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August 21, 2024

S2E5 - The Recipe for Capriotti's Phenomenal 300% Yearly Expansion, Revealed by David Bloom

Explore Franchise Success with David Bloom: Capriotti’s Culinary Excellence and Remarkable Growth.

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WISK white logo-> All episodes <-

August 21, 2024

David Bloom Reveals Capriotti’s 300% Expansion

Explore Franchise Success with David Bloom: Capriotti’s Culinary Excellence and Remarkable Growth.

Apple Podcast player linkSpotify Podcast player linkGoogle Podcasts player link

Show notes

Episode Notes

In this conversation, David Bloom, Chief Development and Growth Officer for Capriotti's and Wing Zone, shares his journey in the restaurant industry and discusses the growth and success of both brands. He highlights the importance of franchising for scalability and wealth building, as well as the role of technology in the industry. David also provides insights on expanding into different markets and regions, and emphasizes the commitment to maintaining quality as the brands scale. In this conversation, David Bloom, Chief Development and Growth Officer at Capriotti's and WingZone, discusses the challenges of managing the supply chain and the importance of having strong distribution partners. He also shares insights into owning a Capriotti's or WingZone franchise, including the specific metrics and costs involved. Additionally, he provides an overview of the restaurant industry's key numbers and targets, such as prime costs and occupancy costs. Finally, he explains the franchise process and emphasizes the importance of transparency in helping potential franchisees make informed decisions.

Takeaways

  • Franchising can be a viable option for scaling a restaurant brand and building wealth, but it requires careful consideration of the economic model and finding the right partners.
  • Technology plays a crucial role in the restaurant industry, and staying at the forefront of technological advancements is essential for success.
  • Expanding into different markets and regions requires a combination of experienced teams, local partnerships, and understanding the unique dynamics of each market.
  • Maintaining quality as a brand scales requires strong relationships with vendor partners and a commitment to using high-quality ingredients. Managing the supply chain in the restaurant industry requires careful planning and coordination with distribution partners.
  • Owning a Capriotti's or WingZone franchise involves operating in the fast casual space with specific price points and quality standards.
  • Key numbers and targets in the restaurant industry include prime costs below 60%, rent at 8% or less of sales, and overall costs below 80%.
  • The franchise process for Capriotti's and WingZone involves transparency, education, and a selective approach to choosing franchisees.

Timestamps

00:00 Introduction and Background

01:14 Capriotti's - Upscale Sandwich Concept

03:02 Wing Zone - National and International Growth

05:07 David Bloom's Journey in the Restaurant Industry

09:58 Choosing Franchising for Scalability and Wealth Building

19:17 Pros of Franchising and Building from Scratch

22:14 Considerations when Choosing a Franchise

25:13 Building a Scalable Concept from Scratch

29:35 The Importance of Technology in the Restaurant Industry

33:51 Navigating Different Markets and Regions

36:07 Expanding Internationally

38:02 Maintaining Quality as the Brand Scales

39:33 Managing the Supply Chain

41:12 Owning a Capriotti's or WingZone

44:50 Restaurant Numbers and Targets

47:09 Franchise Process

Resources

Follow David Bloom on Instagram!

Connect with David Bloom via Linkedin!

Learn more about Wing Zone!

Learn more about Capriotti!

Transcript

Angelo Esposito [00:00:01]:

Welcome to Wisking It All with your host, Angelo Esposito, co-founder of WISK.ai, a food and beverage intelligence platform. We're going to be interviewing hospitality professionals around the world to really understand how they do what they do. Welcome to another episode of Wisking It All. We're here today with David Bloom, chief development and growth officer for Capriotti's and Wing Zone. David, thank you for being here.

David Bloom [00:00:31]:

Appreciate it. Angelo, it's a pleasure.

Angelo Esposito [00:00:34]:

Awesome. So maybe just to kick things off for our audience, can you tell them a bit about, for those who don't know a bit about Capriotti's and about Wing Zone.

David Bloom [00:00:43]:

Capriotti's has been around for almost 40 years now. It started in the East Coast, in Delaware, and then kind of leapfrogged over to Vegas. And so for many, many years, really just existed in those two markets. We are an upscale sandwich concept brand, fast casual. Our specialty is one of our sandwiches. The Bobby was voted the greatest sandwich in America. We literally roast whole butterball turkeys in house every night. We're actually, for those that may not know, we're the largest restaurant buyer of butterball turkeys in the world.

Angelo Esposito [00:01:21]:

Oh, wow.

David Bloom [00:01:23]:

Butterball raises a lot of turkeys just for us, called the capriati super Tom. It's a larger bird that you can't buy in the stores. And so we're roasting whole turkeys just like you would at home. And then, you know, the next day, pulling the meat off and shredding the turkeys, and then we're making stuffing in house, and we have our cranberry sauce. And that's the Bobby. It's, you know, it's on an italian roll with mayo, cranberry stuffing in fresh roasted turkey. So that's really where the brand started. In addition to that, our cheesesteaks tend to win best of awards no matter where we go.

