Quick and casual

Quick and casual

Entrepreneurs by Jean Gruss | Editor/Lee-Collier

Franchising is a perfect fit for budding entrepreneurs, but getting the financing

is the key to making it work.

McAlister's Deli is in the sweet spot of the restaurant world.

Dubbed "quick casual," it falls somewhere between fast food and full-service restaurants by combining the speed of counter ordering with table service. Industry observers project the segment will grow faster than any other type of restaurant in the next few years.

A Naples couple is capitalizing on that opportunity. Brian and Elora Crabtree recently purchased the franchise rights to open as many as 20 McAlister's Deli restaurants over the next decade in a five-county area that stretches from Port Charlotte east to Lake Okeechobee and south to Marco Island. They recently opened their first McAlister's Deli in Fort Myers near U.S. 41 and Daniels Parkway.

But the Crabtrees' resume doesn't include any prior restaurant experience. A former police detective, Brian, 46, was most recently regional vice president of Valor Security Services in Naples, overseeing security for 15 regional malls. Elora, 34, worked in customer service and training for retailer Anne Taylor.

"If you'd asked me two years ago if I'd be in the restaurant business, I'd laugh at you," Brian Crabtree concedes.

How a couple with no prior restaurant experience got into the business and plan such growth reveals the power of franchising and the concept's popularity with budding entrepreneurs.

Investors first

The Crabtrees always wanted to be entrepreneurs and saved their money for the day they could make it. "We wanted a multi-unit business," Brian Crabtree says. "We wanted something that would grow."

But instead of searching for a franchise first and then figuring out how to finance the business, the Crabtrees reversed the process. They looked for investors before they settled on the franchise.

Although Brian Crabtree won't go into details, he says he met two wealthy investors through his church and prior employment. "I built a relationship with these guys," Crabtree says. "They've been in business many years."

The Crabtrees will need financial resources and expertise that experienced investors bring. Together, the first McAlister's restaurant in Fort Myers represents an $800,000 investment. "You want to make sure that you have the money," he says. That's a key that helps opens doors at franchise companies and McAlister's was no exception.

"We really look for groups that are well-capitalized," says Patrick Walls, the chief development officer for the Ridgeland, Miss.-based company.

Still, the Crabtrees own 52% of the company, E&B Deli LLC. "[The investors are] not interested in running the business," Crabtree says. "Eventually I'll buy them out." He estimates that will take about five years.

In addition to using investors' cash, the company is financing part of the growth with the help of Irwin Franchise Capital. Although Crabtree says the terms are little higher than conventional bank financing, Irwin's lenders specialize in financing restaurants.

Searching for the right franchise

The Crabtrees searched for the right franchise once they had investors lined up. They knew what they wanted: a cash business, a wide territory that would allow lots of new stores and a franchisor that would really back them up with training and assistance.

The search for a cash business led them into the restaurant arena, but finding a franchise that fit the other criteria proved to be tough. Subway and Quizno's would only let them open a few restaurants, for example. "You're not going to get rich off one restaurant," Crabtree says.

Then, thumbing through a franchise-industry magazine one day, Brian Crabtree came across a story about McAlister's Deli. Crabtree says he was struck by the company's support for its franchisees. For example, the company trains managers for two months before they set foot in a restaurant and has devised a complex purchase-order system that can track the efficiency of employees.

McAlister's initial franchise fee is $35,000 ($20,000 for McAlister's Deli employees) and the franchisee pays the company 5% of gross sales. Typically, the investment in a new restaurant ranges from $330,000 to $1.4 million, depending on the cost of the property and construction.

Crabtree says one especially appealing factor was the fact that the menu is designed so that nothing needs to be cooked on gas-fired stoves or fryers. All meats come precooked, for example. As a result, there's no need to equip the kitchen with expensive hoods, exhausts and fire-extinguishing systems.

Speed is a critical edge over the competition, Crabtree says. Customers at McAlister's Deli can order, pay for their meal and get a drink at one of five registers. That is more efficient than many deli-style restaurants, where customers order their food in one area and pay for it in another part of the restaurant. The deli's average time from order to tableside delivery is seven to nine minutes.

The restaurant is open seven days a week, a fact that the Crabtrees were ready to face. "If you want to go into this business, it's a commitment and a lifestyle," he says.

Getting it right

Despite their lack of restaurant experience, Brian Crabtree says running the security operations for 15 regional malls has given him the kind of management experience he needs to run a deli. Meanwhile, Elora has the customer-service touch from her experience in retailing.

Some things were easier than they expected. For example, the Crabtrees had little problem finding good employees. They received more than 200 applications before they even opened the first restaurant in Fort Myers. "To be honest, I didn't expect the quality," he says.

The Crabtrees hired good managers, too. What attracted good managers was the idea that the company will grow to 15 to 20 restaurants and that their careers can advance with the company. "You get them to buy into your dream," Crabtree says. The restaurant has four managers and 40 employees.

What Crabtree found most challenging was realizing that it would take longer to open the first restaurant than he had anticipated. Coordinating dozens of contractors and subcontractors to build out the restaurant took longer because it was such a juggling act to schedule them all. Permitting issues also slowed things down too.

The size of the restaurant was also a bit daunting. At 5,000 square feet, the Fort Myers deli is bigger than the typical 3,340 square feet freestanding McAlister's Deli. But Crabtree took advantage of a large room in the rear of the restaurant by turning it into a training room for his employees and a gathering spot for local functions such as corporate meetings. Frequently, a "stroller brigade" of young mothers will gather there so their children can run around without bothering other patrons. Free Wi-Fi brings in the road warriors too.

When the restaurant was ready to open, the Crabtrees didn't do a big grand opening event. Instead, they opened the restaurant quietly for the first three months earlier this year to work out the kinks. He expects the first restaurant to be profitable within a year on a goal of $1.4 million in revenues.