For Dev and Sunita Sagar, branching out from their Denny's restaurant into Baja Fresh and Jack in the Box allowed them to cover different segments of the restaurant business in Northern California: 24-hour family dining, fast casual, and QSR. The mixed bag of concepts reduces risk, Dev figures. But by keeping all the businesses under the food-service umbrella, operations are simplified.
"Customer service is customer service," says Sunita. "The food is different, the POS system is different, but the skills are the same. You offer good food and good service in a clean environment. It's all about using the basic skills."
The Sagars' first location, a Denny's in the San Francisco Bay area, was financed out of their own savings, with the help of local, community banks. Sunita had 17 to 18 years of experience in food service by then, and Dev had a successful computer-support business to his credit. "They knew they could trust us, providing the financing," says Dev.
Since then, the Sagars have tapped community banks for their various expansions. It's part of Sunita's philosophy of commitment to the local community. "We believe in getting involved, and that includes community banks," she says. "We have gotten funding from a lot of community banks."
Having a successful first business to build on helps not only financially, but operationally as well. One of the advantages of operating three different concepts, the Sagars have found, is that they can apply good ideas from one franchisor in operating their other businesses. "Each brand, each franchise, has its own systems," says Sunita. "We can choose the best and apply it to them all."
For instance, Baja Fresh has well-established fund-raising and catering methods, Sunita says. The franchisees work with community organizations, schools, sports teams, and the like on fund-raising events. The organizations drive traffic into the restaurants, and then reap 20 percent of the proceeds. It makes sense for the Sagars' Denny's and Jack in the Box locations to do the same.
"That's the kind of community involvement I would like to have with all of my stores," says Sunita. "Getting involved in the community lets them know about us and helps us to increase sales. I believe strongly in getting involved."
There are opportunities for the Sagars to share more than good ideas. Their operation is large enough to warrant a full-time financial staff to deal with all three brand operations. Accounts receivable, accounts payable, human resources, customer service, and other back-office functions are all handled out of their Fremont, Calif., headquarters.
Management training comes out of Fremont as well, another synergy offered by operating several concepts. Cross-training managers ensures that the businesses always have backup in place. It also helps to retain employees by grooming them to move up as opportunities arise. "We do look into promotion or opportunity for growth within the organization first," says Sunita.
It's key, of course, to do your homework on a prospective franchisor, says Dev Sagar. "Understand what their expectations are, how people view the brand, what kind of systems they have, how much they'll support multi-unit growth," he says. "It's like a marriage: You need to understand what a partner will provide you, what compromises you will have to make, and how you can achieve your goals in the environment that you share."
Sunita points out that the analysis can't stop with franchisors. Entrepreneurs must look carefully at themselves, too. "Multi-concept is not for everybody," she says. "You need to look at your personal strengths, at your business's current infrastructure, to see whether you can do it."