David Bloom [00:01:59]:

Our capistrami. But Capriotti's is really all about having the best product we can possibly have. Our roast beef. The only roast beef we carry is snake river farms american Wagyu roast beef. I'll actually be up in Idaho next week with our team, visiting Snake river ranch and all that good stuff. So.

Angelo Esposito [00:02:19]:

Wow. Very cool.

David Bloom [00:02:21]:

You know, we go to extremes to make the very best product we can, and, you know, we have a very, very loyal following. We started going national about six years ago. Five or six years ago. We're open in 30 states today, actually opening in India as we speak, looking to enter Canada, Mexico, some other markets, Middle East. So Capriotti's is just kind of off to the races, doing really well, has a great reputation. We acquired Wing Zone about three years ago and kind of have spent the last three years positioning Wing Zone for national and international growth. We've got about 85 units open, half domestic, half international. We'll open about another 2025 this year.

David Bloom [00:03:13]:

We'll have opened about 25 this year, next year called 30, 35, and really position the brand, as I said, to be unique in terms of the marketplace. We've just recently introduced our line of Nashville hot chicken, which is really great. Kind of continuing to play with the sauces and the rubs to make sure they're differentiated. Our tenders are the best that I've had anywhere. Literally. Again, great product. Our chicken sandwich now is coming in. Our new units is coming out of King's hawaiian roll, which is really delicious with our natural hot rub and homemade coleslaw and pickles.

David Bloom [00:03:53]:

So just, again, having great product that's differentiated in the market and the brand is, when we acquired it three years ago, didn't have any stores in development. Today we've got about 150 in development, plus another 75 or so internationally in development. We're opening Wing Zone in India, but we're also open, already open in Malaysia, the Philippines, Panama, and have conversations going on in other markets as well. So both brands are kind of, as I said, off to the races, and we've got our hands full, as you can probably guess.

Angelo Esposito [00:04:28]:

Yeah, exactly.

David Bloom [00:04:31]:

Love what we do and try to be really good at it.

Angelo Esposito [00:04:34]:

That's awesome. Yeah, I mean, I'm gonna have a. I'm sure you can share a lot of insight, because growing two brands in parallel of that size is. Is no easy feat. I can only imagine. So on the Capriotti's side, I saw. I saw online, but I'd love to hear from you. Is it about 175 stores currently? Is that the 185?

David Bloom [00:04:53]:

I think today? Yeah.

Angelo Esposito [00:04:56]:

Wow. Okay, cool. And then on the Wing Zone side, about 75. Plus another hundred something.

David Bloom [00:05:01]:

Yeah, about 85 actually, today.

Angelo Esposito [00:05:03]:

Wow.

David Bloom [00:05:04]:

Plus another 125 for 30 in development.

Angelo Esposito [00:05:07]:

Wow. That's amazing. Well, first of all, just kudos, because, you know, we work with thousands of restaurants and seeing how hard it is to operationalize a restaurant. Those are some big numbers. That's really, really, really cool. Maybe to take a step back. Right? Like, people are probably wondering, how did David get here? Right.

Angelo Esposito [00:05:24]:

Running 250 plus restaurants internationally and nationally. So I'd love to maybe just go through your story. Where did you start? Were you always involved in the restaurant space? What kind of got you into it?

David Bloom [00:05:38]:

Yeah. I appreciate it. That's a great question. And I will have to admit nothing has been by design or by some grand plan that I had. I'm definitely not that smart. I kind of stumbled into the restaurant business as a kid growing up in New York and grew up in the kitchen with a very successful, small, successful restaurant company there, upscale. Today. My brother, who also worked there, is an executive, he's an executive chef.

David Bloom [00:06:09]:

One of my sisters became a pastry chef, and one of my other sisters worked in business for many years as well. So I did grow up in the restaurant business and then came out to Vegas, UNLV, to the hospitality program out there. And then I got to really, frankly, over my career, work with and for some really just incredible people. And I have to say that I think that's one of the greatest things in our industry, is the people you meet along the way that are incredibly generous and want you to be successful. And if you work your butt off and keep, you know, and are persistent, people will help you. And so years back, I worked for Norman Brinker and the go go days at Bennigan's and steak and ale and all that stuff, and really got to run my own restaurants at a very early age. Multi million dollar businesses. You're 22, 23 years old, running $10 million businesses, and you have no idea what you're doing, but you think you do.

David Bloom [00:07:06]:

So all that stuff. And then I got to the hotel side of food and beverage, worked for another great group of guys, incredible group, and they became a food and beverage director, executive food and beverage director, and got to do my own concepts and build out big resorts and convention properties and all that kind of stuff, traveling around the country. And my wife and I, I think we've moved 18 times to date. So always kind of being willing to go wherever the opportunity was, was certainly a big deal. And then we moved to Denver with that hotel company to take over a hotel. And I ran into Quiznos that had 18 stores just in Denver at the time. And I thought they had some legs. I was always entrepreneurial on the side, usually trying and failing, but always small businesses that I was getting going.

