Home-Based: Keeping It Local in a Texas Military Town

For years, Jeff Orlando has read with fascination the articles in franchise and business magazines about super-successful entrepreneurs. "It's amazing to read about these guys who have 87 Burger Kings and 92 Wendy's units and these unbelievable homes and lifestyles," says the Killeen, Tex., resident. However, he adds, it's also nice to read about "regular guys like me," who choose to define their success in a different way.

Orlando, with one Wingstop and one Schlotzsky's, says he admires the hard work and smarts it took for these operators to become so large, but he doesn't really want 92 units--maybe 12 close to home. "I want to build my success here in this community and I'm spending many hours doing that. I don't really want to spend so much time traveling to units far from home," he says.

His Schlotzsky's is in a shopping center near his home in Killeen, an hour north of Austin. His Wingstop is three doors down in the same shopping center. The two brands (both under the Roark umbrella) work very well together, he says, because Schlotzsky's is a 70 percent daytime business, and Wingstop is a 70 percent evening business. He plans to open another Schlotzsky's co-branded with a Cinnabon (another Roark brand) later this year in Harker Heights, three miles down the road.

Orlando, a self-described "Air Force brat" and youngest of four brothers, believes he has the best of both worlds. His first franchise experience--he and his brother opened a pizza place that lasted about 18 months when they were young--came in 1999 when he opened the 10th store in the then-new Wingstop brand.

"Everybody told me I was crazy," he recalls. "When we were growing up, nobody wanted the wing--everybody wanted the drumstick. We threw the wings away." Obviously, things have changed, he says, pointing to Super Bowl Sunday, the busiest day of the year for his store. "Wings and sports just go together."

Orlando, who worked 10 years as a manager for Blockbuster and other video stores, says he signed on with Wingstop because he loves the simplicity of the concept. "I love the product and the way the company is set up, the way founder Antonio Swad designed the packaging. It's just meticulous, perfect. I also really liked the man behind the vision, and I had a lot of confidence in him. Some people have great concepts but they can't execute them. Wingstop just felt right to me," he says.

He opened a Wingstop in College Station and then one in Austin, following the Wingstop philosophy of locating units in shopping centers with video or grocery stores because people go there several times a week. His mother died unexpectedly the same day he opened the Austin store, and Orlando decided to sell the stores in outlying areas and bring another business home to Killeen. "My stores were 100 miles apart, and I was already tired of the travel. Plus, it's a struggle to find the right employees to leave those businesses with," he says.

In the process of doing his due diligence, Orlando learned that Schlotzsky's had been purchased out of bankruptcy by Bobby Cox, a major Blockbuster franchisee in Texas. "I had a whole new feeling of confidence in Schlotzsky's, the deli with the funny name and the serious sandwich," he says. "Bobby understood the value of the chain, that it had a great product and great name recognition and just needed fixing."

About the same time, he heard the 27-year Schlotzsky's franchisee in his shopping center wanted to retire. He bought that unit and hasn't looked back. "It's worked out great. Our biggest advantage is that both my units are in the same shopping center, so if I have a problem at one, I just walk down the sidewalk and get help. I can work both the stores."

As he works on plans to open the new Schlotzsky's/Cinnabon, Orlando is mindful of the constant challenge of owning and operating restaurants in a military town. "Here in Killeen, we have Fort Hood Army base, which is the world's largest military base. What that means, business-wise, is that we're hurt when soldiers are deployed, because they go in huge numbers, not just a few here or a few there. For example, in the next few weeks, 14,000 troops are due to deploy, and for the first time, there are none coming back for six or seven more months. So it could be a tough summer," he says.

2011 is an important year in Orlando's life for other reasons. He and his wife are hoping to have a baby and adopt a small child. "I'll be honest--my life is out of balance. I need to make time for family. That's just something I don't want to miss out on," he says. "I'm 47 and making decent money, and it's time to spend time building a family. I joke with my wife that, at my age, at least we'll get the best parking spaces at our kids' high school graduation."

Orlando, who says he's learned a lot from his failures as well as his successes, often talks with his mentor, Charles Loflin (see www.mufranchisee.com/article/534/), about the continued challenges of running restaurants in a tight economy. "My best advice is do your homework. Running your own business is getting tougher all the time. Twelve or 15 years ago, if you were a marginal operator, you could make money. These days, with the cost of food, labor, and energy, you have to be a shrewd operator to make it."

Name: Jeff Orlando
Title: Owner
Company: Wingstop & Schlotzsky's franchises
No. of units: 1 Wingstop, 1 Schlotzsky's (opening a Schlotzsky's/Cinnabon in 2011)

Personal

Age: 47
Family: Married, no children; this year we are going to have one and adopt one.
Years in franchising: 12
Years in current position: 12

Key accomplishments:
Starting my own business.

Biggest mistake:
Not starting a family sooner.

Smartest mistake:
When I opened Wingstop 12 years ago everyone thought wings were a fad and said it wouldn't work.

How do you spend a typical day?
First, I drink my coffee and read the paper. I make projections on the day's sales using previous years' sales and trends for each manager. I'm on the phone a lot and stay busy running errands, doing maintenance, etc.

Work week:
My work week is seven days. Sometimes I feel like I'm always thinking about it, and I'm physically in the stores nearly every day, even working shifts with employees and filling in when needed.

Favorite fun activities:
Golf. I need to start playing again.

Exercise/workout:
Three days a week with a trainer.

Favorite tech toys:
None. You know how some people are high-tech and some are low-tech? I'm more like no-tech.

What are you reading?
Mostly newspapers and business magazines. I miss reading books, though. I'm actually thinking about the Nook or the Kindle. It would be so easy not to have to go to the bookstore anymore, and I could always have lots to read with me at all times.

