of payments.

22:55Right. While that brand is still hot, because I might run steam after 10 years. So there's more risk afterwards. Exactly. This episode is brought to you by Restaurant Technologies, the leader in automated cooking oil management. Unstoppable restaurant owners know which services to keep in-house, and which services to outsource. An oil management is one of those things you should outsource. Their total oil management solution is an end-to-end closed-loop automated system that delivers monitors, filters, collects, and recycles your cooking oil eliminating one of the dirtiest jobs in the kitchen. Create a more efficient food service operation and ensure consistent food quality with a safer, smarter, and sustainable cooking oil solution. Restaurant Technologies services over 45,000 customers nationwide, including countless past guests on the show. Automate your oil and elevate your kitchen by visiting RTI-hyphen-nc.com or call 888-779-531-4 to get started.

23:58This episode is made possible by Sir Boni. Sir Boni is your all-in-one book, keeping and financial solution referred to me organically in episode 1,200 by Mama Betty's founder, Jason Carrier. You got to hear what Jason had to say about Sir Boni. Anything that comes remotely close to your financials, Sir Boni has your back. Reliable tax preparation and business incorporation, seamless payroll and compliance reports, strategic CFO services that drive the business growth, detailed customer reporting for complete financial clarity, and dedicated support for restaurants and multi-location businesses. Did I mention they do bookkeeping? They do it all. This is an end-to-end financial management solution all under one roof. Let Sir Boni handle the number so you can focus on the vision. Call Sir Boni today at 281-888-2413 to schedule your free 30-minute consultation and discover how Sir Boni can streamline your operations

24:58and boost your bottom line limited time offer. And this is exclusive to restaurant unstoppable listeners. Mention this message and get 20% off your first month of services. I have one other thought and you can correct me if I'm honest. No, go ahead. Before we move on to my next question, are you almost looking at like when you invest in this property and you build out the, you know, you take your cash, you put it into this real estate, you have the tenant, you're getting the check, the rent check. But are you also looking at that almost as like a high yield like savings account where like it's appreciating over times or is that not part of the game or is that like not going to look at it? It's a good way to look at it. It depends on what your business model is. Like when we first started out, you know, we didn't have, say a million bucks. We did, say it cost, again I'm making these numbers up. These aren't accurate, but say the land cost half a million dollars and to build the building cost half a million dollars, right? So you're a million bucks in. So when we first started out, we didn't have a million dollars, right?

25:59Right. Sadly, we didn't have that. So what you do is you get investors to give you some equity, you give a bank to give you debt, right? So and you do that deal. Well, what we had to do is we had to sell it, take our profits, and then roll that into the next project, right? So the value we looked at was how fast we could flip it and make that spread as early as we could so we could invest in more deals. Got it. That's always more of a production thing. Got it. But if I had all the money in the world, absolutely, I would buy it like a bond almost, right? Right. It's like you'd buy it, you'd build it all cash, and then whatever where that monthly check came in, it was just going on, going, and then to your point, also the land is appreciated, just with inflation and everything else. Yes. And as that air is being built up around it, right, you know, it's adding value. Yes. But you're getting ahead of the wave. So you're getting a discount, and you're kind of like, it's kind of like these momentum markets, right? Like in the city,

26:59like everyone wanted to be in the middle of the city, but then they started to realize that the opportunity was on the edge of the city. And you go there and if you can hang on for two or three years, eventually the city is going to, you're going to be in the city, because the city is going to expand around you. I wonder if that's shifting right now. I don't think, I think the momentum in the cities is kind of going away. Unless you're in a small city, where it might be picking back up. But the big cities are kind of like, they're not really, I mean, maybe this is later on in the conversation, I'm like, what's happening on macro scale of trends in different markets? We'll see if that for later. I mean, yeah. I don't want to get too far out of ourselves. I'm going to put that as a note though, macro trends markets. You said something, we talked about triple net in the past, but can you describe what triple net is? So true, that basically means that the tenant is going to pay for their own maintenance, their own insurance, and their own taxes. Okay. And that's very appealing to a landlord. Why? Because a landlord has nothing to do. So how do you make, like, so the toy that breaks in a Starbucks, Starbucks does not call the landlord.

28:00They exit themselves. Originally, you and Garrett started negotiating on behalf of tenants, right? You were looking out for the tenants, the tenants' interest. How is this a win-win? Why is this a win-win? Why is it flipping in the landlord's side? Yeah, it's triple net good for the tenant. I mean, is it more in favor to the landowner, or the property owner, the landlord? I honestly, that's actually a really good question. I've just always been done that way. I mean, I guess, you know, I mean, some of these aren't. Let me break it down for you, so you'll see. So as a landlord, as an investor, you're investing in a certain amount of money. And you know if the tenant's paying the rent that's covering your investment, right? Well, you own the land, so there's still taxes, right? So if the tenant agrees to pay the taxes, because they're using the land, they should pay the taxes, and the taxes rates go up really high.

29:02As a landlord, you have no risk in that, right? You have no risk, because they pay it. If insurance costs go up really high, you don't have to, you know, your insurance rates are going to go up. The advantage the tenant has is if taxes go up and insurance goes up or maintenance goes up, they can raise the price on their product to cover those costs. The landlord can't raise your rent, because taxes went up or because something went up. So the tenant has more flexibility on pricing to match variable costs, whereas the landlord can't deal with those inflations with a fixed lease. Right. So by putting the variable expenses on the owner, it protects both. In a way, there's more flexibility on the operator. And technically, the landlord could put something in the lease that says, hey, if taxes go up, I'm going to increase your rent.

30:03Well, it's just a lot cleaner to say, hey, you guys, variable costs, you can do something about a lot easier than I can. So when you were still doing the game with chilies and you're looking out on the interest of the tenant of chilies, your boss, what were the things that you would make sure you wouldn't negotiate for? You were going to get the best rent possible that you can get. Yeah. And I mean, and then there's a million things negotiating in a lease. There's condemnation if something happens. Is that what you're doing today? Well, you're not, because you're building. You're not buying, you're not going into second generation spaces, right? For lanes. For lanes? No, we go into second generation. Are you do? Yes, we do. OK, people will save that for lanes. Because that's kind of more of what you do now. You're looking out for your franchise, protective franchisee. Yes, but in the very end, that's it. So back to your journey prior to leans. You guys are from 2002, 2003. Well, when you start 2004. 2004. So you had about a 12 year run of being main and main developer program.

31:04You kind of shared your business model with us. What was going, I mean, anything in that story that needs to come out in terms of ways you grew as professional, things that you learned from like a, I guess, developer entrepreneurial perspective that you're applying today. That's worth getting out. Probably so, yeah. I mean, the real big thing that happened was, and maybe it was 2006. I don't know, I'm getting old now. I'm half a century old. So don't quote me on all the dates. But the one thing I do remember was around about 2008, 2009. If you remember, the whole world crashed, right? Everything crashed. And 80% of developers were going out of business. We'd been very conservative in how we did everything. So we were able to avoid going bankrupt and avoid that. But I was like to say, it's a funny phrase. The bad thing about becoming a millionaire overnight is that you can unbecome a millionaire overnight.

32:04And that's literally what it felt like. Everybody's like, man, you developers are making all this money. It's the greatest thing in the world. And we're like, yeah, sure is. And then the whole world crashes and you go, oh, that's why we were making all that money. Because there was a whole lot of fucking risk in what we were doing, right? So during a period of time, we survived. We put it that we survived. But we kind of put main and main on hold because no one was developing. There was no work. There wasn't a tenant that was out there looking. So in that case, I actually went back to the tenant side. I went back to Chile for a couple of years and worked there. And then it was planning to go back to the development side. But that's when raising canes called. And they were looking for someone to run their real estate department. And so I went to work for them in 2013, I believe. So you were with canes for three years? Almost four years, three and a half years. What did you learn about that model of, you know, one thing really well fried chicken in real estate that sets you up for success?

33:06What did I learn from the model? Well, I mean, canes, right? Very similar business model. QSR doing one thing really well. Understanding, you were negotiating four canes on real estate. Yes, correct. I guess being close to what would be your future competitor, I'm sure you pulled a lot of lessons from just being close to it that you could then apply later in life. So what were those big things getting close to closer to this business model that you think served you later on, relative to what you do specifically? Well, so I don't know that there was so much canes as it just was the opportunity to look at things in a different way. And I'll explain that. So unless it chiles, everything was corporate. The same thing when I was at Carousel Cain's. But we were rolling out, at one point, one, I think my last year there, we opened up over 100 corporately run casual dining restaurants

34:06which had never been done before by any company. Canes. No, no, chiles. It's chiles. So casual dining, chiles, we opened over 100. I think it was like 105 or something like that. But that was a big thing. So at the time, raising canes, they had 196 restaurants when I got there. They were primarily in Louisiana, part of Texas, Oklahoma. They had some franchisee out in Nevada. We didn't really mess much with that. Yeah, 196. 196. And so their thought was, hey, we need to bring somebody in who's been at a really big company to help us grow nationwide. Because they realize their brand work, they're making money and they're like, we wanna go, we wanna expand out from here. So why it intrigued me was, we're gonna chillies, they'd had, by the time I got there and the early odds, there was already chillies all over across the country. So it was more of going into a market and trying to say, okay, we've already got five or six chillies here. Is there room for a seventh where we put it? So we don't cannibalize it, all that kind of stuff.