David Bloom [00:07:57]:

I knew I wanted to do something on my own at some point. And yeah, I got introduced to Quiznos, became my partners, and I became franchisees, some of the largest. We opened a dozen stores and then became aero developers, opened several hundred stores in our territories, and then joined corporately as well. So I was involved with Quiznos, first as a franchisee, then as an area developer, and then corporately as a Senior VP of brand expansion, up to about 5000 stores in 28 countries. So that's where I learned how to scale a brand. When the company sold in 2006, I sold everything and left and got the opportunity to kind of take those learnings on how to scale a brand to other businesses and other verticals. And education I ran, I was chief operating development officer for an education company based out of Kenya. It became the fastest growing education company in the developing world.

David Bloom [00:08:56]:

Did home services, you know, home heating, air conditioning, electric, plumbing and all that. Did a whole bunch of different verticals. Had a consulting business and all that kind of stuff. Then I spent some time as chief operating officer for famous Brands International, which own TCBY and misses fields. And the guy that was the head of the board there, the chairman of the board for that group, invested in Capriotti's. And that's kind of how I landed here about six years ago. Following him. Another, just an incredible guy, a guy named David Barr who I think is one of the very best in the industry and has a stellar reputation and so followed it, you know, kind of came with David and got to know the senior team here and moved to Vegas, moved again from Boulder, Colorado to Vegas and have been working at this, you know, really ever since.

Angelo Esposito [00:09:49]:

Wow, that's. What a story. And let me ask you this, you know, I know a lot of people listening are always looking for that, you know, mentorship or guidance. And I agree with you. I see it like people in the industry are really, really special. Any tips on how to kind of find that mentor for you? That person that can maybe guide you?

David Bloom [00:10:07]:

Sure. My basic philosophy is who you work with is more important than what you do. So I see a lot of people, they're looking for a very specific job with a very specific title and very, you know, and the reality is most companies have a need, right? It might be operations, might be development, might be whatever. And if you're able to fill that need and perform consistently, then you are gonna, you're gonna have endless opportunities and people are gonna want you. So then it just becomes a matter of deciding who do you align with? And, you know, I had to go through lots of different, you know, I work for large private equity, institutional private equity today I work for what I more what I would call almost family office. Very sophisticated, very, very large, you know, multi, some multi billion dollar. But personal relationships are important to me. So I like that type of environment where I'm close to the people I know, the people, they're, can't believe they're incredibly good to me and my family.

David Bloom [00:11:15]:

And so in return, I'm able to provide that type of loyalty. And as you said, this is not easy. What we're doing doesn't happen all the time. Right. So there's lots of bumps in the road, and so working with a group that can help me and get smarter and better and all those things is also what I look for. And so once you find that, and it is hard to find, as you said, once you find that, sticking with it, despite all the bumps in the road, you know, performing and just kind of strategically figuring it out, cracking the code along the way over and over and over again, I think, is kind of the secret.

Angelo Esposito [00:11:55]:

Yeah, that makes sense. I mean. I mean, on our end, like, what we try to do, and it sounds like you alluded to it as well, is try to align the team on the vision. And when people can see the bigger vision, generally, that creates, you know, that. That loyalty, assuming they have the same vision. Right. And it waits people out, because if they don't have that vision, then it makes it clear. So.

Angelo Esposito [00:12:13]:

So, which is always nice. So, yeah, go ahead. Go ahead. Sorry.

David Bloom [00:12:17]:

The only thing I would say is the vision tends to grow and, you know, pivot over time. So where we're going and what we're gonna do and what the opportunities are, that does change. What doesn't change are the values.

Angelo Esposito [00:12:33]:

Yes.

David Bloom [00:12:34]:

And so I really try to align, and we, as a company, try to align with people first from the values standpoint, because the values will drive the vision. Right, true, so true. Spend a lot of time on that.

Angelo Esposito [00:12:47]:

Agree. Makes sense. And, yeah, especially the pace you guys are growing. Right. Like, the people that take you from point a to b are not always the same. From B to C and C to D kind of thing. It's just life.

Angelo Esposito [00:12:58]:

But there's some people who could grow, but when companies grow so fast, it's tough for most people to keep up with that pace. So sometimes it depends on the type of company, but sometimes you gotta find people with different types of talent.

David Bloom [00:13:10]:

Yeah, you do. But if you care about people, which family is one of our values, and family for us means caring about people then. And one of the things we're really blessed with is we have employees and franchise partners and vendor partners that we've been with for decades, and having those kind of relationships and people knowing that you care about them and you're looking to play win-win all the time. Not win lose means you can find, yes, some people. As you get bigger, not everybody can be a generalist. In the early days, everybody does everything and wears every hat. As you grow, people have to specialize and become subject matter experts in something. And so helping people find what that is is really part of it, I think.

David Bloom [00:13:58]:

And then people having the confidence that you are going to do that and you're going to look out for them is what helps you kind of build that base of, you know, your team so you could build on it. You're not just turning people over all the time. And so I do have to credit Ashley, our CEO, and Jason, our president, because our values really started with them when they acquired the company almost 20 years ago. And so it's their personal values, and I obviously aligned with it. And everybody else that we bring on board, we were very clear about, these are our values. This is who we are. And if you're aligned, great. If you don't, this is a good time to select out.

