Franchise Update Magazine Issue II, 2013 | Page 20

Grow Market Lead

Leadershipguru:
East Coast Wings & Grill

Driving Unit
Economics
New division focuses
on unit-level growth
By Sam G. Ballas

T

hroughout my 14 years with
East Coast Wings & Grill,
we have constantly strived to
develop a laser-like-focus on
our unit economics. This vision recently
led to the creation of a new division for
our brand: Unit-Level Economics/QA.
Systems and structures are logical
responses to complexity, which grows
almost exponentially as a company expands. Within these systems there is data
that, if not measured and held accountable, could be the difference between a
franchise unit’s bottom line or sustaining
a positive one: data drives prediction, data
holds accountable the result.
The ultimate goal of imposing a new
structure and instituting a new system is,
of course, predictability. Unless a brand
has the ability to determine where a franchise unit is today and project where it
might be tomorrow—in a week, a month,
this quarter, and ultimately this year—it
is not on a trajectory for growth.
The need to navigate through all as-

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Franchiseupdate Iss u e II, 2 0 1 3

pects of a unit’s economics is imperative
to that unit’s success. In our restaurant
industry, market dynamics and cost are
changing month by month, which challenges the franchisee’s ability to manage
their unit-level economics. The need for
the franchisor to identify these changes
and have the ability to predict and assist
a franchisee in navigating their unit sales
and expenses is going to be the difference between sustaining great unit-level
economics or building them.
• The first 4 years. Building a franchise system from the ground up was not
easy and definitely had its challenges. And
while we have made plenty of mistakes
along the way, the one thing we did not
unhinge was the philosophy of “managing
from the outside in.” In other words, our
corporate structure focused on spending
quality time working on franchisee and
unit-style issues daily—before we spent
time and energy in growing a new unit.
The brand would grow only under the
understanding that no unit would be left
unaccountable to our standards of operations; thus, our slower new-unit growth
model evolved. We had, and have, all the
traditional franchise tools, including (but
not limited to) ongoing training, field inspections, and annual P&L reviews for
franchisee support. Our focus was on the
individual unit, one at a time.
• The next 4 years (to July 2012).
During these years we enhanced our
unit-level support through many evolving changes. We strengthened our units
by adding Internet-based training that
our franchisees had access to at their
sole discretion. We hired an executive
corporate chef who, among other duties,
was charged with retraining our units in
portion control and waste management.
We amended our existing franchise agreements and implemented monthly P&L
reporting in new ones. The franchisees
unanimously voted in a self-regulated
fining system for unit-level specs noncompliance and authorized ECW Corp.
as facilitator of this system.
During these years, of course, we
all dealt with the Great Recession. For

East Coast Wings & Grill, the recession
brought opportunity. We reevaluated
our supply chain, leveraged our buying
power with manufacturers on our proprietary products, and beat down our
cost on space. We began charting indices,
which affected our operational space. This
paradigm shift in our ability to drive a
difference in unit-level economics and
profitability soon became visible: in our
2012 FDD we reported an average 58
percent growth in same-store EBITDA
from 20 x