Thinking Big! 350 restaurants and shooting for 600
Name: Gary A. Rose
Title: President and COO
Company: Meritage Hospitality Group
No. of units: 345 Wendy’s, 3 Stan’s Tacos, 2 Morning Belle, new 50-unit development deal with Taco John’s
Family: Wife and four children; oldest daughters are identical twin girls
Years in franchising: 17
Years in current position: 5
Gary Rose thinks big.
As the president and COO of Meritage Hospitality Group, he oversees 350 restaurants, primarily Wendy’s, that bring in annual revenue of more than $575 million.
So what’s next for Meritage Hospitality? “In 5 years, our target is to own and operate 600 restaurants,” says the 59-year-old. Now that’s thinking big!
To help achieve that goal, Rose says the company has been diversifying with its own concepts, Morning Belle and Stan’s Tacos, and inked a massive deal last summer with Taco John’s. Under the new area development agreement, Meritage will build 50 new Taco John’s by spring 2026, with options to develop an additional 150. Rose says Meritage expects to invest as much as $100 million in the initial 50-store rollout.
It’s a big challenge, but Rose is quick to point out that in 2009, Meritage had 50 restaurants and set a goal a goal to grow to 150 by the end of 2015. “We reached that goal 11 months early and have been growing steadily ever since,” he says.
Rose has been with the company 17 years, coming aboard as CFO. Five years ago, he took on the roles of president and COO and today oversees a company with more than 11,000 employees in 16 states.
In 2022, Rose says, he wants to see the company end the year with 380 restaurants in operation and see revenue rise to $650 million.
First job: My very first job was at a blueberry farm, but my first professional job was with Deloitte & Touche, which was my “big break” coming out of college.
Formative influences/events: One of my biggest influences was working with private equity firms. I learned both structure and discipline, how to establish 5-year plans, and what to do to achieve them.
Key accomplishments: I came from a large family and was the first to graduate college— Cedarville College, a small college in Ohio.
Biggest current challenge: Our biggest current challenge (and opportunity) is aggressively launching Taco John’s restaurants and our own new brands.
Next big goal: Our 5-year plan is to own and operate 600 restaurants.
First turning point in your career: My first career turning point was getting hired by Deloitte & Touche in Grand Rapids. It was very hard work, but also a really great experience.
Best business decision: Joining Meritage and launching our first business plan to grow from 50 to 150 restaurants. That decision has made a huge difference in our company.
Work week: I am at the office about 45 hours a week, but my mind often is on work issues outside the office.
Exercise/workout: I enjoy mountain biking and running.
Best advice you ever got: “Pigs get fat, hogs get slaughtered.” This means that deals happen where everyone wins; it’s not about one person winning over another. The way I think about it, a deal should be beneficial for all involved.
What’s your passion in business? I like to build things, specifically, restaurants, brands, and teams. I particularly enjoy building teams, creating opportunities, and seeing our people flourish. This is what makes Meritage a perfect fit for me.
How do you balance life and work? It can be challenging. I have a family and a 30-mile commute to work. The commute helps me separate work and home life, allowing me to have creative time and plan my work.
Guilty pleasure: Chocolate-covered almonds.
Favorite book: Mere Christianity by C.S. Lewis.
Favorite movie: I have two: “Ferris Bueller’s Day Off” and “The Wedding Singer.”
What do most people not know about you? My creative side. Launching brands and building restaurants allows me to tap into my creative side more than others may realize.
Pet peeve: People who won’t take responsibility, or who avoid accountability.
What did you want to be when you grew up? When I was four of five, I wanted to be a cement truck.
Last vacation: Aruba with my wife. It is one of our favorite places to go.
Person I’d most like to have lunch with: I would love to have lunch with U of M football coach Jim Harbaugh. I would like to explore what makes him tick and how he continues to motivate his team in the face of adversity.
Business philosophy: My business philosophy is to take calculated risks. Once you have well-thought-out plans, it’s time to take some risk and do the hard work to make them happen.
Management method or style: “Trust but verify.” I typically manage very closely until someone earns my trust. Once trust is earned, I am ready to let go and let folks run on their own.
Greatest challenge: Our toughest challenge as a company was growing from 50 to 150 restaurants. In 2009, our goal was to reach 150 restaurants by the end of 2015. We reached that goal 11 months early and have been growing steadily ever since.
How do others describe you? People would say that I am focused and hard-working. I love what I do and have a passion for the business.
One thing I’m looking to do better: It can be a challenge to keep a vibrant culture with Covid affecting workplaces and people not all working in the office at the same time. We’re needing to explore additional new ways of sustaining a fun, growing, and invigorating work culture in an untraditional setting.
How I give my team room to innovate and experiment: I like to set large goals, let my team figure out how to achieve them, and then celebrate large wins.
How close are you to operations? I used to be much closer to operations on the Wendy’s side, but right now I am working much more closely with the launch of our new brands.
