Life in the Fast (Casual) Lane

At 30, steering the family business to the next level

Harsh Ghai's northern California-based multi-brand business may be rooted in food and family, but aggressive growth and smart development are the cornerstones of the company's success. Ghai is spearheading the entry of Ghai Management Services, operators of 64 Burger King and Taco Bell restaurants in 4 states, into the fast casual lane. The family-owned company recently opened its first Corner Bakery Cafe in Sacramento as part of an 8-store agreement.

When it comes to the food industry, fast casual is the future, says Ghai, who runs the business with his father Sunny Ghai, who founded the company. "It is the middle ground," he says. "There are amazing brands out there. The Corner Bakerys, Chipotles, and Paneras of the world are coming out and blowing everybody out of the water. It has made competition a lot tougher. It is going to force quick service to elevate itself, and it is going to force casual dining to provide that quick service feel that fast casual does."

At age 30, Ghai may only have five years under his belt as a franchisee, but the hands-on operator is a veteran of the restaurant industry. His father became a Burger King franchisee in 1999, just four years after immigrating with his family to the United States from India. Ghai manned the counter of his father's restaurant before he could drive and worked his way through San Jose State University as a restaurant manager. In 2007, the college graduate honed his skills as a district manager, operating five Burger King restaurants.

These days, Ghai oversees operations of the company, which made its mark by buying and successfully reimaging the Burger King brand and, more recently, constructing and acquiring high-quality Taco Bell sites. The company also owns a portfolio of gas and convenience stores that are co-branded with their restaurants. This "power pumper" segment of the company, operated by a business partner, offers a triple-branded experience that is a "machine of business," he says.

Looking ahead, Ghai is focused on expanding the Taco Bell and Burger King brands and solidifying the company's future in the fast casual business. With fewer than 200 Corner Bakery Cafes nationwide, the brand has plenty of "white space" that Ghai views as growth opportunities. "A lot of people in this business don't understand that growth requires change," he says. "Organizational change is really what has helped us get to the level we are today." Along with his father and mother, Ghai's new wife Gurbir and many extended family members work for Ghai Management Services. The family's strong ties have created a solid foundation to build a business that's in it for the long haul.

"We are not a private equity group or backed by a bunch of investors," says Ghai. "This is our hard-earned money that we are investing into our own business. This is a family business, and it is a large family business at that. We are food people in the food industry."

Name: Harsh Ghai
Title: Owner/operator
Company: Ghai Management Services
No. of units: 56 Burger Kings, 9 Taco Bells, 1 Corner Bakery Café (agreement for 8)
Age: 30
Family: Wife, Gurbir. I got married in December!
Years in franchising: Our family purchased our first franchised restaurant in 1999.
Years in current position: 5

Personal

First job: Age 14. I worked at our family's Burger King restaurant in Milpitas, California, taking orders as a cashier. I had a little bit of management duty, but was way too young for anything serious.

Formative influences/events: My father has inspired me quite a bit. He basically grew from the bottom and started his journey as a restaurant manager in 1997. I watched him struggle and work hard to get what he did. It gave me a lot of a lot of drive to join the family business.

Key accomplishments:
Hitting the 65-restaurant level. Being awarded an amazing Taco Bell restaurant by a lead franchisor. To be connected to a brand like Taco Bell told us we had made it, and it is the same with Corner Bakery. It was a proud moment in our company to be awarded the development agreement for this sought-after brand.

Biggest current challenge:
Being a part of constant growth is definitely challenging because it spreads your people out thin. We are constantly looking to grow talent from within our company. Additionally, part of business is to buy distressed restaurants that are operationally and image challenged and go in and fix them. This can be operationally challenging, but it is what we have built our business on--from the ground up.

Next big goal:
We have a lot of goals. We want to continue to grow in the QSR segment, while establishing ourselves in fast casual, which is where we see the food industry growing in the next 10 to 15 years. This is the reason we are getting into Corner Bakery right now. Finally, we want to acquire and build new restaurants as the economic models for each brand allows us to do that.

First turning point in your career:
We ramped up our growth in 2010. It was a big turning point, because we doubled in size that year. This was challenging from an operational standpoint, because we had to facilitate that growth by pushing people up further. That is when we realized we wanted to grow and grow further. We went from 13 restaurants to 25 restaurants in a matter of 6 months.

