The Stevie Factor: Trust and Empower, But Verify

Stephen Reitz was in his late 30s when he entered the world of franchising. He'd already learned quite a bit about the world of business in the years preceding his career switch.

"I had a number of positions before I got into franchising," says Reitz, who spent 20 years at Ford Motor Company in sales and marketing. One highlight at Ford was a week he spent with W. Edwards Deming, the legendary management and quality guru who helped the Japanese create some of the world's leading manufacturers--and who spurred Reitz to become passionate about process improvement.

Inspirational advice from Henry Ford also has helped guide his daily activities, but Reitz had to come up with what he calls the "Stevie Factor" all by himself. Put simply, the Stevie Factor is that the more Reitz does in each of his locations, the less his managers learn how to handle things themselves. For Reitz, who operates seven Supercuts and one Five Guys Burgers and Fries (the first of seven he has signed on to build), getting good managers in place and letting them learn and grow is central to his success.

"My simple philosophy is trust, but verify," says Reitz. "I put people in place that I like, empower them and trust them. But I do verify." In part that's just good business, but with his home office in Florida and his Five Guys units in Michigan, it's particularly important to have good people in place.

Reitz's background in quality and process improvement, combined with his hands-on education in franchising, has allowed him to learn what he's good at: opening new locations, building teams, and handling whatever wild cards his business deals him every day.

Name: Stephen Reitz
Title: President of Reitz Enterprises (co-owned with wife Joanne); vice president of Land Shark Corp.
Company: Reitz Enterprises
No. of units by brand: 7 Supercuts; 1 Five Guys Burgers and Fries

PERSONAL

Age: 55
Family: Wife Joanne, 1 son

Years in current position: 17
Years in franchising: 17

Key accomplishments: Establishment of the Supercuts brand. We have a really good reputation in our market.

Biggest mistake: It took me too long to get out of college. In franchising, not getting into it sooner. And from a business standpoint, trying to expand too fast.

How do you spend a day, typically? On the average day I spend probably six to seven hours in the office. But my office is at home, so there's a lot of flexibility to do stuff with my son and wife. I get up and get online, open mail, read the news, then review the sales from the previous day. I spend a lot of time online. I live in Florida and my Five Guys business is in Michigan, so I check in by phone every day. I also look at the video camera feeds just to see how the customer flow of the restaurant is doing. Obviously lunch and dinner are the busy times. If things are too backed up at lunch, or there aren't enough people cleaning the dining room, I can place a call.

Work week: I work a little in the office every day. Both businesses are open seven days, and so am I.

Favorite fun activities: I love playing golf and coaching my son's baseball team. And I enjoy drinking good wine.

Exercise/workout: I had knee surgery in May, so now it's just rehab on the exercise cycle and walking.

Favorite stuff/tech toys: I really got sucked into this smartphone deal. I've had an Instinct phone, which is similar to the iPhone, for about a year.

What are you reading? I'm kind of a process improvement weirdo, so usually I'm reading something related to process improvement or business methodology. One book I'm reading is Out of the Crisis, by Dr. W. Edwards Deming. I studied with him at Ford for a week.

Do you have a favorite quote or advice you give? I have two. One is from Henry Ford: "If you think you can or you think you can't, you're right." The other (and I'm not sure of the author) is: "Worry is the price you pay for a debt you may not owe."

Best advice you ever got: Trust my instincts.

Formative influences/events: The birth of my son. That was one of the most influential things in my life. I really got serious after that, which was 12½ years ago.

How do you balance life and work? That's kind of easy because I work out of the house. I can work when it needs to be done and do the rest when that needs to take place.

MANAGEMENT

Business philosophy: I try to treat employees and customers like family.

Would you say you are in the franchising, real estate, or customer service business? Why? Definitely the customer service business. Everything we do in training, hiring, etc. is focused on customer service.

What gets you out of bed in the morning? Besides the alarm clock, every day is different. In franchising, no two days are alike and it's fun to see what I'm going to get into next.

What's your passion in business? I really like to create things. I get a real kick out of opening a new location, getting a new store and team growing. Those are the things I love to do.

Management method or style: My simple philosophy is: Trust, but verify. I put people in place that I like, empower them, and trust them. But I do verify.

Greatest challenge: Right now it's finding quality new locations and negotiating lease terms.

How close are you to operations? I would say I'm very close. I'm in Supercuts nearly every day. I'm in Five Guys in Michigan once a month, and with the video and phone I'm in touch every day.

Personality: Probably easygoing and fun-loving, kind of laid back.

How do others describe you? I think most people would describe me as being a nice guy.

How do you hire and fire? I do both very carefully. I don't react on either situation quickly. We focus on setting up employees to succeed.

How do you train and retain? Early in my business life I was very hands-on, working with the management team and working with every aspect of their jobs. Training is key to the business, to how we operate, and we offer retraining when we need it. With retention, we try to get the correct people in the right spot.

BOTTOM LINE

Annual revenue: Last year we did over $2 million for Supercuts. This year, with the Five Guys, we'll do $3.8 million.

2009 goals: I'd like to see 10 percent growth in the Five Guys business. With Supercuts, which has been in the market 25 years, we're trying to maintain our current levels and not go backwards.

Growth meter: How do you measure your growth? Year-over-year sales, top sales. The second way is minimizing the Stevie Factor: the more I get involved, the less managers are growing.

Vision meter: Where do you want to be in 5 years? 10 years? In 5 years I'd like to have most of my Five Guys obligation built out; I have a seven-unit deal with them. In 10 years I'd like to be turning all this over to my son.

How is this economic cycle affecting you, your employees, your customers? Because Supercuts is a value-based entity, when times get tough we get a lot of people who trade down from the higher-priced facility. So we've seen increases in times like these before. This time we've stayed pretty flat. We have hired a lot of good stylists who had been working at higher-end salons, so we're looking to improve staff at this time, which has been a benefit. With the cost of gas and living, we do the best we can to get them the hours and the business they need. The customer is probably feeling it the worst of all, which is reflected in prolonged intervals between haircuts.

What are you doing different in this economy? We use slower times to focus on staff training, to get stronger.

How do you forecast for your business during these trying times? Can you even forecast at all? I think the only way to do this in this type of economic situation is to look at shorter cycles. Instead of month over month, we look at week over week. I use shorter measurements.

Where do you find capital for expansion? I've done all of my expansion personally, through the growth and development of the chain. I haven't gone out of the house to get money. I know there's money out there, but at this point it's all in-house.