Angelo Esposito [00:14:36]:

Yeah, yeah. It's been better upfront than finding out a couple years in or something. And I love that. I love to hear that story. So basically, you know, roughly 20 years ago. Yeah. You know, Capriotti's was started, or actually more. Was it, was it 19, like on 76?

David Bloom [00:14:52]:

It's over 40 years ago. It started in Delaware in a little row house. It's actually, by the way, Joe Biden's favorite sandwich. He goes there all the time. Keep politics out of all conversations. Right. But so it started in a little row house, and they were roasting turkeys downstairs, and I think living upstairs, we actually still own that row house, bought it. We still have Capriotti's in the original rowhouse.

David Bloom [00:15:20]:

Obviously, there was a line down the street, and they just started growing with family and friends, people saying, hey, let me open one down the street. And they did. So they grew organically in that kind of mid Atlantic area for a while. Delaware. And then the owners like to come to Vegas. So anybody that's been to Vegas knows you can't come here without keeping a source of income going. So they started opening up some Capriotti's here, and they again found success. And Ashley and Jason, both who attended UNLV, were childhood friends.

David Bloom [00:15:52]:

They literally grew up together. They have a great story about how that all went down, but had both gone on to their respective careers. Ashley, in the finance world, very, very bright financially and real estate, very entrepreneurial, but incredibly bright, but more of a visionary. And Jason, degrees in computer science and mathematics and MBA is very, very strategic, very data driven, very information, very tech forward. And they just kind of have been best friends their entire lives. And got introduced to Capriotti's in college and literally, you know, moved so they could be closer to one, so they could eat there every day and graduated, went off to their careers, and then had, you know, a lot of success at a very early age and came back and said, we want to do something together. And, you know, both came with one idea, and that is we want to do Capriotti's. So they approached the owners at the time and, you know, they were like 25, 26 years old.

David Bloom [00:16:56]:

I mean, they were kids. And approached him and convinced her to let them do one store and one became three pretty quickly and then decided, hey, we want to go out and do 30 of these someplace. But there were only like 30 or 35 in the world at the time. And the owners didn't, I don't think, wanted to have these 225 year old kids doing that. But if you get to know Ashley, he doesn't take no for an answer very well. So he got super creative and said, well, then I want to buy the company, raised the capital and did that and spent probably the first five or six years just getting to know the business, understanding, franchising, and building that infrastructure, that support. And one of the commitments Ashley and Jason always made was, we'll always invest ahead of growth. We'll always build the programs and the support.

David Bloom [00:17:47]:

That's one reason I think a lot of brands fail is they don't do that. And then at some point, they get to growing so fast and they just can't support it anymore. It just kind of crumbles. It comes crumbling down, right, like, or pandemic hits or something hits. So they always did that and just kind of built their teams and their expertise. And again, I kind of joined the company about six years ago once we were really ready to go national, now international.

Angelo Esposito [00:18:13]:

Wow. And for people listening, you know, I know a lot of people love to get in the restaurant space, and then a lot of reality is the hit of how, you know, tough it could be operationally. But some people often wonder, you know, when is it best to kind of do their own thing versus maybe go the franchise route. Obviously have a ton of experience with, with franchises. So I'd love to hear maybe a bit of your perspective on, you know, some of the pros, I guess, to go the franchise up, for example, like a Capriotti's, and how that may differ with, you know, trying to build something from scratch.

David Bloom [00:18:44]:

And you're talking about as a franchisee or as an individual.

Angelo Esposito [00:18:47]:

Yeah, yeah.

David Bloom [00:18:49]:

Look, I, as I said, I grew up in the restaurant business. I mean, I was very comfortable in the kitchen. I had done my own concepts created from scratch, working for other people on somebody else's dime. But I can just tell you when it was my dime, which happened to be all the money I had in the world I was looking for, how do I have the greatest likelihood of success? And even though I was an expert, this is, you know, this is 30 years ago, right? So even though I knew a lot about some things, there were other things, like real estate and lease negotiation and just lots of technology. There were lots of things I knew nothing about and that I knew I wanted to. I needed to do everything I could to guarantee my success to the degree that I could. And I chose franchising myself. And so as somebody that grew up in the business, and I never, frankly, also, I think it depends on your goals.

David Bloom [00:19:44]:

If you just want to, you have a dream, you want to open your donut shop or your italian restaurant or your pizza place or, you know, whatever it is your mom made, and you want to share that with the world, more power to you. Go for it. And being in that spot and being part of your community and all that great stuff that comes along with it and having a super pride of ownership and creativity, that's great. That is definitely a route that is appropriate for people doing that. But I wanted to scale. I wanted to do something at a larger level. And candidly, I was looking to build wealth. I was looking to build generational wealth, not just for me, but for.