Best business decision:
Diversification is at the top of the list. Not being bound to one brand gives us a lot more scope, particularly on the real estate side.

Hardest lesson learned:
I developed three restaurants that never did well, and I ended up closing two of them and selling the third. It was a side venture with another brand, which I did on my own, and I had a bad experience with the franchisor. That failure was a big lesson. I learned that failure was okay and important, and taught me what I needed to be doing differently in the future to ensure success.

Work week:
Essentially, Monday through Sunday. I spend Monday through Friday in my own restaurants. Saturday is our catch-up day, and I am always available on Sundays. It is just something that is part of being in the restaurant business and being a restaurateur--you don't have that luxury of having weekends. Working for yourself allows for more flexibility as well, and we love to travel as a family. We go on at least one major international vacation per year.

Exercise/workout:
Working in the restaurant industry keeps me on my feet. I go to the gym in the evening and I like to run and do a little bit of lifting. I have taken up golf recently. I'm not finding the time to play as I would like, but it is something I want to get better at and spend more time on, later in life.

Best advice you ever got:
"Your guest is never, ever going to have a better experience than the people who work for you." If I like what I do, it should eventually cause the people who work for me to feel the same way. To improve your customers' experience, you constantly have to improve the experience of the people who are working for you. It's a no-brainer, but an eye-opening idea that trickles down from the top and is part of our company mission statement.

What's your passion in business?
Food is my passion. Customer service is my passion. And making people happy is my passion. Food is something that makes the world go round.

How do you balance life and work?
You really have to find ways. The restaurant business is so demanding and can get overwhelming at times. One thing that works in our favor is that our entire family is involved in our business. We have a lot of extended family members who work for us as well. It makes it very easy to trust people. We built the family around our business and our business around our family. We take time to go on vacations together and have Sunday brunch together. We force ourselves to make that time for ourselves.

Guilty pleasure:
Traveling. We love wine and it is easy to love because we live near Napa Valley, and we love the beach. I'm trying to become good at paddleboarding. We love the outdoors. Just getting out and about is a big part of our lives.

Favorite book:
Lord of the Rings. I am also a big fan of The Burger King: Jim McLamore and the Building of an Empire by James W. McLamore.

Favorite movie:
"Star Wars."

Pet peeve:
My wife and I are both big neat freaks and germophobes--cleanliness that translates big in the restaurant business. You will find our restaurants very, very clean.

What did you want to be when you grew up?
A science fiction writer.

Last vacation:
I just got married in December, so my wife and I went on our honeymoon in January. We went to Australia, New Zealand, and stopped off in Bora Bora on the way back home.

Management

Business philosophy:
Our business philosophy is to constantly grow through a healthy combination of good operations and strong development, and to have a succession plan in place to give people growth opportunities.

Management method or style:
Hands-on.

How do others describe you?
I am good coach. I like to facilitate and empower people. I like to make people smarter and give them the knowledge to grow.

How I give my team room to innovate and experiment:
Being part of a large restaurant organization gives us the luxury to innovate and experiment. I am all about innovation and testing things. Each district management team has five to seven restaurants under their belt, and if someone has a good idea I let them roll with it. There have been a lot of ideas that have come from one or two of our restaurants that we have incorporated company-wide.

How close are you to operations?
I don't have an office; my office is my restaurants.

What are the two most important things you rely on from your franchisor?
We really look for trust and guidance on growth and development from our franchisors.

What I need from vendors:
Economies of scale. I look to my vendors to understand what we hope to accomplish and to understand our growth model. We are looking for the highest quality of vendors and the highest quality of services.

Have you changed your marketing strategy in response to the economy? How?
There has been a big shift in the economy over the last five years. We have gone through waves and work closely with our marketing department. On the Corner Bakery side we are going to do a lot of hands-on local marketing. It is very important to shift your marketing strategy and understanding--that shift is your bread and butter. In the QSR business you have to have a healthy balance between premium and value. Value is what is going to drive traffic into your restaurant, but to gain you have to focus on your food.

