Purpose Driven: John Hotchkiss, 33, Has Been In Franchising For More Than Two Decades
John Hotchkiss was born in Pontiac, Mich., and grew up in San Antonio, Texas. But he likes to say he "was born" into franchising.
"I started working in our stores when I was 9 years old and really enjoyed it. I learned in high school that it was a good business to own when I came home exhausted from a crazy, busy night at one of our stores and my dad was relaxing and reading a book on the back porch," he recalls. "He had 700-plus employees working hard that night making him money.
"My dad said, 'Doctors and lawyers can make a lot of money, but they have to be there doing the work or they don't get paid. I enjoy knowing I'm making money when I am relaxing at home or even on vacation.' That made sense to me."
A sports fan who especially loves basketball, young Hotchkiss graduated from Baylor University with a double major in information systems and performance improvement technologies and a minor in real estate.
After college, he worked as a systems analyst for Ross Perot's former company, EDS. Later, he worked for a software start-up in Austin for a few years. "I did anything and everything that was needed," he says. "I learned a lot about starting and running a business from the ground up and all the struggles that come with it." That job led him to France, where he helped start the company's European office. He currently serves on the board of directors of that company and still helps when he can.
Among the skills he's brought to franchising is "the stubborn ability to never quit and the ability to always put yourself in the shoes of your employees and customers and look at things from their perspective," he says.
A "people person" who believes his success is tied directly to the success of his colleagues and employees, Hotchkiss and his wife, Laura, also enjoy traveling, visiting wineries, and spending time with their friends.
Name: John Hotchkiss
Company: L&M Restaurant Group
No. of units by brand: 40 Little Caesars, 3 Firehouse Subs
Family: I married Laura in December 2007.
Years in current position: 7
Years in franchising: My family started franchising 25 years ago.
Key accomplishments: I think our company's key accomplishment has been the retention of our managers and office staff. Average tenure here is 13 years. It truly is remarkable how this company retains its employees. If you treat people fairly, acknowledge and show appreciation, rightfully compensate, and are willing to forgive mistakes, the right people will be drawn to that character and want to stay with you. It's sad, but I've learned most people grow up without encouragement or feelings of worth. It can be life changing for someone when they learn they have great value and are appreciated.
Biggest mistake: Right now I'm thinking the store we opened last week, but we'll see.
Smartest mistake: Two years ago we wanted to increase our side items sales (wings, cheese bread, dessert), which was about 4 percent of customers. So we picked a very high target of 12 percent average within a few weeks. We offered our managers trips to Las Vegas, our cashiers iPods, and all crew members Best Buy gift certificates if their store hit its goal. Almost all 40 stores beat the 12 percent. You can do the math--ouch. We kept raising the goal and eventually took away the prizes, but since we share store profits with our managers they easily saw the benefits to them. We now average 23 percent, which is unheard of in our chain.
How do you spend a day typically? Emails, industry reading, meeting with our company directors discussing operations, HR, marketing, finances, and new store development. We're always looking for new locations in our development areas, and I deal with lease negotiations. I also spend time on our other investments and evaluating new opportunities.
Work week: Whatever it takes.
Favorite fun activities: I enjoy riding my motorcycle, boating, spending time at the lake house with friends and family, wakeboarding, visiting wineries in the Texas Hill country, and exploring Europe whenever I can.
Exercise/workout: Running and weights a couple times a week.
Favorite stuff/tech toys: Laptop, Kindle, iPhone
What are you reading? There are about 30 books I am excited to read, but I figure books will be there when I retire, so I'm mostly glued to my Kindle reading the Wall Street Journal every day and numerous magazines to keep up with business and the world. However, I have been reading John Steinbeck's East of Eden for about four years. It's so good I don't want to finish it.
Do you have a favorite quote or advice you give? Success is dangerous. It can allow you to stop innovating or avoid making needed changes because you are content or think you have everything figured out. I think this economy is an example of how great success can turn dangerous.
