This article is based on a video originally recorded on Vetted Biz Youtube Channel
Patrick: Hey, everyone. Today, I got Nick Reynolds here, the owner at Chick fil A franchise in City Creek. And from what I’ve heard, it’s the most… you guys sell the most sandwiches than any other Chick fil A in the state. Is that true?
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Nick: No, not entirely, no. So we have a really busy front counter. As far as the inside the restaurant, we have one of the busier locations. We don’t have a drive-through, though. So, no, we aren’t the busiest location in the state, but we are among…we’re definitely a busy restaurant.
Patrick: I see. Okay. Very cool. How old are you? Let’s start with that.
Nick: I’m 33.
Patrick: Thirty-three. And when did you get into the Chick fil A business?
Nick: So it was just about three years ago. If you would have told me five years ago that I was going to be doing what I am now, I would have said, “What? You’re crazy. Chick-fil-A, what?” But, no, so I started looking at it about four years ago, went through a…it’s pretty lengthy, robust interview process that Chick-fil-A has before they decide who they want to partner with. So that was about an eight-month process, and then I’m in about three years. So yeah, still relatively new.
Patrick: Wow. Yeah, it’s pretty new. So you’ve run it for about four years, you said.
Nick: No, three years. Three years, yep.
Patrick: Three years. Three years of running it. Okay. It’s been four years since you’ve gone through this process.
Nick: Yes, since I started the process.
Patrick: The Chick fil A has been around longer than three years, am I wrong?
Nick: Yeah. So City Creek was built in 2012, so 5-and-a-half years ago. The original owner, he ended up leaving this franchise to go open up a different Chick-fil-A further south. And so when I was going through my interview process, I got a phone call one day from Chick-fil-A corporate, saying, “Hey, there’s a franchise available. It’s yours if you want it,” so to speak. So that’s how it came to pass.
Chick fil A Franchise
Patrick: Okay. Let’s go back just a little bit more. What were you doing before Chick-fil-A?
Nick: So prior to Chick fil A, my wife and I, we’re originally from Utah. But I moved out of state in 2010 to do an MBA program at the University of Illinois. And then after graduating, we moved to Chicago, and I was in marketing and consulting there. So I worked for a big Fortune 500 company. You know, it was a good job, I enjoyed it. But I knew I wanted to run my own business someday. I had done some stuff prior to serving an LDS mission where I was running my own business. And so I always wanted to do that. It was always in the back of my mind. And when I heard about the unique franchise opportunity that Chick-fil-A is, that’s what really piqued my interest. Of course, you know, I consider myself an entrepreneur, but it’s different being an entrepreneur with a franchise versus if you go out and, you know, organically start your own thing. I think there’s definitely pros and cons to both, but it’s been an incredible experience so far.
Patrick: Wow. All right. So were you just working over there in Chicago when you got the phone call, “Hey, it’s Chick-fil-A, it’s here if you want it?”
Nick: Yeah. So I had already started the process. So the way that it works with Chick-fil-A is I had submitted…it’s pretty basic. But I had gone online and submitted an expression of interest, and just said, “Hey, I’d be interested in doing a Chick-fil-A.” They get like 25,000 to 30,000 of those expressions every year. So it was kind of like, yeah, I’m interested, but I never imagined it would go anywhere just because of the competitive nature of it. And so I had gone through about five rounds of interviews. And they said, “You know, we think we want to partner with you and allow you to buy one of our franchises. We just have to wait to see what becomes available.”
So yeah, it was in November of 2014. I got a call one afternoon, and they said, “Hey, City Creek in Salt Lake City is opening up.” And Utah was one of the areas that I was looking at, being from out in this area. And so I flew to Atlanta the next week. They did a final interview. Chick-fil-A always does a final interview with the franchisee and his or her spouse. So they met my wife, we interviewed, and then it was official at that point. Yeah, it was cool. So even though they do this interview process, a lot of people said, well, basically you’re just interviewing for a job. That’s actually not true. So I’m considered a…I have an LLC that I have set up. I’m considered an independent business owner, but in partnership with Chick-fil-A.
Patrick: Oh, in partnership with Chick-fil-A.