David Bloom [00:20:24]:

Not even just for my daughter, but for her family. And in order to do that, you have to scale. And in order to do that, you have to raise capital. So franchising, just as it turns out, is really the route, the vehicle. And I can just tell you today, I have many friends that own a lot of restaurants, but other franchises, other industries, massage, haircut. I mean, lots of different industries. And, you know, a lot of them actually did start out in the business and work their way up, were, you know, in independence and very entrepreneurially, but they built their success and they built their wealth and franchise. And so it is a vehicle that has worked for a lot of people, but it also really just depends upon your goals.

David Bloom [00:21:11]:

Right? Like, what are you looking for?

Angelo Esposito [00:21:13]:

Right. That makes sense. And. And I guess, like, one question that, you know, I'm sure our listeners will want to know is when looking at franchises, right, you know, there's franchise expos and all kinds of things. And what are some things? And you could obviously talk about Capriotti's and how you guys maybe differentiate yourselves. But what are some things that you would suggest, you know, they look out for, whether it's Capriotti's or another franchise. When looking at different options out there, what are some things you're like, hey, make sure to look at A, B, C and D before making a decision.

David Bloom [00:21:41]:

Yeah, I can tell you what my criteria were. First of all, I believe, and we believe in being in the business, that we're franchised. So we own and operate, and we're really good at owning and operating Capriotti's. And when we acquired Wing Zone, there were no company shops. And first thing we did is we were going to go out and open, you know, half a dozen of these things at least, and learn the business. So we can make sure we understand it, make sure we can teach it to others and make sure that we're looking at the same information and experiencing the same pain as our franchisees and maybe more than them, because we're going to be one of the larger operators. So I like to be in businesses where we're aligned. Like, you know, we're living and dying on the same thing day by day.

David Bloom [00:22:30]:

And that also means that's where for us, that means that's where we develop all of our processes, we test our products, test our technology. It's just, it's a huge, huge differentiator that I think people way underestimate. A lot of brands will say, well, our franchisees do all the testing. I've been down that road and that's, there's a lot of, there's a lot of problems with it. So that's number one. Number two, as I said, I look for businesses that can scale. Right? So could I go out and make a better sandwich than Capriotti's? Maybe. Or in my opinion, it might be better or more specialized if I lived in New Orleans or I lived in, you know, Nashville or I lived in New York City where I grew up, you know, I could make more of like a special regional sand, or I lived in Chicago, you know, Chicago beef sandwich, whatever.

David Bloom [00:23:24]:

But those businesses don't scale. Right. So I look for something that's really scalable and is going to have leverage, not just purchasing or supply chain buying power, but marketing power. Particularly today in the technology world, we have national agreements with everybody, all the delivery service providers, and I can tell you ours are a lot more advantaged than the individual operator. Right. And so I think today, frankly, it's very, very difficult to be an independent. It's really complex. And I, having been in the business for many, many years.

David Bloom [00:24:05]:

Could not do it on my own. I really don't think I could. I think I, I don't have any hair, but if I did, I'd be pulling it up.

Angelo Esposito [00:24:12]:

Oh man. I can only imagine. You know, I have some friends in the industry who want to make something scalable. Now they're probably going down the tougher path because they have their own concept that they want to prove out and they want to eventually be able to turn it into a franchise. Do you see a path there? Like what? Or what is the path there? Is it, is it once you have five stores, three stores? I know there's no maybe set formula, but what would you say for someone kind of building from scratch, making it scalable ahead of time thinking about these things, what does the path look like to maybe become that franchise?

David Bloom [00:24:49]:

Just to give you a heads up. So I certainly didn't go into detail on everything I've tried, but at one point, my partners and I bought an existing fast casual asian brand and spent millions and, which was a lot of money to me at the time. And we failed. Just we were trying to compete kind of between panda and PF changs today. If you think Pei Wei, Pei Wei think is actually frankly a knockoff of this brand, and we failed. And so I think, number one, it doesn't always work. Just, I don't care how long you've been doing it, how smart you think you are, how great you think, and our food was incredible and there were lots of great attributes about it. But number one, I think you have to have an economic model that is really dependable and there's three inputs.

David Bloom [00:25:46]:

What does it cost you to open, what are your operating margins and what's your top line? And those three things will give you a return on investment model. And you need to be certainly close in the 30% or better range, return on investment in order to compete with a lot of other concepts that are out there. So I think you have to have an economic model or a box economic model, people call it different things, and you have to have that lockdown and has to be replicable. That's the second thing is you have to be, people have to be able to do what you're doing, right? So like, that was one of the issues with our fast casual brand, was the back of the house working the woks, the custom woks, and the cooking was really difficult and it was kind of a specialty, and it was hard to find people to do that, that we could afford to pay what we needed to pay in order to make our model work. And so again, our food was awesome and I could do it, but I grew up in the kitchen, right? Like, so having that, you know, that replicable operational platform where they can, if you do this and this and this and you'll get that and having that figured out so that it's really dependable because that's like the opening line of every franchise agreement is we have a proven model, basically, is what it says. And so you have to really figure that out. And it has to work not just in Biloxi, Mississippi, but it has to work in Boston and everywhere else. And so proving that out takes time.