35:07With canes, it was like green space. I mean, they're like, hey, we wanna go into Colorado. You know, we've never been to Colorado. Let's go there. We wanna go into California. And I was like, this is fantastic. Because the way I would analyze real estate with chillies was I'd look at a map and say, if I had a clean slate today, I had zero restaurants and I had to build seven, where would I put them, right? Then I'd map that out and then I'd say, okay, well, the six we have today are here. How does that kind of line up? Maybe we need to relocate this one. Maybe these four cover where we should be and we need a new one here and there. So maybe we close this one, reload this one. You know, we kinda work like that. With canes, it was, if it was a clean slate, where would you go? Oh, it was a clean slate. It was just really fun to go in and look at it. The solution effects. Yes, exactly. I mean, Chick-fil-A was probably the only other competitor at that time that was really similar in model and scaling like it was. I think it was around 2016-17 that the hot chicken trend starts, right?

36:07Well, what's funny is, is we and raising canes don't consider Chick-fil-A competitor. Why is that? Because in the analysis, the surveys that have been done on the customers, the customer sees Chick-fil-A and raising canes are lanes as a completely different thing. Really? It's really interesting. I'll give you another example, too. Anyone who sells bone-in chicken, they're not concerned, no, no, no, like Popeyes. Oh, yeah. I mean, Popeyes sells Chick-fil-A's. Oh, KFC? Yeah, Popeye are KFC. They sell Chick-fil-A's. Yeah. They're on their menu. Right. You know, Chick-fil-A sells Chick-fil-A's. Right. But the way the consumer sees it that we've seen in all the different surveys and research that we've done is they see Chick-fil-A as a chicken sandwich. Even if they don't buy a Chick-fil-A sandwich, they see it as that. They see us as chicken fingers, and they see Popeyes, slash KFC as bone-in chicken. And people will literally eat Chick-fil-A for lunch and eat lanes for dinner and say they ate two different things. Even though it's both fried Chick-fil-A.

37:07Wow. So it's really kind of just like this idea, and then you must know Kathleen would, if you're close to Canes. Kathleen would work with Canes as I think there's like fractional COO or whatever, I think she came in and helped scale Canes. What was that? Like before you got there. Okay, yeah. I think I got there. Yeah, like I wanna say, like it was just a couple of locations and then she helped them get to like hundreds. So what was my train of thought? She talks about what is your one thing? Because the consumer, even if you offer different things, is gonna see you as one thing. So you need to be that thing when they're in the mood for bone-in, one thing KFC or Popeyes. When they're in the mood for fingers, one thing, you know, lanes or Canes. So it's like doing that one thing or at least convincing the public that you're the best at that one thing. So when they desire that one thing,

38:08you're top of mind. That's a better play. Yeah, exactly. And that's, if you think about that, Chick-fil-A, that we didn't event the chicken, we invented the chicken sandwich. Right. Did they invent the chicken sandwich? I don't know, but it sounds like they did. That's what everybody believes. I'm sure somebody had a chicken sandwich before though. I'm sure. But that's the one thing, right? Chicken sandwich, Chick-fil-A. And then, you know, they got one law that raising Canes. So that's their chicken makers, right? Got it. So yeah. So what was our train of thought with the, we're talking about different markets, Canes. We're talking about Canes and what you learned. Oh yeah, yeah. So I went there, I went there with the idea of, hey, you've worked at Chili's, you've worked at a big company, the guy that hired me. He had worked at Chili's. He was actually working at Chili's when I was there, then he went on to Chase Bank, and then, you know, raising Canes picked him up. So he brought me in, and it was kind of, I built a real estate team that can, you know, really, really grow this thing,

39:08and we want to blow it out. So I just immediately started out, going out and market planning these markets, and then bringing it back to the board, or the executive, not the board, the executive team, and explaining to them why we needed to be in a certain market, why they thought we could be successful. It's funny to look at at hindsight now, because there was a lot of angst about that. Like, well, can't, can we be profitable in Denver? You know, can we be profitable in Salt Lake City? Can we make money in California? I mean, it was, and you look at it now, and everybody's like, ah, but yeah, it's easy hindsight. People like chicken figures. Yeah, it's easy hindsight. And I love chicken figures growing up. It's an interesting, well, I know, but like, I almost think like it's something special to me. It's probably not as special to everyone. It's kind of like when you love Rocky as a kid, then you grew up and realized every kid loved Rocky. But it always seemed really special to me. So it made sense to go to work for them, and it made sense to see that, because I truly believed in the product. So I was, you know, they always say, real estate guys are way too optimistic.

40:10Yeah. Like they think every site's going to work, because we probably are too optimistic, but I like that quality. Yeah. What would you say was we said, four years here with Keynes? Almost four years. Almost four years. How did you grow the most as a professional in your niche? That was my first time where I had direct employees underneath me, like a team of them. Direct reports. Direct reports, like a number of direct reports. Was your title? I was a director of real estate. Got it. So I had a number of direct reports. You know, in the past, I mean, I've managed brokers, I've managed consultants, I've managed GCs, all these different things, but they weren't employees of the company. They were contract employees, or they were contracted to their work. So that was the first time I was actually, you know, hiring direct reports and then having to teach them what I knew to go implement the strategy that the company had to grow and set goals with them. You know, motivate them to accomplish all the goals that we needed, and we did my last full year there,

41:16we were the fastest growing restaurant in America, which was a great, that was a great award to get. It's kind of a cool thing. Then it was in restaurant news. They probably said we were number one. I think Jersey Mike's was number two. It was based on percentage of growth. I put an asterisk on it to the positive because Jersey Mike's was all in line stuff, and ours was all ground up. I'm like, ground up's way harder than in line. So we should get a double bonus. What does that feel like to achieve that? It was great. I was extremely proud of our entire team. They're the construction team, the design team, the field they got the permits, the real estate team, everybody to make that happen. And it just motivated me to continue to want to do it again and again. Yeah, and being seen as the best, like to have that title to be seen and valued to know that, like you're doing what you're supposed to be doing if you can be the best at it, right? That has to feel good. You talked about the challenge was directing or managing having all these direct leads.

42:18You grew, like how did you get better? Like how did you evolve? How did you improve at that? So as you're asking a question, I thought of something that my last boss at Chili said told me. He said, he gave me a compliment. He gave me a very good compliment and made it a teachable moment, which I love when people do that. So those compliments are how we become self-aware. We really aren't aware of what we're good at. So you keep going. And so the reason he did it is because we're one of the real estate committee we're explaining all this stuff. And he said, Eric, he goes, he says, you really know your stuff. Like you really know your real estate stuff. You've got it all figured out. You do the research, you study it all. He goes, when you explain it to the guys in the room, you need to know that they don't know everything you know. And apparently I was skipping over a lot of stuff. And I was like, a little self-conscious I'm doing that here in this conversation as well. Because I just kind of get ahead of myself

43:20and I start talking about things. And so he said, so that hit me later on, the reason I tell you that story, because they hit me later on when I was at raising canes. I was training a couple of real estate managers and they were bringing their package and they're the site package into me saying, hey, this is the site we're looking at. And I'm just like, wait a minute, did you ask this question, did you look at this? Did you look at that? And they're like, no. And I realized, I didn't tell many of you looking at this. Right, they don't know that. They didn't know that. I'm not a standard yet. It wasn't a standard checklist, right? Yes. And so I'm like, I need to not make these assumptions that everybody knows what I know. I need to ask them what they know, see what they have, and then see where I need to coach or teach or whatever. And so that was a real big thing for me. And that's like literally how you systematize any business. When a restaurant or any business starts, it's usually an owner who has a process for doing things and then they have to remove themselves from the day-to-day grind so they can work on the business. So they hire people and then they show them how to do it and they say, you got this and then some shit happens. And they're like, why didn't you think of this? You're like, oh, I never told you that could happen.

44:22And then you're like, well, I'm just going to like, write down like my process on how I would do this. And we're going to document that. And we're going to think about, you know, if this then that scenario is, but right now you just start with something, right? And then as the cuckoo hits the fan, you're like, oh, add that to the list. Oh, and eventually, less of it hits the fan. And so because you're like, oh, I should train people on these scenarios and what happens. And they get their own experience, you know, walking in your shoes and eventually they can, yeah, their shoes get bigger, you know? Like, you know, I don't know, that was good analogy. But, you know, it's not that good. Remember, this guy said he goes, he's going to have a business, you hire someone, you teach him to do it, you know how to do it, you pay him less, and then this is profit. But that's the whole system. Yeah, but that process of creating process never ends as a company of scales. As new roles are being developed, you go into that role with your experience. But eventually, if you want to ascend beyond that role, you need to systematize what you're doing to create room for the next person

45:23to come in. And then that happens again, and again, and again. So like, anyway, should we move into lanes? We've been talking for almost 40 minutes now. Oh gosh. Oh, 43 minutes, I mean, we're even going. But I'm loving the conversation. So at what point are you guys like, you know, when do you have this idea like to do the next thing? So it actually came out of the real estate crash, honestly. 2008, 2009? Yeah, 2009, that was a dark time. Like I'm not gonna lie, it was rough because you didn't know, you know, was something to file for bankruptcy? Was, you know, were they going to pay rent this month? It was really tough. Nobody was buying our properties that we had built. It was a very difficult time. And, you know, I've a very young family. Two little girls and a little boy that was actually born in 2010. So like, my wife's pregnant in 2009, while this is all going on, it's a fantastic time. But, so I went back to the tenant side because it was a steady paycheck and that was great.