Nick: Yeah, and that’s how the franchise model usually works.
Chick fil A Franchise Cost
Patrick: So hypothetically, you could, well, run a bunch of Chick-fil-As, also a bunch of Wendy’s or whatever you really wanted to. Hypothetically, you could.
Nick: Hypothetically, yes. And franchise owners do that. However, Chick-fil-A has a unique stipulation where they say that, hey, if you’re…Part of my operating agreement with them is that I will not operate competing brands. So it’s pretty much just Chick-fil-A. So if I said, “Hey, I want to go buy a Wendy’s franchise,” and Chick-fil-A saw that, then I would be in violation of my agreement and I would either have to get rid of Wendy’s or I’d have to leave Chick-fil-A. We really feel like that’s part of the success of Chick-fil-A as a brand overall is that the franchise owners, they call us owner-operators, we’re really involved in the business.
So, you know, I’m in my restaurant most days. Some days it might be only an hour or two, some days it might be eight hours depending on what’s going on. But I know my leadership team really well, I know most of my team members. And so I’m active, involved, able to see, you know, are we meeting the food safety requirements in the kitchen? Are we serving our guests the right way and so forth? And we really believe, like, we believe that that’s what has allowed Chick-fil-A to be as successful as it has. Whereas other franchise models, there might be 1 owner that owns 5, 10, 15, 20 units. And how often is that owner actually seeing his or her day-to-day operations?
Patrick: There’s just no way they could.
Nick: They’re not. So customer service can fall by the wayside, quality can fall by the wayside. And so this allows the brand to really have a unique focus by having the owners heavily involved. The other stipulation is right now, you can only own up to three Chick-fil-A restaurants under the model. And even that’s rare, most people just have one, and then a few more have two. That’s so that you can maintain that focus on the individual units.
Patrick: I see. So every single Chick fil A franchise we see is owner-operated.
Nick: It is, yeah. There’s a handful out there that are corporate-owned just in between transitions. So let’s say one owner leaves and they need…they’ll have what they call an interim manager go in and run it in the meantime. But no, they’re always focused on getting another owner in there. So yeah, all 25 stores in Utah right now, they’re all independently owned.
Chick fil A Franchise Fee
Patrick: That’s interesting. There’s 25 in Utah. So when you were originally thinking, okay, I gotta get out of this corporate job, I want to start a business, why would you go to Chick-fil-A?
Nick: It’s a great question. So I had no interest in the restaurant business before this, to be honest. Chick-fil-A has a very unique franchise model as far as a low…it’s a low barrier of entry financially. So most franchises, you’re spending half a million, a million, $3 million.
Patrick: I mean, isn’t $1 million to build a McDonald’s, to buy a McDonald’s?
Nick: Yeah, I think it’s a million to buy in, but then you’ve got to build the store, you’ve got to have the…you gotta furnish it.
Patrick: Oh, it’s a million, plus…
Nick: Yeah. I don’t know exactly what McDonald’s is, but with Chick-fil-A, it’s a very low barrier to entry financially. So that piqued my interest. But then also just seeing the values that Chick-fil-A has, closed on Sunday, really involved in the community, very big focus on leadership development as far as developing our team members, whether they’re team members that stay with us for the long term or developing them to be better members of our own community and they go elsewhere. A lot of those aspects really caught my interest, saying, wow, this is a pretty incredible company.
How Much is a Chick fil A Franchise
Patrick: Interesting. So I guess the values of Chick fil A franchise as a business owner, like you said, would be higher quality, better people, and low financial engagement initially.
Nick: And that better people part of it really is the leadership. We have a tremendous focus on leadership development, both for myself personally and also for my directors that I have helped run the restaurant, all the way down to our team members. We really invest a lot of time and energy into the development of our team. But if you think about it, when we’re doing that, that in turn allows people to have a positive experience when they come to Chick-fil-A, and it makes them want to continue to come back. And that is really a big part of what has fueled our growth. You know, over the past several years, but even just the last two or three years we continue to see incredible double-digit growth chain-wide. So yeah, it’s unique. That’s for sure.