Do you have a favorite quote/advice?
Organize, simplify, delegate, and verify. Best advice you ever got: Go with what you know, don't worry about what anyone else thinks.

Formative influences/events:
My Dad. He is my hero.

How do you balance life and work?
I am actually out of balance--too much about work. That's where family will come in now. We would like to have a baby and adopt one a little older. Since I'm "old," this would give us a head start.

Management

Business philosophy:
Keep moving forward.

Are you in the franchising, real estate, or customer service business? Why?
Customer service. No matter what you sell, you're in the customer service business. I keep a quote from Howard Schultz of Starbucks next to my desk: "We are not in the coffee business serving people, we are in the people business serving coffee."

What gets you out of bed in the morning?
Smell of coffee.

What's your passion in business?
My customers. I love being in the stores and talking to people.

Management method or style:
Hands-on and direct. If I like what you're doing, I'll tell you. If I don't like what you're doing, I'll tell you that too.

Greatest challenge:
Being in a military town, we have to balance the constant deployment of troops to the Middle East. When they leave, it hurts, and when they come back, everyone is busy. The troop levels are always fluctuating with deployments, soldiers in the field, gone for training, etc.

How close are you to operations?
Right in the middle. If I'm not there, I talk to the managers in the stores about every two hours to check on sales.

Have you changed your marketing strategy in response to the economy? How?
We are consistent at advertising constantly, mostly TV but trying new things.

Personality:
Business-like, community-oriented, hard-working.

How do others describe you?
Always moving fast, like George Jefferson. I can do anything in the store faster than all these young guys.

How do you hire and fire?
We interview and make a decision to hire based on previous work history. We have a good core set of employees at each store who have been with me for years. It's always the fringe that keep coming and going.

How do you train and retain?
Training is done at the store level, and we are very tough on newbies. If they can't cut it after a day or two, there is no use wasting any more time. We get them out and get a new one in who wants to work.

How do you deal with problem employees?
I believe everyone deserves a fair shake, a get-out-of-jail-free card, if you will. After that it's just time to go.

Bottom Line

Annual revenue:
$2.05 million

2011 goals:
Build another store of each brand in the market--4 stores, $4 million a year.

Growth meter: How do you measure your growth?
Overlapping last year's sales and profit. Sales should always be up, even if it's just a little. If your sales are down a little but your profit is flat or up, you're still okay.

Vision meter: Where do you want to be in 5 years? 10 years?
A lot of people dream of answering this with "retired," but I'll probably always work. I need to stay busy--it's my character. When I'm 80, I'll probably be a greeter at Wal-Mart, just so I have a reason to get up and get out.

How has the most recent economic cycle affected you, your employees, your customers?
It has definitely changed the ballgame: $3 a gallon for gas, higher prices on almost everything, people out of work. You have to be one of the places that customers really want to go often. Because of the economy, people have quit going to a lot of places, and I don't want mine to be one of them. It all comes down to customer service.

Are you experiencing economic growth/recovery in your market?
We have been very fortunate all these years with the military base being the engine that drives our economy here. We haven't felt the impact of the economy as much as other cities and states.

What did you change or do differently in this economy that you plan to continue doing?
I reevaluated all our contracts and services to save money. Electricity, trash, chemicals, pest control, credit card fees, anything I could think of. I would rather cut anything but service and quality. We switched our electrical contracts, which happen to be at the lowest electricity costs in decades. On just two stores we will save about $14,000 in energy costs this year. That's huge.

How do you forecast for your business in this economy?
By using last year's sales and current trending for the last couple of weeks. It's just guessing, but it's amazing how the spikes in your business occur on the same days from year to year. If you don't look at last year's numbers and try to forecast upcoming days, you could leave your store understaffed, and then you will lose customers from longer waits and poor service. We have enough problems facing us with the economy, you don't want to give your customers any reason to not come back. It's really hard to get customers these days and really easy to lose them. Our biggest challenge coming up is going to be commodity prices. All forecasts point to higher food costs for the next couple of years.

Where do you find capital for expansion?
Primarily self-funded.

Is capital getting easier to access? Why/why not?
Yes, because I'm established in the community and have a good relationship with a local bank.

Have you used private equity, local banks, national banks, other institutions? Why/why not?
In the past, I've mostly used national banks because the relationship between the franchise and lending institutions is sometimes already established. Now I have a good relationship with a local bank.

What kind of exit strategy do you have in place?
Nothing. I just want to build a nice little company that can support me till I'm ready, and that will be appealing enough for someone else to want it when I'm through.

What are you doing to take care of your employees?
We have a family atmosphere. Everyone knows everyone's families and kids. We try to do company things together. It's just a nice environment. It makes you feel good when people say, "This is the best job I've ever had" or "I'm never leaving." You know it's not always true, but it's nice to know, even for a moment, that they feel part of the family.

How are you handling rising employee costs (payroll, healthcare, etc.)?
That's been our biggest hurdle lately. The last minimum wage increase cost about $30,000. Unemployment rates in Texas nearly tripled last year to replenish the dwindling fund. It's going to be really tough in the future. If we keep raising prices to offset every cost increase, we will price ourselves out of the market.

How do you reward/recognize top-performing employees?
We have a bonus structure for managers, assistant managers, and shift leaders. Also, anytime we get a 95 or better on a mystery shop everyone on that shift gets $20.

How is social media affecting your business operations?
Being a low-tech guy, I never thought it would come to this. But recently we did a gift card promo online through the local paper and I was amazed at the response we got. We sold 250 gift cards in three days. We have also been the test market on a texting campaign for discounts and brand awareness. Even though I am "old school," I think the future is in some form of other media. Television has always given us the biggest bang for our buck, but I think that's going to taper off.