46:25And then I really wanted to see the challenge at lanes. That was very good too. Garrett being the consulant entrepreneur that he is is like, we gotta get back to developing how to get back to doing this. And I honestly was, I still had kind of a little kind of shell shock from, right? You know, I'm still traumatized from that. And I just knew all the ways it could go wrong. And so I said, you know, if we could build for ourselves, that would be really cool. Like, what if we were the tenant? Like, if we're the tenant, then the tenant can't screw us over. Right? Like, if we're the landlord and we're the tenant, then, you know, we don't have to worry about the tenant through. You're diversifying your portfolio. So now, if the market gets crap, and you're making all of your money on new deals, then at least you have the cash flow from the food, the business. Right. Exactly. And the thing when the crash happened is, you know, tenants were just walking leases, right?

47:26And you're like, we're not going to walk our own lease. And we're going to find a way to make it work, right? So, you know, we looked at, we looked at a lot of things during those years. We looked at, you know, franchising, you know, different business, Sonic, I think was one we looked at. Some different companies like, how do we, you know, how do we use our real estate expertise, you know, to grow a business, right? We know we can do it. And then it, and then, I don't think it ever really dawned on us that we could, that we could be the franchise's or, right? And then the opportunity, that is the exponential, because you don't have to be the one. Right. Yeah. Exactly. And so, so then it was, okay, there's a chance to acquire lanes. Okay. And, you know, initially looking at it, I think we were saying, well, we could get lanes and we could grow it, right? We could build buildings, we could expand it and do all that kind of stuff more from a corporate standpoint. And then we realized, wait a minute, we can grow 20 times faster if we franchise this. So it was, it was kind of, it was kind of an evolution as we went through.

48:27Was this a realization before you owned it or after you owned it? Some of it, well, the realization of being, being our own tenant, that was before. Once we got on board, I don't, I think we first started. I think we were just so trying to keep our heads above water and running the three restaurants that we had. Which is where you should, like you, yeah, like I think that's where people get in trouble. Right, they have that mindset that you guys have. They're like, oh, like you can get rich off of franchise. Like let's just buy this thing and just scale the crap out of it and get that mailbox money. But what they don't realize is that, oh, shit, running restaurants are hard. Like I gotta actually be present and figure things out and dial it in and make sure I actually have a machine that, you know, and then put the wheels on it or the legs on it so it can't, like there's so much that goes into it. That getting it to the point where you can franchise can take five or 10 years. Yeah, you know, and you guys about what? Four years, yeah.

49:28From one location to two. No, so there was the original three in college station. Yeah. That we didn't actually buy those initially. We just bought the rights too. So Lane's on its own got three locations. You purchased the business. The original. No, the original three locations were still owned by the founder. Got it. And basically it was like, hey, we're gonna draw, you know, 50 mile, whatever, protect every ring around your three restaurants, like, and then we won't develop anything inside there, but give us the rights. You know, we bought the entire business. So like we have the rights to grow lanes everywhere in the universe. We won't mess with your locations. Right. He became a de facto franchisee of ours, because we were the corporate owners, but, you know, Is he under the same stipulation as other franchisees where like if you changed the brand, he has to then also keep up with it? Well, we've since bought him out now. Okay. So we own those now. But originally. Originally, yes. So then we did the three locations in Dallas. Got it. So that's six total. That's six total, yeah. But we were only running three.

50:29Okay. We weren't running the ones in call station. The original founder still running those. And it was, you know, it's, I fell victim to the same problem that a lot of people have. They're like, well, I'm a great operator. I'm not a runner restaurant. Real estate can't be hard. I mean, heck, Eric does it. It should be really easy, right? So I just do a bunch of real estate. They'll grow my business and they get themselves in trouble. Right. We had the opposite of that. We're like, we're real estate. We know real estate. Restaurant can't be hard, right? Like we just got a higher, good guy to run it. We're fine. Yeah. And as you know, that didn't go like that. Right. They're both really in like, yeah, I mean, you hear it from the other perspective more of like, hey, like the money is an owner in the real estate. I'm a restaurant. I'm just going to buy a real estate. Well, did you plan on being a landlord? And you know, all the regulations and laws and like the challenges that become with being a landlord like, you know, I think the way that you guys did it was right where, you know, you were the developers, you kind of stayed in your lane and you started surrounding yourself with people who did know how to run restaurants. You didn't learn from scratch. You built a team. Right.

51:30And even then it was an uphill battle until probably 2021, 2021, 22, 23, 23, like what do you guys had? Like some mirror come on is like this. It went to some mirror came on. That was a huge, huge game changer for us. How many locations did you have when it's a mirror come on? I want to say we had seven. Seven. And like, he really helped you guys. Like he was the rocket fuel that really, like you guys were the rock, like you were the operations on the real estate side, but he was the operations on the restaurant side that was that fuel that rocket fuel you needed to go double size every year. Yes, some mirror knew the things we didn't even know to ask. Yeah, right. He'd been in the business so long, you know, from a supply chain standpoint from, you know, all these different things that like, we didn't even know to ask the question. You don't know what you don't know. Exactly. Ignorance, ignorant, the word ignorance, I think people are offended by it, but it just means that you don't know. You don't know. And there's, and you will never know it all. I will never know it all. I've interviewed like what episode number is this?

52:321,260 something. And the more I learned, the more I realized it's so complicated. Yes. Like I will never know it all, you know? Anyway, so during, from tonight, when did you open the first lanes that you owned that was in Dallas, what year was that, 2016? Because this January of 2018. January of 2018. I believe I'm going to quote me on that. During this time of acquiring lanes, getting everything like situated so you get the first location open, what was your role before you were doing what you do today, which is getting out there and being the chief development officer, developing. So interesting enough, I really didn't have a role. Yeah. I mean, my role at that point was to run main and main. OK. Because main and main made money. Right. And lanes did get it. So that was kind of floating lanes. So I was, yeah, so I was developing for grocery outlet, Dutch bros, doing the same thing

53:35for them that I'd done for Starbucks and everybody in the past, right? And so that was my main focus for probably the first, you know. So you're paying the bills, you're here. It's out here trying to get the thing going. Yes. Again, back to my original quote, the greatest thing about garantizers to us. Yeah. And you also complement each other. Because the way that he described to you is you're the attention details guy. You're the, you know, the how guy, he's the why guy. Yes. And that is rocket fuel. That is visionary operations. And that is a deadly duel. It is definitely one of the most common themes amongst successful restaurant tours is that they didn't do it alone, that they went into it with partners. And there's a lot of people who say, like, never get a partner. And I don't tend to agree with that. If you want to be the best, you can't be everything. A few people are like freaks of nature and they are really just good at whatever they decided to do. They're socially emotionally intelligent. They have good with numbers. They're like, they're visionary. Those people are like zero, one percent of people.

54:38And even if they have all the skills, they still have to have the desire to do the other things. So I think you guys from day one were set up because of the complementary, the symbiotic relationship that you guys have. It's funny, because you said Garrett talks good about me. I'll give him all the current in the world for everything. And he'll turn around and say, why couldn't it have that Eric? And I'm like, I don't know about you. Well, you couldn't go do it with each other. Yeah, that's the truth. And not only do you guys complement each other with that you're just your hardwiring of why guy, how guy. But also you have the same culture. You're literally brought up the same exact way. You have the same values. They don't go into business with friends and family. Like I think that's the only people I'd want to go into business with. Because at the end of the day, I want to trust those people. They're going to be your family, whether you want them to be your family or not. Oh, yeah. And if you have the same values, and I don't know, like it's a plane with fire. But if it works, it works better than anything else. Yes, I agree. Yeah, sorry, I'm doing all the talking.

55:39You sure you're great. No, I love listening to you guys. So I guess, so you're working at Maine and Maine. There's one thing I'm curious about. And I don't know if this, I'm just curious if you know, I'm, I'm so curious about the world of private equity. Okay. Private equity gets involved with development. Did you ever play with, like, did you work with private equity people? I never worked with private equity. Well, obviously Matt was one of our partners here. He came from the private equity world. So if he's having a head of actual, like, building, right? Matt, no, this is not the big dude. I just, no, that's Justin. He's just a construction head of construction. Who's Matt? Matt is, Matt and my brother have been friends for years and Matt made his money in private equity. And so he was, you know, he invests in lots of businesses, right? And it's a private equity does. And he left the private equity world but he has his own money. And so when the Lane's idea came about,

56:41he was, he was one that put up a lot of the initial money to get the thing going. Right. It seems like private equity in the world of restaurant spaces are relatively new thing in terms of a game to achieve or a win is to build something to only turn it around and sell it. And then cash out and build the next thing because you like building the things. What is your comprehension of that game in that world? So the comprehension that I have of it is just watching tenants that I've worked for become acquired by private equity and then watch what they do with that. What does private equity do with that? Relativity to the world of development. Right. So the company that I was a developer for and watched it happen. Basically what I understand, again, I'm not the expert on this, but they want to grab a brand that's big enough that they know it works but hasn't been able to make that huge leap, right? Like when I got on with Raising Kings,

57:42the 196 restaurants, you know, we probably weren't right for private equity, but when we got right about 300 and man it looked like, you could see it then. I mean, you knew there was no stop in the train, right? That's when I think private equity wants to get in because if you, if you, if private equity comes in and buys you then, you don't have a huge value waste. You got a big value waste but it's not massive. Right. But all the hard, hard work's been done. Right. You've got that system. You've got that just plug in another person, plug in another, you know, we got three real estate managers. Let's get six, right? And we can have twice as many locations in a year per year, right? Right. And so what private equity does is they come in and say, hey, we're gonna buy you or buy part of you. We'll buy 50% of you or whatever it is. And they say, but we're gonna invest, you know, $100 million in your development. Right. So we're, so we're, so even even like raising canes, they still have a finite amount of money to build new buildings every year. They do a new building. They spend $3 million on a new building. I don't want they spend them just throwing that out.