What are the two most important things you rely on from your franchisor? Product innovation and facilities innovation.
What I need from vendors: We need the fundamentals: quality and on-time delivery of things we have agreed on.
Have you changed your marketing strategy in response to the economy? How? A lot of our strategy has changed as a result of Covid. Our focus is much more on customer convenience, technology, and for Wendy’s, on our drive-thru windows.
How is social media affecting your business? This is where a lot of our growth is coming from and where we are putting most of our money right now. We are focusing on using apps for promos, rewards, and for making it easier for our guests to access our brands.
How do you hire and fire? We have a substantial recruiting team focused full-time on keeping our 11,000 positions filled across the 16 states where we do business. We use technology to make us more accessible for candidates to apply, making the process as easy as possible. We would never want to turn potential employees away by being inaccessible.
How do you train and retain? We have a lot of training programs. We focus on flexible scheduling, fair pay, and rewards and recognition.
Fastest way into my doghouse: Lack of accountability. I want people to follow up on what they say they will do.
How has Covid-19 affected your business? A lot of our office personnel are working from home, so for a lot of our employees that is a big change. In our restaurants, drive-thru windows have become very significant as many dining rooms were closed for long periods. Staffing has been very unpredictable, but, for the most part, our guests have been more understanding if a restaurant is closed temporarily because of staffing, for example.
How have you responded? We have an increased focus on the pickup window. We also have increased wages to find and retain employees, offering them flexible hours, simpler application processes, and keeping them as safe as possible with protocols, proper PPE, and sanitation procedures.
What changes do you think will be permanent? There will continue to be some office work from home for the foreseeable future. We will make sure safety and sanitation procedures in our restaurants continue to exceed expectations, while continuing to provide the service and convenience our customers have been enjoying. We believe restaurant hourly wage increases and more flexible work schedules will remain beyond the immediate impacts of Covid.
Annual revenue: Our 2021 annual revenue was $575 million. For 2022, we expect revenues of approximately $650 million.
2022 goals: To end the year with 380 restaurants in operation.
Growth meter: How do you measure your growth? Primarily by number of restaurants, revenues, and earnings.
Vision meter: Where do you want to be in 5 years? 10 years? Our target is to own and operate 600 restaurants in the next 5 years. We typically plan only in 5-year increments.
Do you have brands in different segments? Why/why not? The bulk of our restaurants are Wendy’s, so we wanted to work with Taco John’s to diversify our portfolio with another QSR. We do have two of our own internally developed brands: Morning Belle and Stan’s Tacos, which we also plan to grow.
How is the economy in your regions affecting you, your employees, your customers? We’ve seen 10–15% sales growth in the last year, but commodities have increased 10–12%, and wages are up 20%. But overall, the economy is strong and growing.
Are you experiencing economic growth in your market? Yes, sales are up 10–15% from continued strong Wendy’s performance and pricing adjustments because of inflation. We anticipate continued inflation in 2022.
How do changes in the economy affect the way you do business? People tend to trade down to QSR when times are tough because they want affordable, convenient food. For one of the first times, we are seeing trends where grocery and home meals are exceeding QSR restaurant prices.
How do you forecast for your business? We prepare detailed 5-year plans followed by annual operating plans. We also prepare detailed annual plans for all the restaurants, and every restaurant-level general manager is measured and incented to that plan.
What are the best sources for capital expansion? Cash from ongoing operations, debt financing, and equity when engaged in a significant acquisition opportunity.
Experience with private equity, local banks, national banks, other institutions? Why/why not? We did a major refinancing in 2020 with a large national bank. We typically work with large banks that understand the restaurant and franchising model.
What are you doing to take care of your employees? We offer extensive training, growth opportunities, and flexible schedules. We recently launched a large Christmas care package to surprise our general managers. In our Restaurant Service Center, we prepared 350 care packages (one for every general manager in our company) made up of logo wear, gear, candies, and a personalized note. This was an expression of our appreciation for all they are doing to take care of our guests in what has been a very challenging operating environment.
How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We are raising prices where it makes sense. We are continually challenged to look at every line item in our business to make sure it is being managed as well as possible.
What laws and regulations are affecting your business and how are you dealing with it? When Covid first hit, we immediately assembled a team responsible for handling all Covid cases, interpreting local guidance, and providing guidance to all our restaurants across the 16 states we are operating in. In the first 12 months of the Covid outbreak, this team dealt with more than 600 governing guidance issuances across those 16 states.
How do you reward/recognize top-performing employees? We have many ongoing growth opportunities, so we reward top-performing employees with ongoing advancement opportunities. Employees can also be awarded bonuses, and may be recognized in company publications or in the Wendy’s franchise system as a top U.S. operator.
What kind of exit strategy do you have in place? We are not planning on selling our business any time in the foreseeable future. Our plan is to hold the company long term and, maybe one day, go full public if and when the timing is right. For now, our focus remains on sustainable growth.
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