David Bloom [00:27:23]:

As I said, Capriotti's has been around for 40 years, Wing Zone, close to 30 years. So neither of these are overnight successes. Right? It takes, I always tell people it's going to cost probably six times more than you think it is. And I'm being conservative here, and it's going to take at least six times longer than you think it is. And you might just use ten as your multiple because it's easier and probably more accurate. So it's just a lot more difficult, it's a lot more complicated. And then most franchise companies that I know, depending upon their average unit volume and their royalty flow, don't hit profitability till they're somewhere close to 100 units, anywhere from 75 to 150, depending upon how much they're forward investing for their growth. Like I said, we invest very heavily in growth.

David Bloom [00:28:16]:

So even when we could have been profitable, we were pouring all that money back into building the teams and investing in technologies and all that kind of stuff. So thankfully we had the blessings of the board and the direction of the board to do all of that. So that's the third piece is you have to have the leadership in place. People have been there and done that, are not guessing at it.

Angelo Esposito [00:28:40]:

Right. That makes a ton of sense. And I wonder, like, you know, you touched on tech. I love to. Maybe, you know, we don't have to go too deep on it, but how important is tech, you know, when it comes to, you know, obviously I'm biased, I'm in the tech restaurant tech space, but I love to hear from your point of view, right, someone that's growing these brands as you guys are scaling these up, like how important is tech to you? And what are some, you know, examples of tech you guys are using?

David Bloom [00:29:02]:

Well, I would say that, first of all, just overall, the pace of change, the rate of change in our industry, and virtually every industry today is ten x what it was 20 years ago. So what used to take ten years. Today takes a year. And so I would suggest that people do some homework on this area. I think a great resource is a book called The Future Is Faster Than You Think by Peter Diamandis and Steven Kotler. I think his name is, and it goes into every industry, but it has a couple chapters on food and beverage and supply chain and everything else, real estate, finance, everything. And there is no world that technology, artificial intelligence, robotics, big data, 5g, autonomous, you know, vehicles, there's no world that's not going to be incredibly impacted by all of those advances. But what is changing and why it's changing so fast is all of those technologies, for the first time literally in history, are converging and coming together.

David Bloom [00:30:07]:

So when you put robotics with artificial intelligence, with big data, with 5g, with autonomous vehicles, and put it all together, you get exponential growth and change. And so it is hitting us everywhere. And we candidly try to stay at the forward edge of it. So we're always testing, as I said, that's what we use our company stores for operations, is to try all of that. Because when you're on the forward edge of technology innovation, a lot of things fail. Nothing works right away. It takes years to figure it out. But if you're on the forward edge like we are, when things happen, like the pandemic, we were already really good at all the delivery service providers, and we were already good at making money at it.

David Bloom [00:30:51]:

We already had deep relationships. We already had a ghost kitchen, you know, open with all the major ghost kitchen guys. We already had virtual brands. We had all that stuff in place when the pandemic hit and had gotten, you know, either good or learned what worked and what didn't work. And so I think that's it, it's just essential. I'd say probably 30% of what we do today is technology. And I think long term it's going to get closer to 40 or 50%.

Angelo Esposito [00:31:18]:

Wow.

David Bloom [00:31:19]:

Just take picking a site, picking a good location, right? Like, you still have to have experience, you still have to have the right brokers, you still have to understand all the dynamics. But we utilize a program platform called Tango analytics, and we acquire all of the cellular data. So we know, you know, for every market, so we know where people drive, where they live, where they work, where they stop, how fast they drive, you know, we know their traffic patterns. We acquire all of our competitors' data, so we know what they're doing in revenue. What is the Domino's and Jersey Mike's and, you know, Pizza hut and Starbucks and everybody else doing. And then we know where all of our existing stores are and what their performance is and what their demographics is are. And we know what all the, you know, the site attributes, the visibility, the access, the egress, the parking. And so this platform uses these ongoing learning algorithms that take our existing stores' performance with all those dynamics and project what those new locations are going to do.

David Bloom [00:32:23]:

And that's, you know, so real estate for us is 50% scientific or data driven and 50% experience because data only knows what's already happened. It doesn't know what's going to be happening. You know, what's happening in that market going forward. So.

Angelo Esposito [00:32:37]:

Right.

David Bloom [00:32:38]:

You know, it's, it's become hugely important to our success being able to pick the right site. Right. That's just one little piece of our business. But there's a good application.

Angelo Esposito [00:32:49]:

Yeah, big time. And it was actually something that I wanted to ask you is, I imagine, you know, being the in charge of growth, one of the challenges must be, you know, you alluded to it before, but opening in Boston versus New York versus whatever. Right. There's so many different markets and regions, and so how do you kind of, and this might be a loaded question, but maybe you give some nuggets over here. How do you handle, let's say, say, the fast pace of different areas, making sure that things are set up for success, the marketing, there's so many pieces that go into that puzzle. How do you kind of navigate that?