58:42They spend $3 million in a new building. You want to build a hundred a year. It's a lot of money, right? And if you don't have that money, you don't want to go on the debt then you say, well, we're only gonna build 50 a year. Right. So private equity comes in and says, I'll fund a hundred and if you can build a hundred, let's go do it. Yeah, there seems to be these tipping points in the world of restaurants. So zero to one is the obvious tipping point. Right. And then you can get to three with running status quo. But once you get to three, you really gotta start changing the way how you do things with systems and processes. And then the next is like four to like 10 is another one of these hurdles. And then I would say like 11, 10, that ballpark to, you know, 20, 20-ish, you know? But if you wanted to scale it to a hundred, then it's a whole new, that's when you have like the, the, the chiefs. Like, you know, you get the, you get that C suite. And each one of those people comes with a six figure salary and then to your point with all the real estate, and if you're especially if you're first to market and your other people are realizing, oh, they figured something out. Now you, there's like a rush to get there

59:44and you can't do it organically and still have that blue ocean effect. So you need that three million dollar, or that three hundred million dollar investment to continue to scale and own what you've created. Right. But I sometimes wonder, that's how I used to see it is, private equity is just like investing in a good concept. But I wonder now is private equity more about investing in owning the concepts. So very similar to how you and Garrett were like, well, if we can own the property and the business, then we can diversify our profile portfolio. I mean, where am I trying to ask here? Is private equity more interested in real estate or are they more interested in concepts? This episode is in partnership with Giving Kitchen. Restaurants run on tight margins and even tighter teams. Anyone who's been in the business long enough knows, one injury, one diagnosis, and one family emergency can take a great employee out overnight. That's where Giving Kitchen comes in.

1:00:46Giving Kitchen is a national nonprofit that supports food service workers in crisis. They provide emergency financial assistance and connect workers to resources like housing, support, counseling, and physical and mental health appointments, not someday, but when it's actually needed. Since 2013, they've helped more than 35,000 food service workers and awarded over 17 million in support nationwide. This isn't theory, it's cooks, dishwashers, bartenders, and servers being able to keep their apartment, get access to mental health resources or cover bills when recovering from an injury. Operators keep Giving Kitchen bookmarked, not just in case they ever need it, but because they want their staff to know it exists. If you're in the industry, this is an organization you should know about. Learn more, share it with your team, and find a way your restaurant can stand alongside the work at Giving Kitchen.org. This episode is made possible by US Foods. It takes more than great food to run a kitchen these days. With US Foods, more means consistently high quality products,

1:01:46industry leading tools, inflexible deliveries that let you grow your business on your schedule. Whatever your goals, US Foods helps you turn them into reality. As a US Foods customer, you'll gain access to their industry leading Moxie platform, which doesn't just make it easy to place your US Foods order, but it uses AI power technology to help you take more control of your business and increase profitability. You can also explore the latest issues of Food Phenax Magazine from US Foods, and each issue you'll find real world success stories, bold culinary inspiration, and practical profit boosting ideas you can put to work immediately. Visit usfoods.com slash expect more to learn how to become a US Foods customer. Again, that's usfoods.com slash expect more. I think they're marching in concepts. Okay, because I watched, I won't mention the name of the tenant, but watch this tenant, they were bought for $3 billion. Private equity bought them for $3 billion. And five years later,

1:02:47they're trying to sell them for $8 billion, right? Cause they scaled them, they grew them faster. They, you know, they're, you know, they have, I don't know, you know, they've more than doubled in size, right? And a five year period of time, or six year period, five year period of time, right? So they're just, so private equity standpoint, what I think, and again, I'm not the expert. What I think is, you're like, hey, I'm investing $3 billion if I can turn around five years and sell it for $8 billion. I had a $5 billion profit. What's the annual return on that? Looks great. I'll give my investors their return. I take my piece and I move on to the next thing. Yeah. Some private equity guys, they'll, they'll buy, and then they'll take the company public and same things, just different way to cash out. But it, it kind of goes back to, kind of goes back to what we were doing. We're buying a piece of dirt, putting value on it, flipping it, moving to the next one. Right. Right. But instead of, I'm greater, like a bigger scale. Just much bigger scale. I was curious because I know you guys are so close to the world of real estate. And I'm like, is this,

1:03:48so part of the reason why I'm thinking about this lately is because I've noticed that it's getting harder and harder for independent, you know, 10 unit, 20 unit local operators to get the dirt because they're in competition with national brands. And those national brands tend to be in bed with the developers already. So the decision before the dirt's even broke is we know what's going in here because we have a network, a machine of developing these properties. Like you don't have a chance of getting in here. But I think that might be changing at the same time. Well, am I often saying that? Well, no, that's part of it. But I think a bigger part of that is that almost all of these developers that are anchored developers with all the, they've got all the multiple pads out front. They don't sell those pads. They groundleast them, right? And so when you groundleast Chick-fil-A, they're creditous stellar. I mean, they have just phenomenal credit, right? So if you go to sell that to an investor,

1:04:49they're going to pay a higher price for it because it's just like a bond, AAA bond versus a, you know, a junk bond, right? So even if Chick-fil-A says, I'll pay you $200,000 in ground rent. And a mom and pop says, well, I'll pay you $200,000 in ground rent. The developer's going to go, well, if I take mom and pop to the market, you know, I'm not going to get as good of a price. I take Chick-fil-A to the market, I'm going to make a lot more. So Chick-fil-A doesn't have to pay more than mom and pop. They can pay equal. Their credit makes them more valuable to the developer. Because of the draw that they pull people into that space? Not just that, when they go to sell that on the triple that market, right? I'll back up, we'll go back to the Starbucks example. When I built for Starbucks, Starbucks had amazing credit, right? So when I go to sell that, people would say, oh, I'll pay you, I'll give you a five cap for that, right? If it was a mom and pop, because they know Starbucks is going to pay their rent,

1:05:50they know they're not going to go out of business, they're not going to pay their rent. What's a five cap? So this is kind of confusing. It's going to sound funny, because if you look at it from the buyer versus the seller, so if you're the buyer and you want to buy something on a five cap, that means you're going to get a five percent return on your money, right? So if I'm paying $50,000 in rent, you'll pay a million dollars for that $50,000 a year rental screen. You're getting a five percent return on your money, right? It's interesting. Yeah, basically, yeah. Yeah, it's the return you're getting on your investment. So I'll buy a Starbucks and get a five percent return, because I know I'm going to get that return. If I'm on my mom and pop, you're gambling. High risk. Yeah, I may pay an eight, I need an eight percent return on the money, right? So I'm going to pay less. Right. And that's where it's kind of confusing, because the lower they cap rate, so there's the more you're paying. At the core of it, because there's a better opportunity for a Chick-fil-A's, because they, for the from the developer's perspective,

1:06:51it's lower risk. Lower risk. And you know, establish relationship probably too. You probably know that the real estate buyer for Chick-fil-A, you don't have to go through that dance of like hoarding each other. Like, got another opportunity for you. Yep. It's all the things you're saying. It's, they have better credits. So you know they're going to pay their rent. You, you probably have a conformed lease with them. Yeah. Right? You don't want to do work? Why would you do more work? You've done 10 leases with Chick-fil-A. And you, you send your attorney, hey, here's the last lease we did. Oh, sorry. It happens like, we, we conform the leases. The only thing we change is the address of what the rent is. Boom. You're saving money on attorney's cost. You're saving time. Lower risk, lower energy. Yep. You're developing a better relationship. All the reasons at that level, it makes sense. But my concern sometimes, because I'm looking for everyone, like, you know, what's that due to the independent in those markets where they, like, they can't get into these opportunities. It's just that the bar is getting higher and higher.

1:07:52Cost of goods going up. Labor is going up. Opportunities to get into these markets is going up. It's a, it's just like, I'm honestly just trying to figure it all out and learn it. Cause I don't, at this level, I don't really know that. Like, this is like, this is the, the, the, the, the, edge of my knowledge, my scope of knowledge, the kind of stuff that, like, where you play, you know? Yeah, it's definitely more difficult for a mom and pop. And even, even for us, I mean, if I show up, and I'm lanes, and I say, I want to go in your shop instead, and they go, well, Chick-fil-A is interested. Right. Guess what? But you're still a little guy right now. I mean, you only, only got 40 locations with, like, 41. Yeah, excuse me. So it's counting. Yeah, but I, I guess we're in my mind at one point where I was going, I was thinking to myself, like, is, is private equity really in the game of real estate? And to your point, if they play the same game that you play, where they can acquire these brands that know that work, and then they can go in and then put their own brands across different developments.

