Denny's Queen: Dawn Lafreeda, With 70 Units In 6 States, Is A Brand Champion

"Sometimes interesting things happen in a bad economy," says Dawn Lafreeda, CEO and president of Den-Tex Central Inc. in San Antonio. While the economy continued to hammer the industry, Lafreeda opened 10 Denny's restaurants in 2010 and 14 in 2011. That brings her total to a whopping 70 in six states (Texas, Missouri, Kansas, Illinois, Arkansas, and Oklahoma).

"That's a lot of growth," admits Lafreeda, who began her Denny's career as a 16-year-old in Orange County, Calif., and bought her first restaurant when she was 23. "But we like to do whatever makes sense, and this made sense for us. In 2012, we're going to focus on fine-tuning our operations, getting acclimated to all our new acquisitions. We're not going to be as aggressive as we have the last couple of years." She pauses and laughs. "Every year, I say we're not going to do as many, and I always make a liar of myself."

Lafreeda's ambition was born of a tough childhood, she says. "When I was a kid, I told myself that I was going to be self-employed when I grew up and have a better life and the things I'd never had." When she was 13, her hard-working mom became a manager and then a district manager for Denny's. When Lafreeda was 16, she needed a job to get a car, so she got a job as a hostess at Denny's.

She continued to work nonstop at Denny's, and took on a second job when a company selling software for CPAs and lawyers recruited her. "At that company, I learned a lot about business, payroll, and computers. That job gave me the skills I needed to run my own company," says Lafreeda.

When she was 23, she and a friend bought a Hobo Joe's and Colony Kitchen restaurant (part of a chain Denny's had taken over) in the small mining town of Globe, Ariz., about 90 miles east of Phoenix. They did well there, and 18 months later, when oil went bust in West Texas, Denny's offered to sell them "four dogs in that area."

Lafreeda and her partner went for it, but the California girl experienced culture shock in rural West Texas. She called Denny's corporate every week asking them to also sell her a unit in San Antonio, the nearest big city. "I think they finally did just to get me to stop calling," she says. "I've never been afraid to ask for what I want." Thirteen stores later, she bought out her partner and was on her way to the 70 Denny's she has today.

Looking back, Lafreeda recognizes the people who mentored and helped her along the way: people like Jim Orcutt, who taught her "how to borrow money," and her long-time CPA Robert Duskin and attorney Mike Baucom. She also credits her "magnificent and talented" team with much of her success. "While I may have had the dream and the vision, they are the ones who go the distance and make it happen every single day," she says.

Despite all the talk about women in business bumping up the proverbial glass ceiling, Lafreeda has nothing but praise for Denny's corporate. "I've never felt discriminated against from the Denny's side. They've given me many opportunities. They're an iconic brand with a great product, and that's why I feel so much loyalty to them," she says. "Since I was 13, Denny's has been in my life. They've treated me well and put a roof over my head for most of my life," says Lafreeda, an active participant in brand and restaurant industry activities and committees.

Name: Dawn Lafreeda
Title: President, CEO
Company: Den-Tex Central, Inc.
No. of units: 70 Denny's restaurants


Age: 50
Family: I have a wonderful partner I have been with for the last 17 years. We have 7-year-old twin sons.
Years in franchising: 26
Years in current position: 26

Key accomplishments:
I bought my very first restaurant in 1984 on credit cards and a leap of faith. I turned it into a multi-state, multi-million-dollar enterprise that employs over 2,500 people and has spanned over 25 years--so far.

Biggest mistake:
Years ago, I was fearless and hungry for success. I believed I could turn any restaurant around and make it profitable, even when my gut told me "No." I was young and did not fully understand the demographic factor or the economy in other states outside Texas. I used to think more was better, so sometimes I bought restaurants I should have studied and done more due diligence on.

Smartest mistake:
The mistakes I made buying restaurants I should have passed on taught me how to survive and deal with tough situations. It led me to further my growth as a means of survival, which ultimately led me to become one of the largest female franchisees.

How do you spend a typical day?
When you own a 24-hour, 365-day-a-year business, you are dealing with constant issues day in and day out. Every day is a different adventure and I always have multiple projects going at once--whether it be developing a new site, renegotiating a lease, finding capital, remodeling a or staying up to speed on all the things happening in each of the restaurants. It is never the same and it is never boring. When I am in town, I have a lunch meeting every day with my VPs to discuss all the current issues happening in the restaurants and the company.

