Capital Access: Ed Doherty Is The 12th Largest Franchisee In The U.S.
Ed Doherty has a passion for his business and growth.
His roots in the restaurant business trace back to his youth when he worked after school and college to help his mother run a deli. "She worked so hard to provide for me and to put me through college. I got my work ethic and my determination from her," he says.
After college, he went to work for Marriott Corp. where he eventually became vice president and general manager of the Big Boy division. He took a big step himself in 1985, leaving that job to become a Roy Rogers franchisee, buying 19 Connecticut restaurants for $1 million. He turned the losing restaurants around in five years and grew the company to 28 stores.
Doherty and other Roy Rogers franchisees had a rude awakening in 1990 when Hardee's bought the concept from Marriott, he says. "The brand was hurt by Hardee's management, and ultimately all the Roy Rogers were closed down. I had hard conversations with the banks and sold out our leaseholds to Boston Market, McDonald's, and Burger King."
He acquired the franchise rights for Applebee's in New Jersey in 1993 and has never looked back. Today he has 61 Applebee's, 30 Panera Breads, two Chevys Fresh Mex, and two concepts he developed with his three children--all of whom work at Doherty Enterprises.
In 2007, he assigned his middle child, Shannon Portell, the task of developing a great Irish pub. That concept, Shannon Rose Irish Pubs, is now doing well in three locations. In April, his youngest daughter, Kerry, led the opening of Spuntino Wine Bar & Italian Tapas, a Clifton, N.J., restaurant with a "cool, New York City meat-packing look" and a list of 42 Italian wines sold by the glass and nine Italian beers. His oldest child, Tim, also holds leadership positions within the company and sits on the board of directors with his mother and sisters.
Doherty's annual revenue is around $340 million. He says they keep things simple and focus on the same goals and objectives each year. "Every year, our goals including reducing management turnover to below 10 percent and reducing team member turnover to less than 50 percent."
How has the most recent economic cycle affected you, your employees, your customers?
I'm a lucky person. I was concerned that there might be a recession, so I went out and refinanced and lowered our interest rates and got a line of credit for future growth in December 2007. When the world fell apart in 2008, we were already set. We've opened multiple new restaurants every year since then and were able to remodel all our restaurants. The economy makes it challenging, but we haven't had to reduce labor or lower prices. Our guests get the same great service in nicer facilities.
Are you experiencing economic growth/recovery in your market?
Yes, there is slow economic growth. The biggest challenge for the restaurant industry today is too many seats for the number of guests. No market is hurting for restaurants. Our overall New York metro area is doing reasonably well.
What did you change or do differently in this economy that you plan to continue doing?
We've continued to grow, remodel, offer salaries, raises and bonuses, and reinvest in training. For a couple of years, we stopped our GM convention, but we reinstituted it last year and took them to Vegas for four days of business and fun.
How do you forecast for your business in this economy?
We always forecast positive sales, and we've always achieved them. We make our budgets as reasonable as possible so our managers make money and get bonuses.
Where do you find capital for expansion?
Since we refinanced in 2007, we have the ability to remodel and build five to eight units a year without going out for funds.
Is capital getting easier to access? Why/why not?
It is for franchisees in tier-one concepts, maybe in tier two. It's more expensive today than four years ago; banks want more these days.
Have you used private equity, local/national banks, other institutions? Why/why not?
I've never used private equity because I like to be the guy who makes the financial decisions. We're too big for local banks, so we use national banks.
What kind of exit strategy do you have in place?
I don't have one in place, but I have a succession plan. In the next year or so, I'm looking forward to having our president become CEO and I'll be chairman. Whether my children have the inclination or ability to run the company, time will tell. They're still young, and they're on our board of directors. My plans will keep the company running whether I'm alive or involved or not.