1:08:53And like, to me, that just seems like an unstoppable machine, like, how are you supposed to go toe-to-toe with that? I don't know if that's the case now. I'm doing it. I don't know if that's the case, though. This is just a thought that, like, I mean, it is, but it's just like anything else that's more nuanced. I mean, if all of you are like, well, you know, okay, let's say, you know, some private equity groups come to them, and they have billions of dollars. And they're like, we just, we got, we got hundreds and hundreds of millions of dollars to just spend on real estate. So we're just going to go by every good corner we can see, we're going to go, you know, talk to Target, talk to Walmart, we're going to tell them we own all the dirt in the world, there's too many variables to make it that simple, because maybe, you know, they can get 20 acres, but they can't buy it to the little lady next door that owns the other five that they need to make a 25 acre development, right? And so they need 25 acres and they can like it 20. Or maybe they can buy all the land in the world,

1:09:54but once they go through all the thing of the target, I don't want to be there, I don't want to be there, does Kroger really want to be there, do they not? And there's a time value to their money. So if it takes them five years to get all that done, they may say, man, we built it, we did it all, but man, we needed to make our money back in three and it took five. So there's, and then interest rates can change, cap rates can change. So there's a lot of variables in there that if you're not in the game and you're not, you don't have the right people, you can get lost really quickly. And I saw that happen before the crash and it still happens today. If you just come with a lot of money and say, oh, I can do this, it's gotta be easy, Eric does it, he's not so smart, we can make this and watch a lot of him get in trouble. They overpay or whatever. We haven't even gotten to what you've done in the past, since like, so you guys purchased lanes 2000 or 2016's when you started doing the dance and it was 2018 when you started building your own units. Yeah, police so yeah. And you're still made in Maine, focusing on keeping,

1:10:56you know, the cash flow alive until this thing got off the ground. When did this thing get off the ground in your opinion? When did it get off the ground? Like when did you get more involved with what you bring to the table as the Chief Development Officer? Probably when we signed our first franchisee. What's in our really, the 2019? And then there was a pandemic, which kind of slowed down. Yeah, pandemic slowed things down. So really for you, it's only been the past four or five years that you've really been kind of in this the way you are today. Right. So I guess take us to like what, I don't know, what has the evolution from your role been over the past four or five years? So well, let me, I'll just say what I do now. That's probably the easiest way to do it. So I'll just take it, say a new franchisee comes in and they say, we want the state of Kansas, right? So the first thing a franchisee don't tell us is,

1:11:57they say, oh, I got a great site. And you're like, oh, really? Well, why is this site great? Well, it's right about my house. A lot of people live there and you're like, okay, no, we don't hold it back up. That's great for you. That's great for you. But then I'll be the best thing for the brand, right? Might be great for you getting home on time. Right. So what we do is we go in and we, before we even talk about a specific site, we go in a market plan, the entire area. And what I mean by that is we go in and we, we map out every big box target Walmart, Home Depot lows. We map out all the grocery anchored centers, Croger, if it's Kansas, it's high V, or you know, or Dillens or whatever, whatever the grocer is in that market, the predominant grocer. We map out all that we map over. The schools are the high schools, the colleges, all these things. And we create these two mile rings that we call trade areas. And we say, like I said way back when I, when I was at Chili's and I always wanted to do and I always did, is I'd say, if I could have any piece of real estate in the world,

1:12:57where would I want to go? Where's ground zero in this? So we'd say this two mile ring, if we could get a restaurant there, it'd be perfect. Population is good, growth is good, traffic counts are good. There's lots of other traffic generators, grocery stores, other fast food people, schools, all those things, right? And so we just start dropping these circles and all these, these, these, these areas. And we, and we call them trade areas. And so we do that whole thing and then we kind of say, all right, well, it looks like you have 20 potential trade areas, 20 potential restaurants you can open. And then after that, then we go back and we drive everyone of those traders with the franchisee, we look at all of them and say, what's the best piece of real estate available today? So first you identify the markets, then you identify what's actually on the market. Right. And what's the, and then we go back and say, okay, this is what we got, we got 20 trade areas, there's only seven pieces of real estate today that we would even consider. Let's go after those. That includes dirt and turnkey operations or pre-existing standing buildings. It could be, it's a great question.

1:13:58It could be both. So we'll do second gen spaces or we'll do ground up. Got it. So in a more mature market, most likely this can be a second gen space, you know? If it's more on the fringe or in an area where there's new development, then it's, it's most likely going to be ground up. So that's step one and two is, I don't know how the markets find the opportunities in those markets and then you go in, what do you, when do you hand this process off? So how far do you take it? Well, we never, actually we never hand the process off. The process is always there. So we're acting more as consultants. To the franchise. To the franchisee. Yeah. So we get them to hire a local broker. Some of those they're doing and real estate broker. Real estate broker, sorry. And if they forget that's like, people will listen to a stock broker. Sorry. But if they have a broker, we'll interview them, make sure they know what they're doing. If they don't, we'll try to probably help them find somebody. Yeah. But we approve their broker. And then, because they have the, you know, the local, the local knowledge. Right. And then we tour with the broker. We teach them what we want. We teach the franchisee. So the franchisee is, it's their job,

1:15:00but we're consulting them every step of the way. Right. You're bringing in the specialist perspective. Right. But in terms of you in your role of chief development officer, eventually you hand that off to Justin. If there's, if you're breaking ground, they're building a new location. Like you're not there overseeing the construction. No, so, so I've got, I've got a couple of guys that work for me in the real estate department. So I kind of break up my role. I'm over real estate and then construction. Okay. Or development. I'm going to call it, but I guess we'll say real estate construction. Are you working at GC like, like contracting with the construction or no? No. So the way, so, so the handoff works like this. So Cordell, I'll use Cordell's example because he's, he's my director of real estate. So, say Cordell tours with the franchisee, they identify a second gen building that's available and they identify that we want to go into and they identify a piece of dirt that they can buy or ground lease. So Cordell will help the franchisee get an L.O.I. out to the landlord help negotiate that.

1:16:02Let every 10, let every, sorry, let every 10. Let them help them negotiate that. And then once it goes to lease, the franchisee is negotiating the lease, but they come to us and say, hey man, this lease says XYZ, is that normal? Is that not normal? And then Cordell will go, hey, yeah, you should push back on this, push back on that. Once that gets done, then we hand it over to Justin in the construction department. And that's where we start the due diligence phase of doing the design of the building. If it's a, if it's a ground up prototype, we kind of know what it's going to look like. If it's a second gen, then we've got to bring in an architect which is hired by the franchisee, but again, Justin's consulting. So under the scopes of what the brand is, what like Natalie does of like, we have to make sure we design to these brand specs. Right, exactly. So we get, we get a Matterport done, which is basically a 3D rendering of the existing building. And then Justin says, okay, he says down with the design team and says, okay, this is what the exterior is going to look like.

1:17:03He says down with the architect to say, this is how the kitchen's going to line up because our kitchen needs to be exact. It needs to be the same all the time, you know, if possible. So there's a kitchen fit in that building. And then what's the exterior going to look like? And then gets with Natalie's team and marketing decide what the interior is going to look like. They put all those plans together. Franchisee is hiring the architect to draw it, but we're telling the architect, this is approved. You can do this, this look, this brick, this color, whatever. And then we then they go to the city and get a permit, a building permit to do the construction. Then the Franchisee goes to hire a GC. Justin will vet that GC to make sure that they know what they're doing. And then when the Franchisee goes to sign a GC contract, Justin will be involved. He'll review that contract with them and say, hey, you could probably say some money here. You could do this, make this change, value engineer something. So we're really step by step with them all into the process. The Franchisee hired the GC, right? They're ultimately responsible for it,

1:18:04but Justin and his team, they'll go visit the site. They'll make sure that GC is doing it correctly. When the equipment installation comes, they make sure that it's being installed correctly all the way up. And then the graphics come in and get installed and then we open the restaurant. Cut it. So right now the Franchise, I guess the model, like you're providing the specialist and the guidance and the standards, but you're not actually going through and developing and building the buildings. All that's being contracted out through the Franchisee with your guidance. Right, with our guide. Is there a vision, a future where you vertically integrate a construction company? We, that was kind of initially one of our thoughts as we, like, main and main could be the developer for the Franchisee if they wanted it, right? Like, that would make sense. But it just never materialized that way. And then it, you know, I would do my absolute best if I was a main and main. I would do everything in the world to try to save them money and that kind of thing. But if something does go wrong, it's very easier for Franchisee to say,

1:19:05hey, you're, you're double-dip in this that you, you kind of plan for the worst case scenario. I don't think that would happen. But we've got to the point where like, hey, we don't want to develop for our Franchisee's. We want to be consultants to not actually be in a contract with them on that. So vertical integration makes more sense, maybe in the corporate setting when there isn't a us and them situation. Right, exactly. Yeah. And it can be done. Obviously, me and Chick-fil-A does it, but it's, you know, McDonald's does it, but it's, it's, it's, it's a very different. Chick-fil-A's corporate, or they're Franchisee, or they are Franchisee. They are Franchisee, but the corporate always buys the building, does the real estate. And then they kind of lease it, I've as I understand, they kind of lease it back to the Franchisee. So it's, so the Franchisee never owns the property. No. But like McDonald's, same thing, same thing. McDonald's owns it and they lease it back to the Franchisee. Right, but what's interesting, which I actually like this about lanes is that you give the Franchisee another opportunity to build wealth by owning the property. Right. That's cool.