How is social media affecting your business?
Digital and social networking has been so successful for Taco Bell. They have pioneered this to leverage their business more than any other brand out there, in my personal opinion.

Ho do you hire and fire?
We use a broad approach to hiring. We do a lot of our hiring in restaurants. I'm not currently using an online model for hiring because we believe in face-to-face, in meeting somebody and speaking to them. This is very important on the crew level. I use a recruiting company called PeopleScout to help find above-restaurant management talent, and we don't limit ourselves geographically. We buy 7 to 10 Burger Kings per year. We aren't like a lot of organizations; we don't clean house or start over. We retain and hire everybody the previous organization employed; we give everybody a chance. The ones who don't stick around are the ones who don't embrace change.

How do you train and retain?
Training and retention go hand and hand. The people we hire are looking for growth opportunities. We offer management classes and train people even if there are not positions available. We have a deep bench because turnover is part of our industry.

Fastest way into my doghouse:
Lack of responsiveness. I am looking for people who are engaged and who want to interact. The fastest way into my doghouse is to not embrace change.

Bottom Line

Annual revenue:
$70 million.

2015 goals:
$81 million.

Growth meter: How do you measure your growth?
We review our growth on an annual basis. We consider four issues: 1) how we did with new acquisitions and development; 2) reimaging or the status of our restaurants' image--we want to be more than 50 percent reimaged at any given time as a brand; 3) same-store sales growth; and 4) P&L across the board.

Vision meter: Where do you want to be in 5 years?
100 restaurants, heavily developed in Corner Bakery, acquiring more Taco Bell restaurants, and building and acquiring more Burger King units. 10 years? 150 to 200 restaurants.

Are you experiencing economic growth in your markets? Absolutely. 2014 was a great year economically for our brands. We experienced growth on every level.

How do changes in the economy affect the way you do business?
If the economy is scaling back we get in there ourselves and help our restaurants adjust. If sales are negative that means we need to change economically. When the economy is not doing well we have been able to grow by acquiring real estate and businesses at a lower cost. And at some point food inflation is also a big part of our industry. Beef is a big part of Taco Bell and Burger King, and the rising cost of beef has made it difficult for us to make money year over year. Just as with sales, you have to adjust. We use that to our advantage by growing our scale. The best way to counteract a shrinking economy or lower profitability is to increase our scale. We have leveraged that to our advantage over the last couple of years.

How do you forecast for your business?
We usually rely on our brand to provide sales growth information and use commodity outlooks and economic outlooks from our lenders to give us insight on how the economic environment is going to change.

What are the best sources for capital expansion?
We have a lot of really good lenders on our side. We work closely with GE Capital, Franchise Finance and we also recently started working with City National Bank. We work with a lot of small local banks looking to invest in the restaurant business. We also leverage a lot of government programs as well. The EB-5 Immigrant Investor program allows people from countries like India, China, and Brazil to obtain permanent resident status by creating jobs here. It is a great program where someone lends you money for a 5-year period and you pay them back and create jobs.

Experience with private equity, local banks, national banks, other institutions?
See above. There are a lot of sources of capital out there. It is all of our skin in the game. We don't have a private equity group backing us, it is all of our hard-earned money. If a lender is approving us, they are approving us personally.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)?
We feel that it is a product of economic change. I'm not saying we should go out and raise minimum wage drastically. It is true that California has a cost of living that is higher than the rest of the country and parts of the Bay Area are difficult to do business in, but the consumer has to understand that these are costs that are going to be passed on to them as well. We don't feel that Obamacare may be the best plan for healthcare, but as a company we believe healthcare is something to which everyone is entitled. We are working around it. We evaluate every situation differently and accept that profitability may go down on a certain level and require us to scale up as an organization. There are ways to deal with it, other than to just raise prices.

How do you reward/recognize top-performing employees?
The best way to recognize people is to monetize a reward. We offer bonus programs, based on operations metrics. We give out awards at a ceremony once a year to our top performers. Recognition is a big part of our organization.

What kind of exit strategy do you have in place?
We don't have an exit strategy. We aren't looking to sell our restaurants in the next 5 to 10 years--I am looking to do this long term. All the decisions we make are based on wanting longevity.