Work week:
It varies greatly, depending on whether is involved. Some weeks I am in the field visiting and touring my restaurants to ensure we meet all of Denny's standards and guest expectations. I sit on the Denny's Franchise Association Board, and I spend a fair amount of time traveling and meeting on behalf of the franchise community to ensure we communicate to Denny's with a united voice the issues that surround our business and our brand. When I am in town, I am at the office every day touching all aspects of the business. I do things my team tells me I should not have to worry about, but I believe it is partly why I am successful. I have my hands in everything.

Favorite fun activities:
Spending time with my family and friends. I love traveling, the theater, concerts, and anything related to the ocean. I enjoy the work I do with nonprofit organizations, and I love collecting restaurants.

I walk 2.5 miles daily.

Favorite tech toys:
I love all things tech. If there is a new gadget, I have to have it. I spend a lot of time with my iPad.

What are you reading?
The Success Principles by Jack Canfield--for the fourth time.

Do you have a favorite quote/advice?
"You can be anything you want to be, if only you believe with sufficient conviction and act in accordance with your faith, for whatever the mind can conceive and believe, the mind can achieve." (Napoleon Hill)
"You are the average of the five people you spend the most time with." (Jim Rohn)

Best advice you ever got:
When I bought my first restaurant at 23, I was worried I might fail and 35 people were dependent on me for jobs. My mom said to me, "What is the worst thing that can happen? You start over at 26?" Once she said that, I was instantly okay and the fear went away. To this day, whenever I am faced with a challenge, I still ask myself, "What is the worst thing that can happen?" It always empowers me to move past any obstacles I may be facing.

Formative influences/events:
I grew up very poor and knew I would have to work hard if I wanted to change my life. My mother had a great work ethic and empowered me to believe I could do anything I set my mind to. Every night as a child I would program myself to be successful and lead a good life.

How do you balance life and work?
It is one of my biggest challenges. I am guilty of working too much, but when I do play, I play as hard as I work.


Business philosophy:
I have been asked to open other restaurants or concepts, and while I am often intrigued and have the means to do so, I feel a large part of my success is that I am only in one brand and I know it like the back of my hand. I also believe in the win/win philosophy and always giving back. I reinvest in my business and I always try to do the right thing. I am never afraid to ask for help or take a risk.

Are you in the franchising, or customer service business? Why?
Yes, all of them. I am a franchisee, I own some of the that my restaurants sit on, and I serve over a million guests a month. I am in all of those businesses because they all revolve around owning a Denny's. While you don't have to own your real estate to operate a Denny's, it has been a nice way to diversify and build equity.

What gets you out of bed in the morning?
My family and the thrill of the next new restaurant I am going to open. I enjoy what I do and I love to work, so every day is fun for me.

What's your passion in business?
I love all aspects of the building process. I love finding a site, finding the money, and making it a Denny's. I love when I can put a new Denny's in a neighborhood for people to enjoy.

Management method or style:
I'm very hands-on. I have great leaders in place, but I really have my hands in everything. I believe it helps me keep my finger on the pulse of my company.

Greatest challenge:
Finding and retaining talent in the restaurants and adhering to all of the industry regulations.

How close are you to operations?
Extremely close. While I have a very sharp, top-notch VP of operations we still communicate on a daily basis about all things operational. Without the restaurants, we would not have jobs. She and I have the same philosophy about the restaurants and business and the importance of operations.

Have you changed your marketing strategy in response to the economy? How?
Yes. I have invested additional dollars in local co-ops, which allows me to make tailored marketing decisions more geared for my specific area of the country in addition to the national media message. We are also focusing on things we can do in our local communities and inside the four walls of the restaurant.

Hard-working, organized, loyal, fair, caring, and fun.

How do others describe you?
They would say I am someone they can count on. If I say I am going to do something, I do it.

How do you hire and fire?
I have been very fortunate in that my core team has been with me a very long time, and I have not had to hire or fire anyone in many years. If I did though, I would hire individuals who share the same business philosophy and understand the importance of the guests and the restaurants. They need to have a broad understanding of the 24-hour business and have great people and support skills.

How do you train and retain?
To stay relevant, you have to continually train and develop your staff. We are fortunate that Denny's puts a lot of emphasis on and we are able to tap into all the training programs they offer.

How do you deal with problem employees?
I do my best to coach, train, and develop, but sometimes no matter what you do, someone may not be cut out for the or be a good fit for the company. I have learned over the years that in most cases you cannot change behaviors, and it is best to deal with the problem early on.

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 opportunities. 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, 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 prepayment 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 valuable asset. We constantly train and develop them and offer advancement opportunities. I started as a 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.

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