David Bloom [00:33:23]:

Well, first of all, you have to have great people. You have to have really strong teams and leadership for marketing teams and real estate teams and supply chain teams, technology teams, finance teams. Like, again, we're investing in building those teams. Each of those teams has to build out their technology stack and what, you know, their process. And then we have to find local people, the best, the right brokers in the market that are like, that are in the deal flow, that know, hey, yeah, Starbucks is planning to move across the street. They haven't even told the landlord yet. But next year they're building a freestanding building. Their space is going to come up and we can get in there early or these guys are not doing well.

David Bloom [00:34:03]:

I know the Lance others, this combination of art and science that have to be married, I think, together. And it has to be run by a great team that's really passionate because that real estate director needs to be able to, you know, with our franchise partner, with our broker, go out into the market and knock on the doors and ask the managers, hey, you know, how's your business doing here? How's lunch? How's dinner? What do you say? You know, it's that combination of, I think, great people, you know, great technology and data and really experience in doing this because as I said, you're going to learn and stumble along the way and learning how to take your brand from Boston to LA, opening in a new market where nobody knows you, no one's heard about you, and frankly they don't care about you. And there's a bunch of competitors that have been there for decades. Like learning how to open in new markets is a skill set in itself. It's very marketing driven and you really have to know your brand and what drives the success of your brand. Not in markets where everybody knows you, but in markets where no one's heard of you.

Angelo Esposito [00:35:13]:

Right.

David Bloom [00:35:14]:

So it's a whole new competency that you have to master.

Angelo Esposito [00:35:18]:

Right. And I can only imagine, you know, you mentioned like, you know, you guys are going international and I think you mentioned India, so I can assume that's going to be totally different or somewhat different marketing and different, you know, a lot of different work. So I'd love to maybe touch on that because I'm sure that's crazy feat.

David Bloom [00:35:36]:

It's very different. I think I've worked in some 30 countries to date, to various degrees. And so every region, every market, and not every product plays in every market. Some parts of the world eat sandwiches, a lot of the world eats chicken, which is why Wing Zone does so well internationally. And some parts of the world don't eat sandwiches. And then there are other parts of the world where frankly, I just don't like to do business. It's just not, I don't feel safe. I don't feel comfortable.

David Bloom [00:36:05]:

So knowing the regions, knowing where to go, where not to go, I think is really helpful. So again, having an experienced team that's done this before and has a track record, partnering with the right people in the market because there are some incredibly successful international companies out there. Some of the largest food companies in the world are not in the US. I'll say. I'll try. And these are just behemoth companies that are just incredibly good at what they do and really smart. So partnering with the right people and then just think about it, you're going to have to set up your entire brand all over again. Supply chain, it marketing, all of your design and construction, everything, all your support services.

David Bloom [00:36:48]:

You're going to have to set that all up in the country, which means somebody's going to do it. Either you or your development partner. And so knowing how to do that and going through all, you know, how you're going to get your product there or you're going to replicate your product there, it's just, frankly, it's a lot of work that's a long term commitment.

Angelo Esposito [00:37:07]:

Yeah, that makes sense. I can only imagine because, like you said, you're kind of restarting from scratch in terms of that perspective of building all that, you know, those playbooks and that infrastructure. You know, one thing that came to mind is, as you guys are growing at such a fast pace, you know, and I know, obviously, quality is top notch at Capriotti's, as you alluded to, with the food and the ingredients you guys use. One of the challenges I think restaurants sometimes faces as they scale, sometimes people say, ah, the quality went down because, you know, there's. How do you guys handle that kind of challenge of, you know, keeping quality with such high volumes?

David Bloom [00:37:41]:

Yeah, I think we're blessed again with these great vendor partners that are committed to our growth, and we have from time to time had to invest in their growth. Like they might have to make substantial capital investments, and that means they need to have commitments from us and even financial participation from us. So our relationship with, say, butterball is just incredible. And they've been incredible partners and remain incredible partners, but we've been loyal to them. Obviously, we could probably buy cheaper turkey somewhere, or, you know, we could go into Costco during Thanksgiving or albertsons and get cheaper turkeys. But we utilize butterball turkeys in all our shops 100% of the time. And that way we know the quality is just best in class. It's literally the best you can get.

David Bloom [00:38:30]:

And we hold to that standard. And that goes again like our roast beef snake aroma farms, but our pastrami, our, our beef or our cheesesteaks, our meatballs and our stuffing, you know, it's our peppers. We actually have to buy our, commit to buying our peppers for our pepper relish a year in advance because there's very limited supplies. And so we have to project our growth and our needs and what we need, but not over, obviously, buy. And we have to buy and store literally, I can't tell you how many cases of stuffing, how many, you know, how many chicken wings we have to buy in advance in store and keep in stores, just as a guarantee. But we do all that corporately and we do it nationally and internationally to make sure that we can control that supply chain. And then we have to have a great distribution partner. Our partner in the US is Cisco.

David Bloom [00:39:22]:

And I can tell you that's a tough business, too. Like, just, you know, they've had many, many challenges getting drivers, and, you know, they have their own challenges, and so being committed to them and working closely with them or addressing. I was just at Ken's. Ken's food, which does our dressings for Capriotti's, they do our mayo. Like, you can't buy our mayo on the shelf anywhere. It's specifically made per our recipe. And it's. It's different.