Best advice you ever got: I think the opening line of the book The Purpose Driven Life is good advice for anyone: "It's not about you." That was horrible news for me. But the idea of a greater purpose than my selfishness eventually was comforting. However, do not think I don't fight it every day.
Formative influences/events: My parents are amazing people and set the tone at our company many years ago. They never count the cost to themselves to helping anyone in need. If someone needs $3,000 for an emergency, they will give them $5,000 and never think anything of it. They also have great perseverance that allowed them to keep fighting through some very hard years of business.
How do you balance life and work? I balance life and work by making it all life to me. I visit Europe often and lived in France for a while and learned a lot about balance... and wine.
Business philosophy: Our employees know that we will always do our part to take care of them in a way that exceeds what one would expect from an employer, and in turn they will do their part to take care of our stores and customers in a way that exceeds our expectations as owners. I always say we are in the people business, not the restaurant business. You can do anything if you have the right people.
Would you say you are in the franchising, real estate, or customer service business? I view customer service as not just providing good service, but also making sure we give our customers a good product at a fair value. When I visit a restaurant and pay what I perceive to be too much for the food but receive "great" service, in my mind, the business wins and I lose. If you look at this current economic situation, those companies rising to the top in their industry are the ones that try to create this win/win situation between themselves and their customers. But to answer your question, this mentality of customer service drives our franchise. This is why we are successful, which then gives us the ability to build our real estate portfolio. We mostly lease but we try to own as many of our locations as possible.
What gets you out of bed in the morning? Recently it's been these crazy raccoons on my roof, but usually it's the idea of building a business that allows us opportunities to positively influence people's lives. Again, it's having a purpose and using that purpose to help others. I think it would be unrealistic to expect one to start a business with that mentality, but hopefully they reach a point and realize they are in a unique situation of influence and then use that influence to do great things for others.
What's your passion in business? There is a quote I like from Blue Like Jazz by Donald Miller: "Sometimes you have to watch somebody love something before you can love it yourself..." I completely identify with that because one of my passions is seeing others passionate about what they're doing. It seems I'm surrounded by those people at our company, and I enjoy giving them what they need to pursue their passions. By so doing, I share in their happiness and fulfillment. I'm often shocked that people can come to work every day and be passionate about making pizza, but seeing that only makes me want to help them be successful and happy. This ultimately benefits me, as an owner, and my company, too.
Greatest challenge: My greatest challenge is finding new locations because we are about maxed out in our development areas. We have to be careful not to cannibalize our existing stores.
How close are you to operations? I grew up in operations and am very involved. At the same time, I'm hardly involved because my managers kick me out of the way if I try to help.
Personality: I'm fun, understanding, and laid-back naturally, but I also know when I need to step it up. I'm a very determined person with high expectations of myself and others.
How do others describe you? Those who work with me would probably say I am fun, very fair, creative, and really care about people. I'm horrible with numbers and details, so thankfully I have amazing people around me who do that. I tend to look at the bigger picture and set a more aggressive path for us.
How do you hire and fire? I don't. We have a great HR guy. We rarely fire and we have almost zero turnover at the management level. We have developed a reputation in our market as an excellent place to work.
How do you train and retain? We have a wonderful orientation and extensive in-store training program that we are die-hards about. Training is the most important thing we do.
Annual revenue: Private.
2009 goals: Our most important item on our agenda is opening the first three stores in our new out-of-Texas market, Louisiana.
Growth meter: How do you measure your growth? Only by profitability. I know it's popular to say how many stores you have, but I could care less. Of course having more stores usually leads to lower overhead, which increases profitability, but if not done right, having more stores reduces profitability.
Vision meter: Where do you want to be in 5 years? 10 years? I would like to maximize our development areas with solid profitable stores. Another great concept also would be ideal.
How is this economic cycle affecting you, your employees, your customers? We are up from last year, so thankfully we aren't seeing a problem.
What are you doing different in this economy? Nothing.
How do you forecast for your business during these trying times? I'm not that smart, but I think our food businesses will be fine.
Where do you find capital for expansion? Local bank.
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