Setting the Course: California Operator Grows while Navigating Big Changes

Name: Harsh Ghai
Title: CEO
Company: Ghai Management Services
No. of units: 140 Burger King, 36 Taco Bell, 28 Popeyes Louisiana Kitchen
Age: 39
Family: Wife Gubir, daughters Saanjh and Reyhat
Years in franchising: 14
Years in current position: 2

Harsh Ghai has made good things happen over the past five years. When he was profiled in 2019, he was the largest Burger King franchisee and operated more than 150 restaurants. Since then, Ghai has sold approximately 20 Burger King restaurants in the Midwest and focused his growth primarily in Northern California. He added locations as far north as the California-Oregon border and acquired high-performing stores in San Francisco and Sacramento. In total, he operates 140 Burger King restaurants.

Soon after Popeyes Louisiana Kitchen was acquired by Restaurant Brands International, Ghai purchased most of its restaurants in the Sacramento market as part of a 15-unit deal. It was a full-circle moment for Ghai because his first experience with franchise ownership came with the chain shortly after he graduated college. He recalls that he failed miserably and left the brand in 2012. Now, he's optimistic about the growth opportunities with Popeyes and has 28 locations.

"We love the brand, and there is tremendous demand for chicken concepts," Ghai says. "We are very excited about the growth opportunities."

When he stepped away from Popeyes a dozen years ago, he stepped toward Taco Bell. Ghai has 36 Taco Bell franchises but plans to double his current count over the next three to five years.

"Being represented by three brands is very appealing to us," he says. "It enables us to scale much faster that way. We need to have at least 50 units of each brand for it to make sense for us."

On the personal side, Ghai and his wife Gubir welcomed a second daughter to the family last year. It's a busy time as he balances operating more than 200 restaurants with raising a young family.

"There are a lot of ups and downs," he says. "Owning a business and being my own boss is definitely helpful. It gives me a bit of freedom and flexibility. Having the support from my amazing wife and family helps as well. Our entire extended family lives close by, and that is very beneficial. We are fully invested in our children's lives."

During the past five years, Ghai navigated Covid and other industry challenges. As with most business owners, Ghai was forced to adjust his business practices on the fly.

"Our first reaction was to take care of our people and be sensitive to everyone's needs," he says. "We implemented hazard pay for our employees for the first three months, and we didn't hesitate to shut down dining rooms or install shields between customers and staff to protect them. Every day was a challenge, especially in the first 45 days."

As the country recovered from Covid, the restaurant industry faced a new set of issues that tested its operators. Many restaurants experienced severe staffing shortages after the pandemic, stressing their ability to operate and serve customers. After California recently raised its minimum wage to $20 per hour, owners are seeing new problems. Ghai says it was difficult to find employees last year, but open positions receive two to three times more applicants this year. The question now is how to find a way to pay those employees without hurting the bottom line.

Ghai is committed to tackling these issues head-on by working with local legislators and continuing to grow his business. "We love doing business in California and will keep fighting for what is right to manage the complexities of the business," he says. "We are cautiously optimistic and believe we'll come out stronger on the other side."

PERSONAL

First job: I first started working on weekends when I was 14 at the Burger King my father owned in Benicia, California.

Formative influences/events: My parents. As a second-generation franchisee and first-generation immigrant, I watched my father start from the bottom up to create the American dream. He put everything into growing the family business while my mom worked to help make ends meet. Their work ethic and commitment to education laid the foundation to help us to become successful.

Key accomplishments: Growing our family business portfolio from 20 units to 200-plus units since I graduated college. In 2019, we were recognized as Burger King's Global Franchisee of the Year. In 2023, we were again recognized as the brand's North America Franchisee of the Year.

Biggest current challenge: Working through the tough legislative environment in California.

Next big goal: Achieving $50 million in company EBIDTA. We are almost there.

First turning point in your career: My entry into Taco Bell. I owned about 25 Burger King restaurants at that point. It was good to diversify into a good brand, and it solidified me as a multi-brand restaurant operator.

Best business decision: Diversifying into Taco Bell and Popeyes and focusing on established brands instead of emerging.

Hardest lesson learned: It can be tempting to jump into emerging brands, but they require a lot of time, focus, and capital, and many of them are not supported in the manner they should be.

Work week: Seven days a week with plenty of working vacations.

Exercise/workout: I start my morning with a workout and try to get in a long walk before the end of the day.

Best advice you ever got: It may seem simple, but "patience is a virtue." I learned patience in business from my father.

What's your passion in business? My passion is my people and my restaurants. I feel at home when I am in stores and interacting with the people who make us successful. Having relationships with team members and managers is very important to me.

How do you balance life and work? Having support from an amazing wife and family is very helpful. Since my wife also works in the family business, we find ways to support each other and raise our kids at the same time.

Guilty pleasure: I love sports, and I have a dangerous sweet tooth. I'm also a foodie and a sucker for a plated dinner.

Favorite book: Dune by Frank Herbert.

Favorite movie: "Interstellar."