1:20:05Why is that a better path? What are the benefits to that approach? Is somebody who's well-versed in the world of real estate development, like you're not, you guys know what you're doing, why would you choose that path? It's a good question. I think ultimately what we finally decided was everything has that opportunity cost, right? And if I'm trying to, I mean, if I would have to have a very large staff that made a main to do that, right? If I hire a bunch of people to manage UCs to do construction draws to do all these things, right? Because we used to have much bigger staff made a main that we do now, because we were doing a lot more deals. And then my time has pulled away from what we're doing at lanes, right? So, I mean, it's an opportunity to cause. I only have so many hours in a day and to trade off, I'm spending 50% I'm trying to be a developer and 50% trying to grow lanes that I'm really not giving lanes, you know, as much as I could. And so our vision, what Garrett and I

1:21:06and in the part of what we decided was like, if we just focus on growing lanes and don't focus on an ancillary business trying to be tied in, we're gonna grow lanes a lot faster and ultimately be more successful. Right, and in the future, is there an opportunity to go back and combine the business models of main to main lanes where you do what you were doing, where you find the dirt you build and then you find franchisees to take over and they become your tenant. And also your franchisee? There's always that possibility, but that's not the plan. It's on the table, all right? It's honestly, we don't think about it anymore. Right now, you're just trying to focus on executing the franchise. Yeah. And honestly, I mean, we don't plan on ever doing that in the future. Like we just kind of decided we're not gonna do that or just gonna focus on lanes and do that. So one thing that came up in my conversation with Gary when I like really might, in my ears, perked up with a can I talk to Eric? Because it sounds like I'm really interested in what, is like the things that you gotta consider when selecting a site that is like next generation

1:22:08or next level like experience teaches you of like, when I'm rolling up on this place, like how much time from when the sign, the actual location is visible to how much time would they call it degress or ingress? Like, ingress or egress? Yeah, ingress, you're going out? Yeah, like all that kind of stuff. Like I guess what I wanna know, you spent a whole career talking about or learning about how to find optimal real estate. So like what is like your internal checklist of what is the perfect location in terms of it? And like this is worth investing in for like, here's a list of all the things you wanna look for. Like what is that? Is that something you can even like produce for me on the spot? I mean, it's a million, it's a million different factors. So like if I could have the perfect site, right? I would be, I would wanna be right on the hard corner with full access at a traffic light off both side streets. I'd want, you know, a huge shopping center behind me

1:23:11with a massive grocery like an HUB or a croaker or something that's producing all this kind of traffic. I would want it to be on the going home side of the road because it's a lot easier for mom or dad to pull in and grab chicken on the way home than it is, just like Starbucks wants to be at the going work. So the work side, versus the going home side, right? I don't wanna be on the going home side. I would want the biggest signage in the world. I'd want the tallest pile out on the world so you can see us from far away as possible. And then I would want tons of community things around their schools and all that kind of stuff so that we could close to an exit. Yeah, if you can see from the highway. Yeah, you can see from the highway, yeah. You'd want all those things. And then plus, I'd want it to be extremely cheap. So that's from what the dirt would be really, really inexpensive. So what about like when you're standing on the dirt? So now this is like leading up to the dirt, you're not on the dirt yet, but when you're standing on the dirt, what are the variables that people tend to overlook in terms of a good location? For example, was it formerly a laundry mat? Oh, yeah, that's, yeah,

1:24:12formerly a laundry mat, formerly a gas station. I mean, all this stuff can be dealt with, it's just a hassle. But what it all boils down to is you've got to take all the variables and then kind of run a math equation on it. So we had a franchise that he looked at this site and it was a second-gen building and it was like $300,000 in rent. And the franchise is just like, that's just too much rent. You can't pay that much rent. And I said, what if you did $3.5 million in sales there? Because we can't do $3.5 million sales. We don't do that much in sales, or AUV. Can't do that, right? We had that when I first went to California with raising canes and the dirt was obviously expensive, the labor was expensive, all the stuff. And they're looking at a committee like, man, the sales number we got to make to achieve our performance numbers is so high.

1:25:12And I'm like, okay, well, look at California. They don't have, they don't have as many restaurants per capita as they do in Texas. Texas they've got a restaurant. And every corner of California is about to restrict where you can build a restaurant. Do you spend so much time in Texas? Do you live in Texas? I'm like, no. If Texas is just like next level when it comes to the amount of concepts, the willingness, because it's such a congested market, I feel like there's a lot of creativity too. There's a lot of different business models. I don't know, I think it's just a really hot market. I think also a lot of brands come here because they can make it in Texas. It's like a market that can prove a concept. So I think there's just a lot of, I gotta just keep coming back to Texas because also if I'm living in a camper, which I am, it's better to be here in December, January, February, March than it is in New Hampshire in a camper. So it's like plenty of opportunities, whether it's good, let's go to Texas and learn. But this is a crazy market. Yeah, but that's the best thing is like, if in Texas there's, I can numbers up again,

1:26:12but one restaurant per 50,000 people, and in California, there's one restaurant per 300,000 people. You've got a lot bigger pool, right? So those are all things you gotta take into consideration. Is the site too expensive? I mean, people say that, is that too expensive? My first answer is, I don't know. How much in sales do you think you can do there? Oh, well, this is gonna be the greatest site in the world. We're gonna do double our normal AUV. Okay, is it too expensive? And they say, well, no, I guess no, I'd make money at that, yeah. But man, it's expensive. Yeah. Okay, the flip side of that is, I get French easy to bring me deals all the time that are cheap. Like, oh, it's so inexpensive, I can do it. And I was like, what do you think your sales are gonna be there? Yeah. And they said, well, the average, I go, ah, is that an average site? Yeah. And then they got to break it down. Oh, wait, this is not an average site. One of the things that threw me, when I first got in the franchise site, because I've done mostly corporate development, most of my career. And I went to Samir for this question. I said, you know, because I'd see,

1:27:13not to rag on, you know, chicken express or some of the other guys, but like, I saw this chicken express that opened. And it was a horrible location. I mean, it was absolutely terrible. And I know why they thought it was good, because it was off the highway. And the highway has 110,000 cars a day. They went down it and some broker, some real estate broker told the franchise, they added 110,000 cars. You should be right there, but I can see you. Well, the problem is, is everyone sees you, going 70, but they have to exit after they see you. Yeah. Everybody's exiting and coming all the way back around your fast food. Yeah, this literally happens to me today with a gas station. I saw like a sign for a QT. And I was like, oh, I got any gas. Like, and I saw it up in the horizon, and then I saw an exit. And I was like, it must be the next one. Yeah. And then by the time I'm passing the sign, I'm like, where is the exit? I was like, oh shit, it was a half mile back there. I missed it. I'll just get the next gas station. Right. So like another example of, and that's death for fast food, because fast food's a very impulse thing. And I asked Samir, I said, why in the world would they let them do that? And he said, because a lot of franchisees or just, or franchisee zores say,

1:28:15well, do your money to the franchisee. Those are the franchisees. Your money, if you want to do it, go ahead. Who am I? And that's where we get back to protect the brand, protect the franchisee. That's what we say, no all the time. Yeah. The franchisee brings me to the site. Says, man, this is really inexpensive. It's this old crusty sonic, and we can convert it for next to nothing, and the dirt really cheap. And then I'm like, okay, well, why did sonic close? Well, they didn't close, they just relocated. Were they relocated? About a mile down the road where the brand-new Kruger is and where the Chick-fil-A isn't there. They think I was like, okay, we want to be there, right? So on that mindset of like relative the micro market, right? We're talking a lot of the micro right now, and like micro markets are relative to specific markets, but you're scaling nationwide right now. Right. How do you, how do you decide what markets you go to as a franchisee first? Then it's, it's franchisee first. It's, it's have the right partner first. Yeah. And are there markets that you, in terms of macro, like what's happening with opportunity across the country? Like what markets?

1:29:16I mean, I'm assuming you're paying attention to this because you're in that world. What markets get you really excited right now? Oh, man. Again, I'm an internal optimist. I mean, all markets get me excited. I'm obviously very excited about California from a, from a sales standpoint. I think most people don't want to touch California with a 10-foot pole. Well, those are those are pros and cons. So the restaurants there drive massive sales volumes, but from a development side, it's very difficult to develop real estate there. It's very, very difficult. Tons of regulation, tons of restrictions, and all that kind of stuff. It's just some of the development side, then they're the actual restaurant operator regulation side. Right, and that's, that's where it goes about getting the right partner, right? Because you get a partner who operates restaurants in California, they know that, they know the, the, the score, they know how to, how to, how to navigate all that, because they've already done it. They're specialists in the California market. They're specialists in the California market. All right, there's some guy comes to me, and he's from Kansas City and says, man, I want to open an LA. We're going to be like, yeah, no. Yeah, we're going from Texas to California,

1:30:18where it's like, Lucy Goosey to hyper-stricken, like constricted it like that. Exactly. But, yeah, so, you know, I'm very excited about, just about like, we're excited about, I'm excited about Darnier everywhere. The product we have, it translates, no matter where you go, it was funny. It was funny when I was at Erasing Canes, I'm like, well, you know, why don't we, why don't we go more up North? They're like, well, North, people in North don't need, don't need fried chicken. I was like, why? How do they just don't? I go, do they have it? Well, no, they really don't. Well, you think if they tried it, they'd like it, they'd be like, yeah. And I was like, well, okay, let's look at the, let's look at this location. I have across the campus up in Minnesota. It does huge numbers. And they go, yeah, but it's a college campus. That's the only reason it does it. I was like, no, that's not it. Sure enough, we open in these northern climates, if you're like, oh, they don't like fried chicken up there, they absolutely do it. People love it. I'm absolutely the North, and I can testify on behalf of the North.