Patrick: Wow. Okay. It seems like it’d be a miracle that you would ever get the opportunity to pick up a Chick-fil-A, especially one at City Creek as busy as that one is. Why would someone ever leave the franchise?
Nick: So we have…last numbers I saw, we had about a 97% retention rate among franchise owners. So we have very, very, very few leave once they own franchise. People might die, that’s an unfortunate way that people leave. They might get old enough where they just can’t really do the business anymore. But other than that, it’s extremely rare where you’ll see a franchise owner leave the business. So I mean, it does happen but it’s pretty rare. As far as when City Creek opened up, that individual, he didn’t leave the Chick-fil-A business. He got out of that specific location and got a different location, if that makes sense. So oftentimes they will come available when that happens, when one owner-operator transitions from one restaurant to another. The other way that it happens is just by building new stores. So Chick-fil-A, right now they’re building…I think that there will be about 130 more stores in the United States next year.
Patrick: In Utah?
Nick: We’re going to have one in the Riverton, Bluffdale area, but that’s it. We built a lot over the last few years. So the next few years is going to be a little bit slower on the new growth, and it’s going to be more focused on the existing restaurants and helping us continue to build our base and the brand overall.
Patrick: Wow. So that’s pretty interesting. I want to take this a little more personal real quick. I’m from a small town called Pocatello, Idaho. Everyone in my town loves your product, they love Chick-fil-A.
Nick: You’re wondering when one’s gonna come up there, right?
Chick-fil-A is not focused as much on smaller communities
Patrick: Exactly. How do we get one?
Nick: What’s your population in Pocatello?
Patrick: Oh, man. The sign says about 57,000, but I bet you we’re a little higher than that now.
Nick: So I can tell you, I look at the real estate map for the West every once in a while. There’s nothing that I’ve seen slated as forthcoming in Pocatello. But with a population that size, it’s feasible. Chick-fil-A has said they like to build in areas where there’s at least 80,000 to 100,000 people or more. So we’ve got in Twin Falls, we’ve got a few in Boise. There’s one up in Idaho Falls. So I can’t speak for our real estate group, but I could foresee one someday coming to Pocatello. But it could be 15, 20 years away, or it could be 5 years away.
Patrick: Right. We don’t know that.
Nick: No way of telling. And part of the reason why Chick-fil-A is not focused as much on smaller communities is because we’re still pretty small, relatively speaking, as far as the number of restaurants. So KFC has way more restaurants than we do, even though we surpassed them in sales a long time ago. So our average sales per restaurant is really high. But we only got into Seattle three years ago, in Seattle, Washington. Portland, Oregon was a year later. The entire Northeastern part of the United States is severely under-tapped. California still has significant growth within Chick-fil-A. So when our real estate group looks at building new restaurants, they’ll look at, obviously, as I think any business would, the highest population areas first.
Patrick: Right. More lucrative opportunity.
Nick: It’s to say that it won’t…it’s not going to never come to Pocatello, but it’s probably not a priority right now. No offense to the good people of Pocatello.
Patrick: They are good people. Oh my goodness.
Nick: Yes. Tell them just come down to City Creek when they come to Salt Lake, and we’ll take care of them.
Patrick: They do. They do. Everyone I know has been to your store at least once or twice.
Nick: Awesome.
Factors go into choosing a location for a new restaurant
Patrick: Ok. So can we talk a little more about those priorities? And so when you’re choosing a restaurant, what other factors go into choosing a location for a new restaurant?
Nick: So one thing that they will look at, we talked about just the overall population, right? That’s a big one. They’re not gonna…I don’t think they’re going to build one in, you know, Brigham City any time soon just because it’s small. So the population is a huge one. Another one is they’ll look at proximity to another Chick-fil-A restaurant. So when they build a new store, they’ll say, okay, is this too close to another restaurant? And if that owner isn’t either competitive or doesn’t want a second restaurant, will we build this new restaurant that might only be 2 miles away, is that going to hurt their business? So they’ll take that into consideration because they don’t want to screw another operator, so to speak, by building a new restaurant. So they take that into consideration. Obviously, just the busyness of the cross streets and, you know, the specific location within an area.