What do most people not know about you? That I am from an immigrant family and did not live in the United States until I was 9 years old.

Pet peeve: Aggressive business tactics. I also learned from my father to find win-win solutions. While it is important to have the ability to be shrewd, you shouldn't always feel like you have to get one over on another.

What did you want to be when you grew up? A businessperson. My father's experience was in the hospitality industry, and I was always fascinated with the family business. I wanted to follow in his footsteps.

Last vacation: We just finished a quick trip to Cabo San Lucas and are headed to Europe in August with my entire family.

Person you'd most like to have lunch with: My grandfather, whom I never met.

MANAGEMENT

Business philosophy: Taking care of your people. In restaurants, we are in the people business first. I consider myself a gardener who really just needs to water the plants.

Management method or style: Servant leadership.

Greatest challenge: Getting our team members and legislators to understand that we are a family business.

How do others describe you? Fun loving and innovative.

Have you ever been in a mentor-mentee relationship? What did you learn? Yes, my greatest mentors have taught me to be patient, deal in good faith, and build relationships.

One thing you're looking to do better: I continue to strive to improve our people's working experience.

How you give your team room to innovate and experiment: I try to allow leaders to make their own processes without weighing them down with busy work.

How close are you to operations? Very close. I try to visit restaurants at least once or twice a week.

What are the two most important things you rely on from your franchisor? Transparency, trust, and independence. Communication with the brand is always the key while they also need to allow us to operate with our expertise.

What you need from vendors: Timeliness and service. Some of our best vendors are small companies that provide excellent service and communication.

Have you changed your marketing strategy in response to the economy? How? Being malleable in marketing is extremely important. We went from the toughest supply chain environment where we took a lot of price increases to a big value moment where people don't have money to spend on eating out. Our brands are adjusting very well.

How is social media affecting your business? Social media has been an amazing tool in recruitment and marketing. But it can also be dangerous, and restaurant teams need to be aware of this. These days, you cannot stop team members from posting on social media about their jobs, so it is important to educate them on the correct protocols.

How do you hire and fire? Now that California has a $20 minimum wage, we can hire from a much larger pool. We're still adapting to this change, but it has a silver lining. Having a strong HR support team is extremely important, and I'm proud of the service they provide our restaurant teams.

How do you train and retain? Everyone is responsible for training, but our HR, safety, and finance teams are great at providing the support to train the field in their respective matters.

How do you deal with problem employees? It is important to dig deeper into problems with employees. There's usually a root cause that can be solved by discovering the underlying issues.

Fastest way into your doghouse: Not following directions.

BOTTOM LINE

Annual revenue: $410,000,000.

2024 goals: Maintaining our 2023 EBIDTA.

Growth meter: How do you measure your growth? Growth is measured through sales and EBIDTA but also through the growth of your leadership. We also grow our unit count by 10 to 20 units per year. Developing new restaurants and our real estate portfolio is integral to our growth.

Vision meter: Where do you want to be in five years? 10 years? $600 million in top-line revenue in five years and approaching $1 billion in 10 years.

Do you have brands in different segments? Why/why not? They are all in the restaurant industry. We have burgers, tacos, and chicken. Always looking at pizza and coffee next!

How is the economy in your region(s) affecting you, your employees, your customers? With the changes in wages across all of California, we are still learning. We are now paying the same wages in Bakersfield and Redding as we are in San Francisco. It is a very tough environment.

Are you experiencing economic growth in your market? Many of our nonurban markets are experiencing growth.

How do changes in the economy affect the way you do business? We have to be able to shift our menu, prices, and deals as people have less money to spend on eating out.

How do you forecast for your business? Our finance team does an incredible job of working with the field and anticipating next-growth levers for us. They work with our operations team on minute deals and figure all avenues for growth. I work with the finance team on a macro level regarding growth and adding new restaurants. There are a lot of opportunities with new acquisitions, many of which are underperforming units, and we turn them around.

What are the best sources for capital expansion? Our lenders are incredible. Lending is based very heavily on relationships. We have worked with our lead lender for seven years. We've seen him grow with the bank during the course of our tenure with him. Personal relationships are very important to us.

Experience with private equity, local banks, national banks, other institutions? Why/why not? We have great experiences with national banks like Fifth Third Bank, which is our lead arranger in all deals. We do work with some regional banks on smaller projects. While we have no private equity partners today, it is something we are exploring should there be a need with large growth. Right now, we enjoy being a family business.

What are you doing to take care of your employees? Money talks. You have to make sure they have financial security and a good work-life balance.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? It's a difficult time for this, but we are navigating it. Intelligent pricing and technology, like AI order taking, are going to be the key for us.

What laws and regulations are affecting your business, and how are you dealing with them? The California fast food legislation is our biggest focus not just at the state level, but also in local cities. We are also working on PAGA reform in California.

How do you reward/recognize top-performing employees? Growth is the biggest lever for recognition.

What kind of exit strategy do you have in place? No exit strategy yet! I have plenty of gas left, so it is full steam ahead.