1:31:21Yes, fried chicken is delicious. Exactly, yeah, that's the great thing about our brand is it translates everywhere. Everybody loves fried chicken. They may not know it yet, but I guarantee you the first time you, one of our chicken fingers, you're gonna absolutely love it. Yeah. No matter where you're from. So, there's states that are more difficult to develop in, but we have the, we're nimble in that, we don't have to have a ground up. We don't, we don't tell the French as the, this is our prototype. No, don't be wrong. I love our prototype building. I think it's fantastic. I think it's great. But we don't tell people, like this is our prototype. You have to build this or you can't open. We're flexible enough, and I'm gonna faith in my construction team and design team that if there's an old Jack in the box that goes out or there's a Carl's Jr or whatever, that we can take that build old Dairy Queen. We can take that and make it look like a Lanes, and you know, you get open quicker when you do a second-gen space, typically it's a lot shorter per minute time

1:32:23and design time, and in a lot of cases it's less expensive to get open during the prototype. Right, because the hood's there, the, the, the, the, the, the, the, the, the, the, the, the, the parking lots right, right, yeah. All that. So, oh, I had a question a lot to load it for you and I'll ask it. Three of. No, you're fine. What about just, I mean, when you first started this, you mentioned earlier that you had like this book with all the highways and you would go in like with your magnifying glass and try to figure out like, where am I gonna put, like, like, where are the markets? There are so many tools today that are available to you to, you know, I can't, like, I should have wrote them down, but like, I guess what are you interested in the tools that are a place where, yeah, I know it's one of them. Right. Along that line, like, are you using any tools like that? Like, what, what do you like? Yeah, we have a software that basically, it's a mapping software. It basically takes all these. It's a mapping software? Yeah, I guess that's what you call it. It basically takes, it basically takes,

1:33:26does what you're describing is it takes a Google Earth, right? And then it takes restaurant trends data because restaurant trends reports like how much sales different restaurants do. And it takes place or eye data. It takes traffic count data and it puts it all into one thing, right? So I can zoom in on Dallas and zoom in on the intersection of Preston and Forest. And I can know exactly what the traffic counts are, go in each direction. I can know what the income is, in that area, I can know what the revenue of all those found in restaurants is. Like, that's all public. Well, you got to pay for it, but. Well, I mean, in terms of the revenue, each restaurant's doing, you know what their total revenue is. We don't know what all the restaurants are, but restaurant trends is an organization that. Are they pulling from POS companies that aggregate that information? And like, I'd be surprised how much of that could be public legally. Well, I've heard a couple of different theories on how they do it. You probably have to ask them, but tax records are one way to look at it. How much sales tax for the pain? Yeah.

1:34:27It's not hard to back into that, right? But what year is that tax record from? Last year? I mean, it gets this pretty accurate. I know Toast has like benchmarking where you can go and look at what different restaurants in that market are doing, but they conceal the actual restaurant. So, but you can see where you benchmark relative to other restaurants in your community, you just don't know which restaurants that those are. Right. I don't know if you can segment it down into like model, like if you're comparing yourself to other 200 C full service casual restaurants. Well, restaurant trends will do. They'll say, they'll say, I mean, say they say fast food company X is doing three million in sales. And then the below that they'll say that's an A plus for their national average. You're like, oh wow, okay, their national average is maybe two million. They're doing three, they're an A plus. And then it may say they're a C for the market. You're like, oh, well, in this market, maybe the average is four million,

1:35:27although nationwide they're two, right? So they'll even give you a grade of how well is it performing relative to other restaurants in that market and place their eyes trying to do something, they're doing something similar to that as well. So the tool you're talking about aggregates from place to AI, from Google Earth, from this resource that gives you revenue. What is that tool that brings all this together called? I mean, it's called a mapping software, but there's several different companies that do it. Site-wise does it. I think Bucston does it. There's a couple of different companies. I mean, what companies do you, I mean, this is in full transparency. I would say I do journalistic work. So the companies that I want to reach out to, to say, hey, I want to get you on the show to learn more about what you do. I discovered those companies through conversations of people with you who know like which ones are good. So I'm leaning into testimonial work to work with and promote certain companies. So with that being disclosed, what companies do you really get behind that you like the leverage to discover the marketplace? I mean, site-wise was who Dutch Rose used

1:36:29when we worked with them. Okay. Site-wise, and that does similar to what a place where I need to, a place where I IQ does is. No, what they would do is they would, they would, a company like site-wise would take the place or AI data and put it into their mapping software. Okay. And also these companies like site-wise is one, Bucksons and others, there's a bunch. I can't think of all of them. B-U-X-D-U-X-D-U-X-D-U-N, yeah. What they like to do, they also create a sales predictor model for you, which is another cost to do. What they'll do is they'll say, hey, you have 300 locations nationwide. We're gonna take all the demographic, psychographic data, we have of those 300 restaurants. We're gonna put that into a formula, and then we're gonna tell you where you should build your next thousand restaurants in America. That's kind of scary. It's very scary. Why is that scary? Well, because I don't believe it.

1:37:30You don't believe it? I mean, I'm sure there's a guy there who hate me for saying that. But I think what's important that we talk about this, before it becomes mainstream. No, because, no, this is gonna get me in trouble, but whatever. Yes, yes, look at that trouble. I've used those predictor models since Chili's, and they're oftentimes accurate. But there's so many variables that go into it, right? Because you could say, you're gonna give this example, and you'll understand this, say that the model says perfect traffic, perfect population, perfect growth. Perfect world. Boom, you're there. That's a perfect world. But say they can, say that it's so damn smart that it actually says it can, and you have a shitty restaurant manager, and you have zero marketing. Right. How does that restaurant prefer? So it does terrible. So you gotta think about that, when they say you have 500 restaurants,

1:38:31and this software company collects all that data, and there's a crappy manager in 50 of those restaurants. Well, it doesn't know that. Let's order in chaos right there. You can't have order without chaos. You can't have chaos without order. Those two things need to exist with each other, and you need to have it both figure. The human side is generally the chaos, because people are chaotic in nature. They're unpredictable. You don't know what's gonna happen. That person might have a bad day, they might get sick, or they might just wanna sabotage whatever reason. You can see them off. Like that's chaos. You can't predict for that. Right. And so where I think those tools are most useful is for executives that are answering to a board. Because they don't fully understand real estate. They don't fully understand why a restaurant was successful or not. So they buy this expensive software, and then if they open 50 restaurants this year and seven of them fail, and the board says, why did those seven fail? They can go, I don't know, the software we bought is very, very successful. Yeah. So it's just a way to minimize risk

1:39:33by from at that level, like you have some data that can support it. And also minimize liability when something goes around the wall. The software said. Right. And it sounds like a really negative all the software. I think it's beneficial, but it's to your point, it's not a silver bullet. You can't say the computer said, if we go here, we're gonna be successful 100%. If you treat it like that, then it's not right. If you treat it as directional like, hey, the real estate guy says, this is good. The software says it's good. You know, the local regional operations man on the ground or guy on the ground says it's good. Okay, then all there was a point in the green, that's probably a good site. Right, but if the computer says it's good and the local guy says it's crap and the real estate guy says it's crap, well maybe we should do that. You look for correlating data. Yes, exactly. We've been going at it for an hour and 36 minutes, man. Oh my gosh. I believe how fast it goes. That's amazing.

1:40:33I really enjoy talking too much. But I want to make sure, is there anything that you think you should bring to the conversation, anything you'd like to discuss before we start to wrap things up? That mean, the only thing that I think is important is kind of the stuff we say and that is recovery days to the potential franchisees. Just in case there's some potential fuel listening, that we really pride ourselves on the protect the brand, protect the franchisee. And you asked me earlier, what does my job have to do with that? And I got to touch on it a little bit, but it's really about protecting the franchisee to make sure they end up selecting a site in a trade area where they have a chance to be successful or they have the best chance to be successful. Increase their odds. Increase their odds, right? And that's what I want to do. That's what my team, that's all we care about doing, right? It's trying to help them to get there. And like I said, I've seen other parts of the franchise, Z world. It doesn't seem like a lot of companies do that. My thing is, look,

1:41:33I look at franchisee in the eye and say, look, you're the expert at running a restaurant. You're the expert at making this work. You're gonna hire the employees. You're gonna be in that kitchen, the greasy floor and all the things that you're gonna do. Let me take some of that burden off of you when it comes to real estate. Let me lend my expertise. Let me lend my team's expertise. Those guys are all smarter than I am, right? I'm top being taller than I am. They're all smarter than me too, right? Like let us help you. So you don't have to worry so much about that that you're in good hands. We're not gonna throw you to the wolves in the real estate where we're gonna help you as much as we can so you can have success restaurants. Because at the end of the day, no matter how many restaurants of franchisee signs up for, if they open one and it doesn't make money, they're not opening another one. Yeah, and that is a very unique son proposition to what Lane's offers is that the expertise in real estate and really looking out for your best interests of where are you investing your money, what assets, what land. Beyond the franchise, model the tangible things

1:42:34that will also help you be successful. Right. Physical location. Where do you think the future of the restaurant industry is going? I think I like to wrap up every conversation before we ask our standard questions at the end of like, I think traditionally the restaurant industry has been a very, you know, siloed head in the ground, trying to survive, reacting to the market, just trying to like in survival mode, reactive mode, how do we move into the future more proactively to create a better industry? What does that look like? Do you have thoughts on that? What would be better about the industry? I do. I don't think many people would agree with my thoughts on it, but it's what I'm thinking. I think that we've gone too far in the changes that the faster world was coming. I think we're gonna see, we're gonna see it's going back to our roots. What I mean by that is, you know, you go into a McDonald's, you go into these places and you order on a kiosk, right? Or you order on your phone and you have it, you know, you go in and it's like, okay, yeah, Eric, you're 50, you're a fogey, you know, that's no,

1:43:35that's the future, the future is, you know, instant gratification, you order on your phone, you don't want to talk to anybody, you got your headphones on, you go in, your head down, all kind of stuff. I think it's gonna be the opposite. I think that we miss the personalness of, we need that, we need it. Whether we know it or not, we need it. And I think when we get little bits of that, I think our is as human beings, we latch onto that, right? Right. And I don't really data it back to some of that than just anecdotal, but it just seems like we're going back to, man, I need a personal experience and eating is such a personal experience for everybody. Everybody eats at some point you ate at home with your family, you know, you go out on dates when you're dating, you go out, whatever, I think we're gonna go back to that more. I think the kiosks, all those things are gonna fall out. I agree. I think there's gonna be place for those things. I think yes. But I think you're gonna probably see the marketplace further fragment in the full service, high touch places