Patrick: Interesting. So with a lot of fast-food restaurants, it seems like a lot just kind of popped overnight. Like, we look at the history of McDonald’s or Wendy’s, there’s a lot of locations right now. I mean when they scale, they really just blew across the United States. What is keeping Chick-fil-A from doing that? I mean it seems like they’re popping up where they could. Why the slow growth?
Nick: So the number one reason is we have no debt as a company. Zero. So if you look at a lot of these large franchise chains that have grown like they have, they leverage debt, right? They’ll either go public and they’ll issue stock, or they’ll take out a tremendous amount of debt, which isn’t necessarily a bad thing. That’s how a lot of businesses grow, and that’s what allows a business to grow extremely quickly. But we have a saying in Chick-fil-A that we like to use where we say we climb with care and confidence. We’re confident that we can continue to grow and that we will grow, build hundreds of more restaurants, thousands potentially, but we want to do it carefully. If we went and borrowed a lot of money and went into debt, and I don’t know, if they built 400, 500 a year, are we going to get ahead of our success? Is our supply chain…is our chicken suppliers, is our waffle fries suppliers, are they going to be able to keep up with that?
And you can read case studies out there where restaurants have built too fast and they can’t keep ahead of it. I’m not going to name it here on this video, but there’s a popular chain that has had a lot of food safety concerns as they’ve grown really fast. A lot of outbreaks in the Northeast, parts of California and so forth. And that’s because they got ahead of their supply chain and, in my opinion, they almost built too fast. And so not taking on debt is really the biggest piece, is we’re saying, hey, we want to be a debt-free company. We want to build as we are profitable as a chain, and we continue to increase sales that provides more money and that allows us to build those approximately 125 stores each year. But we don’t want to go nuts and build a lot more than that. Both from the debt standpoint, and also, we want to make sure that we can keep up with the growth.
Patrick: I see. Wow. So that franchise model is pretty interesting.
Nick: Yeah, it is. It’s really unique with Chick-fil-A.
Chick-fil-A have really high-quality food
Patrick: And it seems like you guys are really taken care of. It shows in your food, I mean you have really high-quality food. It’s lovely to eat. Let’s focus a little bit more on…let’s go back to your story just a little bit.
Nick: Yeah, absolutely.
Patrick: You said you’ve never even thought about running a restaurant before you considered Chick-fil-A. What was that journey like? Because I mean you obviously have to know what you’re doing now, you know about food. What was that journey like for you, transitioning from marketing or consulting to, hey, I’m a food guy? What was it like for you and your family?
Nick: It was a crazy journey. So my first day in the restaurant, March 1st, 2015, there’d actually been a Chick-fil-A interim manager that was hired by corporate to just help run it for a couple months in between the ownership change. So February 28th, I went in, met with him for like an hour. He gave me the keys. All right. He’s like, “All right. Good luck, man.” So that first day in the restaurant, it was just like, whoa, what did I get myself into? But that being said, when there’s a new owner, a new franchise owner that doesn’t have Chick-fil-A experience…which I didn’t other than I spent a few days in some restaurants in Chicago meeting with the owners there and kind of working alongside them.
But since I really had no restaurant experience, I actually spent about five weeks at our corporate headquarters down in Atlanta, Georgia, learning the restaurant business.
So we spent two weeks in a simulated kitchen. So we learned all about breading chicken, you know, our pressure cookers and doing fries and making salads and kind of all the operational side of the business. We, of course, looked at, you know, financing and accounting and marketing and all that makes up that. But as far as the restaurant business specifically, it was those two weeks. Then I went and spent another full week out of a real Chick fil A franchise in Sacramento, California with an operator coach is what they call it. So it’s someone that’s currently a franchise owner, and he or she will be a coach. And so I went to spend a week with him to learn the business.
And so, you know, and I certainly wasn’t expert at it and I’m still not. I’m certainly not the fastest in the kitchen, but that’s okay. I’m the franchise owner. I need to know how to do that stuff, but I don’t need to be 100% proficient at it. That’s why we have good people that work back there that can do that. So my team will give me a hard time sometimes because I will go back and help, and they’re like, “Come on, Nick. Work faster.” And I’m like, “Hey guys, this is not my forte to be the fastest person on fries.” But I think it means a lot to the team when they see that, as the owner, we can do it, right. We know how to do it. We understand the business. And if we need to, we can roll up our sleeves and get back there and help.
