Franchise Update Magzine, 2012 Issue 1

tunities. A good example would be when the tornadoes hit in Joplin, Missouri. I have two restaurants there, and had we budgeted annually we would have been way off. By budgeting quarterly, we were able to make the appropriate adjustments.

Where do you find capital for expansion? I have had great success with small community banks, and with equipment-based lenders like First Franchise Capital, Direct Capital, and TCF.

Is capital getting easier to access? Why/why not? Yes. Things
have certainly eased up since 2008. I think lenders are being more cautious,
but deals are getting done. Late 2008 and 2009 were very difficult. I think we
were paralyzed somewhat for that period. Some deals are still hard to get done
or require a fair amount of equity contribution. I have been fortunate in that I
have been able to get financing for all the new development I have wanted to
do. I think in part my size and length of time in
business have helped. Denny’s is also aggressive
in helping us with lender relationships and creating
programs for franchisees to take advantage of.

Have you used private equity, local banks, national banks, other institutions? Why/why not? I have never used private equity because I never needed to. I have used all the other methods and have been pleased.

What kind of exit strategy do you have in place? I don’t have a formal exit strategy in place, but with every lease, loan, or deal I do, I try my best to structure it so that I can be less involved, exit, or sell. I pay close attention to lease terms, personal guarantees, lockouts, and prepay-ment penalties. I do my best to structure things so I have options.

What are you doing to take care of your
employees? My employees are my most valu-
able asset. We constantly train and develop them
and offer advancement opportunities. I started as a
food server at 16 and believe with hard work and
dedication you can move up and even own your
own business. We offer great benefits and a friendly work environment. I am
always growing the company and providing advancement opportunities for my
team.

How are you handling rising employee costs (payroll, healthcare, etc.)? That is one of our biggest challenges. To stay competitive, we have to offer good benefits. With the rising cost of healthcare it is very difficult and uncertain right now.

How do you reward/recognize top-performing employees? We have a quarterly bonus program, contests, incentives, and awards. In some cases, key employees have been given partnership opportunities and have become franchisees themselves.

BOTTOM LINE

Annual revenue: $85 million

2012 goals: In 2012, we’re going to focus on fine-tuning operations and getting acclimated to all our new acquisitions. I’d like to fill up a couple of territories here in Texas and I’d like to build a store in Chicago, where I purchased some existing stores from corporate recently. But we’re going to take some time to catch our breath.

Growth meter: How do you measure your growth? I used to measure it in number of restaurants, but now I measure it in terms of geographic area, profitability, and the strength it provides to the overall enterprise.

Vision meter: Where do you want to be in 5 years? 10 years?

I’ll be enjoying all that I have worked for, spending time with my family, having more time to support my community and organizations I am passionate about and, of course, building restaurants.

How has the most recent economic cycle affected you, your employees, your customers? Times are definitely still tough. Costs are way up, employees are struggling to make ends meet, and guests have many dining choices. We all must do the very best job we can and give every guest the best value we can so they return.

Are you experiencing economic growth/ recovery in your market? I believe so in most markets. My company is in 22 different DMAs and each is a little different. While West Texas may be booming because of oil, the Midwest is still struggling. All in all, I am seeing recovery, but it is costing quite a bit to gain and keep guests. We are discounting and offering a lot of value in these tough times, but it has been rewarded in increased guest traffic and loyalty.

What did you change or do differently in this economy that you plan to continue doing? Denny’s has a $2 $4 $6 $8 value strategy that I believe in and feel is working well. It gives everyone who wants to dine out an affordable option. If you have only $2 to spend, you can still get a great meal at Denny’s. We offer a discount program for seniors through AARP and we give everyone a free Build Your Own Grand Slam meal on their birthday. Denny’s has been around for nearly 60 years. We want to have choices and options for our guests in these difficult and changing economic times.

How do you forecast for your business in this economy? It can be difficult. A lot of companies forecast annually, but I forecast quarterly as it lets me stay more in touch with what is going on in each restaurant and community. For instance, I can see if a road is closed or if a competitor opens or closes, if weather is a factor, or how utilities are trending. I feel forecasting quarterly allows me to budget and adjust for those things with more accuracy. I think my team also appreciates it as it can affect their sales and bonus oppor-