1:44:37are gonna be there, or even like more high touch QSR. Right. You know, I think the hyper-automated concepts will also be there. And then there's this gonna be further fragmentation of the marketplace and those people that prefer, you know, the super, what's the word? Not extroverted, maybe socially awkward. Like, what are the people that are like on the spectrum that they just want to avoid all social interaction at all costs? On the spectrum? Yeah, like they're gonna gravitate towards that. Like, thank God, I don't need to talk to a person today. I could push a button and it shows up in my front door. Those people are always gonna exist. So then there's the people that have a high social appetite that love to be out and engage with people and that there's gonna be a market for those people too. I think you're probably just gonna see a fragmentation of meeting people where they're at. Right? That's good, I say it. But I agree that I don't think we're going hard

1:45:39in that direction of automation because that's not human. No. And Moore's law might be exponential, but humans don't evolve at an exponential rate. Human culture theoretically evolves at an exponential rate, but are hardwiring or biologics? There were social creatures at the end of the day. Exactly. At the end of the day were social creatures. And like to your point, maybe today I don't want to interact with somebody, so I'm gonna go to that place. I don't have to see anybody because man, I had a bad day. And there's other days when you're just like, man, I crave human interaction. And every time I go to lanes, the nice teenage kid behind the counter smiles and me remembers my name and says, how's it going and it makes your day, right? So I think, I mean, that's the space we're gonna be in as lanes and we're gonna be there for that customer. Protect the brand, protect the franchisee, skilled from 24 to 41 locations in one year and you're planning to do double in size again next year. Yeah, we started, we started 25 with 19, we ended the year with 40.

1:46:39Okay. So it was just a little over 100%. And your 2026 goal is, we should have 80 by the end of this year. So at what point are you, or you're gonna have to start to protect yourself from yourself to prioritize relationships and to not make it transactional from like the franchisee perspective. Between us and the franchisee? Yeah, it's a certain point like harder. Yeah, like it might be more relationships than you can manage well, right? And because you're putting so much emphasis on that, like I'm curious, I believe that you wanna protect the franchisee, but what checks and balances are you putting in place to protect you from you? What, Jackson? I mean, right right now, I mean, we, I can't have a thing that they're day, we're actually, we're all talking about it, that it's one of the old adders that people don't care how much you know if they know what you care, right? And so I kinda put that, I said, hey, the franchisee doesn't care how much we know until they feel how much we care. Because we do care tremendously, obviously.

1:47:40Protect the brand, protect the franchisee is there. And, you know, Samir and Garrett make the trips to meet with the franchisees face to face. I've been on a lot of those, I'm planning on going on more of those. The real estate team has, every other week calls the franchisees, the construction team produces, weekly calls the franchisees. Your point is once we get too big, I think what you're asking is, what, you can do that with 30 franchisees, but what happens when you have 100 franchisees, right? And I think that's just more of just finding touch points to be with them more often, finding new ways to do it. I mean, do as many in-person businesses as you can, but instead of doing it every quarter, it's maybe twice a year. Yeah. And get it from, you know, Garrett, me, and Samir being on all those trips to just, you know, maybe it's me and Samir on one trip, maybe it's Garrett, Samir on another trip, and kinda divided and conquering. Yeah. And then really, when it gets to a really big scale, there's 500 franchisees. It's having people like Natalie in marketing,

1:48:43having people like Kyler in operations, like them growing up into the role where they're gonna be doing that. Yeah. Yeah. This has been a lot of fun. We gotta start thinking about wrapping it up because I'm looking at my cameras and we have killed the auxiliary giant battery sacks, and we're now on our camera battery. We're running out of time. So, three interviews one day, man, it been a couple of six hours, and it went by so fast. You're a trooper. I've really enjoyed talking to you all, though. Honestly, my mind's blown. I feel, I got here an hour ago, and an hour ago is 9 a.m., but it's actually 4 p.m., and I don't know how that happened. It's crazy. So, what's one thing about your business, a value, a process, a system that makes you truly unstoppable? That we care so much about the franchisee, and their success. The mission statement is to change the world by inspiring, empowering, and transforming the restaurant industry. And we're gonna do that by transforming one owner at a time. How have you personally transformed? How are you a better man today

1:49:43than the man you were when you got started in this industry? I think by getting to know the franchisees and really having our vision of having a successful worldwide brand become their vision of having a successful brand in their backyard where they live, and then me realizing that that is also my vision. Does that make sense? It's kind of like the vision went to them, and then they brought it back to me, and now I'm living it on an individual basis. Yeah, and I think my more naive version younger self used to be very anti-franchise or corporation, because I thought you're taking money out of communities. But I think that at the same time, you can create opportunity from afar within communities if you select the right people that want to make a difference. And they want to create, like you can use a franchise to be an opportunity within that organization. You have to have both. Yeah, and that's how I see it.

1:50:43I look at our competitors, they're a corporation. They've got a GM, great, probably there's the community that's awesome, area director, whatever, that's great. But if you've got a franchisee, and it comes to mind our franchisee was constant. I mean, they are always constant. I mean, they grow, they're the whole lives of, I mean, to meet them and know up there where Lane's a new brand, you may think Lane's is a mom and pop brand, because man, I met the owner. I met the owner as a dad and as two boys, right? And they're just amazing. And they're in the community nearby, loves them, and they're just the most genuine people, salt of the earth, guys. And if you didn't know Lane's is a big corporation, you'd say, oh, this cute little mom and pop chicken place that popped up, right? And when the franchisee, the owner is in the community living like that, then it's, to me, it's kind of almost the exact same thing. Yeah, awesome. This is the last question before we wrap it up. I'm gonna let the folks at home know how they can connect with you. If you got the news, you'd be leaving this world tomorrow. All the memories of you, you work in your restaurant to be lost with your departure with the exception,

1:51:43three pieces of wisdom. Easy question. You can leave behind for the good of humanity and your legacy, what would those three pieces of wisdom be? Wow, three pieces of wisdom. The first thing would be to love your family. One. Remember to always take care of those around you. Two. And just take full advantage of your opportunity to come to your way. Three. So this last question, as a selfish question, I really try to find my future guests through my current guests. I don't wanna be the one to decide who gets to make an example of, so who do you believe is doing it right? Who's out there in the world of restaurants? Ideally, restaurant owners, restaurant tours, that are doing it right that you think need to be made an example of. Restaurant owners? Yeah.

1:52:45I can't think of one of the top of my head. Do you have to give me a second on that? Or if anybody in the industry adjacent, similar, anybody that comes in mind? I'll tell you one guy that comes in mind from the franchise world, that's been an amazing person in the franchise industry is Greg Smith. Greg Smith, who's Greg? So Greg Smith and I worked at Sally Beauty together. We were both cutting our teeth with the same age, same height. Our boss would call me Greg all the time and call him Eric all the time. This whole area is like our boss didn't tell us apart. And we took very different paths. I jumped to pay less shoes in the exact same time he went to sport clips and sport clips, I think had like 99 locations at the time. Okay. And he stayed there for like 20 something years. It ended up becoming their chief villain officer. He took him from I think that to 2000 or whatever. And it just has a wealth of knowledge in the franchise world. He's now with a different group now. He's kind of did everything he could do at sport clips,

1:53:47but he's a guy I like to go to and ask him about stuff. Where is he based? He's based in Rome, Texas. Where he lives. Awesome. Well, just wrap the road. Always looking for perspective. Greg Smith look out. Coming your way. And how can we connect if we, you're now the first, second, third, fourth interview I've done with Lane's Chicken in a year. And if my listeners went back and listened to the Garrett episode and the Samir episode, they just listened to Alex and Kyler. Kyler, thank you very much. Kyler, your name is cool, man. But I look at a written down on the screen. It's spelled really weird. And Natalie, so we're aware of Lane's what you're doing. We might be interested in franchising. What's the best way to connect? So what should we know if we are interested in franchising? Just go to the website. And there's a franchise and you can click on there. And it'll get you in touch with Matt. And I'll reach out to you. And what if we want to directly connect with you?

1:54:47Is there a way we can connect? LinkedIn or anything like that? Yeah, I'm on LinkedIn. All right. Very easy. My email address is ericatlanes.com. So you can find me there too. Awesome. I cannot do what I do without people like you making time to get vulnerable, to share knowledge, to go further together. There is an questioning Eric, you are unstoppable. Thank you. Cheers. There's another episode wrapped up here at Restaurant Unstoppable. Special thanks to our guests today. Eric Reed for coming on the show. Chief Development Officer for Lane's Chicken Fingers. And just a special thanks to Lane's for being so generous with your team, your staff of specialists. And on that note, a specialist. That's really what restaurant unstoppable is all about. I'm interviewing these restaurant tours. I'm diving deep into their mind. I'm also diving deep into their network and trying to find out who they're going to to become unstoppable. And restaurant unstoppable network. Are you network is all about bringing these people together? So you are listeners. The future leaders of the restaurant industry can surround yourself with the best. Ask the questions you wish I was asking on the show.

1:55:48And just we all go further together. That's the whole idea we would love to have you be a part of it. If you want to join this conversation with Eric Reed, head over to restaurant unstoppable.com slash CWE. That stands for coffee with Eric. You can join this conversation. We'll get you the zoom link also joining us for that conversation is Natalie Hurley of the VP of Marketing for Lane's Chicken Fingers. So if you enjoyed these conversations with Lane's, you'll enjoy this coffee with Eric. Again, we'll be April 20th 11 a.m. Hope you can make it. We'll see you there. And if you want to join this and all future conversations, head over to restaurant unstoppable.com slash live and grow with us, learn with us and be unstoppable with us. We'll see you there.