So it’s been a lot of fun. I’ve really enjoyed being out of corporate America. I’ve really enjoyed not sitting behind a desk and being in meetings for 8 to 12 hours every day. You know, even though I’m partnered with this brand, I have 100% freedom as far as the time I spent in the restaurant, where I go with my family. I want to take a vacation, I don’t have to ask for time off, no vacation days. But on the flip side, you know, and when it’s super busy, we’ve got people out, then I’ll go in and help. So there’s certainly benefits, but there’s also drawbacks to, you know, running your own business.
The number one skill you have to have to run a successful franchise
Patrick: Right. Of course. I guess what is your number one skill you have to have to run a successful franchise like you do?
Nick: The number one skill, that’s a good question. I think, at least for me, I think the number one thing that I have to do, and this is a skill that I’m still developing, is patience with people. So our people are the number one most important part of our organization. And any business will say that, right, it’s the people. Because if you don’t have good employees, good team members as we call them, the business will suffer, and things won’t be able to function or grow like you’d like them to. I often say that the people are the best and the worst part of the business. They’re the best because I really enjoy the people that work for me. I enjoy my leadership. I enjoy meeting with them, strategizing with them, planning out restaurant growth, how we can develop team members’ training.
But at the same time, people don’t like machines or recipes that we can get down perfectly. Machine breaks, you know, get a new one. A part breaks, you get a new part, and it works exactly the same way every day unless something breaks and you fix it. It’s not that way with people, right. With people, again, it’s the most rewarding, but it’s the most challenging as well. So you got to have a lot of patience I think with people, who you’re hiring, who you’re developing, you know. We’ll sometimes have people just up and quit and leave because they found another job. It makes you want to shake them and be like, what were you thinking? But they have the freedom to do that. And so it has taken a lot of patience from the people side of things.
Patrick: Interesting. Patience with people. Very cool. Let’s talk a little bit about…I do want to ask you…I’m still trying to figure out how to phrase this next question. It’s going to be along the lines of what has been your biggest mistake? And I usually ask this, but I feel a little bit uncomfortable asking this sometimes because people that are successful have a hard time, I don’t know, expressing, you know, what their biggest pitfall ever was or their biggest weakness. Is it all right if I ask you that?
Nick: Biggest weakness in the last three years or just in general?
Patrick: Yeah, let’s talk about running a Chick fil A franchise. What’s been the biggest mistake you’ve made?
Nick: I don’t know if I would necessarily label this as a mistake more than maybe, you know, immature in the business or oversight. I guess you could call it a mistake. But we’ve been heavily focused on growing sales over the last, well, almost three years. We’ve grown our sales by about 60% in the last 2-and-a-half years, which has been phenomenal. There’s much to be grateful for. But I think one thing that I’ve learned through that is, just as I was talking about with Chick fil A franchise as a whole, as a chain, even at just our single restaurant, we’ve got to make sure that we don’t get ahead of ourselves on the growth. And we’ve seen that a little bit in 2017 where we continued to just grow, you know, phenomenal numbers from a sales standpoint. But what does that do to our team? And we’ve seen some areas where we’ve had some chinks in our armor, where our leadership may not be as strong as it needs to be. There may be some practices going on that need some attention.
So our primary focus for 2018 is leadership development and training of our team members, really getting them from the level of being good to great. So I think that that’s perhaps one mistake that we’ve made, that I’ve made, is being so focused on the growth, which is a lot of fun. It’s a lot of fun to be growing and having increases in sales. It is exciting. But there’s a lot that needs to be focused on and attention given to other areas. So I would say that for anybody that’s, you know, running their own business or starting their own businesses, is make sure you don’t let the success of the business outpace your ability to keep up with it and to keep those people that I talked about earlier, you know, humming right along, well-trained, well-educated, and also functioning as leaders in the restaurant. Because oftentimes in restaurants, you think about a general manager or someone that manages the business. Well, we have that, but we like to think of our team members or members of our management team really as leaders. And there’s a big difference in my opinion between manager and leader.
Patrick: Wow. I only have two more questions for you.
Nick: You’re good.
The first one is what is the number one thing you've done to increase your sales
Patrick: The first one is what is the number one thing you’ve done to increase your sales in 2017?
Nick: So I think that really the number one thing is the ability to provide a positive experience for our customers. So we focus on four things when it comes to serving our guests. We want to have extremely high-quality tasty food, provide surprisingly fast service, have attentive and courteous employees, and to have a clean restaurant. So if you think about that, if you go into any restaurant, you want the food to taste great. You don’t want it to take forever to come out, especially if you’re going to a quick-serve restaurant, you want it to be fast. Friendly, happy employees always help. You’ve probably got into some places before and the person looks like they definitely don’t want to be there.
They don’t want to be there. And then, a clean restaurant. So we feel like when we can operate on all four of those cylinders, which were not perfect at it, but we feel like we’re pretty good at it, that allows people to continue to come. And we’ve seen about a 45,000 transaction count increase in 2017. So what we do is we look at all of our transactions in 2016 all over this time, what’s the delta between those. And we’ve served, we’ve conducted 45,000 more transactions in 2017 than we did in ’16, which is…And each transaction is about one-and-a-half people.
So if you look at that, that’s 65,000 to 70,000 more people that we’ve served. And so, again, we feel like that when we can provide that extremely fast, high quality, friendly service in a clean restaurant, that that allows people to continue to come back. And you know, we’ve seen increases in sales. Second thing is catering. Catering is growing pretty big for Chick fil A franchise all over, but especially for us downtown here with all the businesses that are around. We’ve seen an enormous spike in our catering business. So that’s helped the sales as well.
Patrick: That’s very cool. Yeah, I remember there was an event they had here at the business college where you catered the whole thing.
Nick: Yeah, it was the box lunches?
Patrick: It was boxed lunches. That was perfect.
Nick: Yeah, I remember that. Yeah, we do those weekly or more.
Patrick: Was there a third one you wanted to mention?
Nick: The third one that’s been a big help for us is we actually have two locations at the Vivint Arena down where the Jazz play. We’ve got one on the main concourse, then one on the upper concourse.
Patrick: So you must run…you run those as well?
Nick: We do. All of the food is prepared out of City Creek. So we were at all the Jazz games, concerts, conventions, and so forth. As long as it’s not on a Sunday, we’ll be down there selling. And that’s been a big part of the business increase as well. So, yeah.
Patrick: Dang, Nick. Well, hey, that’s a really cool story. Really cool just how the business is run, the quality you guys provide, and then your story. The fact that…it blows my mind that you went from like no restaurant experience, eight-month period, and here you are running a really successful Chick-fil-A. That’s way cool.
Nick: It’s been a crazy journey, but it’s been a lot of fun too.
Patrick: That’s really fun. So I just want to ask you one more question. This is kind of unrelated to entrepreneurship. It’s more about, were you around…yeah, you would have been around when the owner of Chick-fil-A came out…I can’t remember exactly what he said, he said something that really made the LGBTQ community freak out. What was that experience like for you?
Nick: So he was doing a personal interview, and someone just asked about his personal beliefs regarding same-sex marriage. And he professed his beliefs, that he believes that it’s between a man and a woman. And of course, you know, what happened, happened with it. So yeah, that’s what that…what was your question specifically?
Patrick: As a franchise owner, how did that affect you?
Nick: So I actually wasn’t…this was back in 2012.
Patrick: Oh, that was that long ago?
Nick: So this was before. But, no. So again, I don’t want to get into the politics of it but we’ve continued to see growth since then, in many ways, exponential growth with that.
Patrick: Really. Wow. Okay. Well, I’m all out of questions, Nick.
Nick: All right.
Patrick: That was a wonderful interview. Thank you very much for your time.
Nick: Hey, it’s my pleasure. Thank you.
Patrick: Appreciate it.
Nick: Thanks.