David Bloom [00:39:47]:

It's very different. And. But by having great partners like Ken's that are able to help us not just manage supply chain and guarantee it, but be very forward thinking and where are things going and what are the possibilities? And I, you know, it's really exciting to be able to work with those people. Going up to snake river farms next week. It's going to be great. We're really, you know, to see what they're doing and have that kind of relationship is just incredibly valuable.

Angelo Esposito [00:40:13]:

Yeah, I can only imagine. And I guess maybe to just kind of segue for people listening, you know, obviously, I'd love for them to. To hear a bit about maybe the process of whatever you can share when it comes to maybe owning a cavalier or actually. And owning a Wing Zone. So, you know, I love to learn. You know, we're super analytical. We're in the industry inventory space and recipe costing, so we help restaurants with all that good stuff to understand their margins. So I'd love to maybe chat a bit about that.

Angelo Esposito [00:40:40]:

Like, what does owning a capitalist look like from, let's say, just an operational perspective, but also just from a numbers perspective.

David Bloom [00:40:49]:

Well, first of all, we're in the fast casual space, right? Like, we're not QSR, we're not full service. So we're in a very different. We're a very specific metric vertical, which drives a lot of our business. That means our price points are a little bit higher. Our build out is maybe a little higher quality than maybe a fast food place, but not as certainly as big as a full service restaurant or staffing is, we think, very efficient. Our average check is somewhere between, you know, McDonald's and Fleming Steakhouse, right? It's, you know, somewhere. So we're in a very specific space. So all.

David Bloom [00:41:26]:

Everything we do, everything we design has to fit that fast, casual customer. It cost about, call it 500 grand to open, whether Capriotti's or a Wing Zone. Our average unit volume for both brands is right about a million bucks. You know, the top 25 or 30% tend to do quite a bit more than that. A million, 4,000,005. And both brands are, you know, there's definitely cooking involved. We're not an assembly line like, you know, some companies out there. So you have to be committed to being in the restaurant industry and both require about the same amount of staffing.

David Bloom [00:42:03]:

But beyond that, both brands are built for multi unit operators, people that want to own and operate more than one. So all of our training, all of our management information systems, all of our technologies are built for somebody to be able to manage a large number of restaurants, maybe in different markets, and really understand what's going on in those restaurants from a revenue profitability, consumer guest service standpoint, to really be able to dive down and say, even like with Capriotti's, if my food cost is high, you know, one month, why? Where is it? Well, we can literally drill down and say, well, we're using too much turkey, you know, in this restaurant, in this. Or if our customer service scores are down, you know, our speed of service or taste of food or front end, we can drill down and say, what? It's happening on Tuesday nights and that's where we have an issue. Well, okay, we got to go back and train that crew and see what's going on there. So, you know, having that kind of, you know, insight into your business is, I think, number one, common for both brands. And again, we built it with the intention of, we're not really what I call a single unit operator system. Some brands are more like, you're kind of coming in, you're going to be there all day, every day, and you're going to really be an owner operator. Yes.

David Bloom [00:43:31]:

You're going to start that with Capriotti's in a Wing Zone, but you're going to build your team. You're going to build your management team. And we have people that own ten or 15. And some of our franchisees are not just multi-unit operated for our brands, but they own checkers and rallies and Taco Bell and KFC, other concepts and other industries. So we're targeted not just from a consumer standpoint, but from a franchise owner standpoint to a certain type of person.

Angelo Esposito [00:43:58]:

That makes sense. That makes sense. And just to get a sense, obviously, I like to nerd out a bit on some of the just high level numbers right. In the restaurant, you look at cogs, labor. So your prime costs, right, cogs, labor and probably operational expenses. Can you share, I don't know if it's private, you don't have to share, but can you share roughly what are good targets for Capriotti's or Wing Zone.

David Bloom [00:44:17]:

And we touched on this when I said, in order to be a franchise, you have to have a strong economic model. And the restaurant space and economic model means you need to have your prime cost, which is your labor and your cost of goods, food and paper. It certainly needs to be below 60%, but below 55 is kind of where you want to be total. So that might be 23%, you know, labor all in. It might be 30 or 32 food or 28 food and 25 labor, some, some mix of that. But you want to be sub 55 is a great place to be. If you get to 52 prime cost, that's great. You want to keep your rent at 8% or low or less of sales.

David Bloom [00:45:04]:

So now let's say you're, your food and paper and labor is 52 and your occupancy costs are 8%. Now you're at 60% cost, right? Let's say between marketing and royalties, etcetera, you've got another 10%. So now you're at 70% costs, and let's say you've got another 8%, eight to 10%, and all other expenses, insurance and utilities and all those kind of things. So now you're, you're at 80% cost somewhere. So now you have a shot at a 20% EBITDA or net operating income, whatever you want to call it. And so in the industry, in our industry, we think of 20%. We have our own shops operating at better than 20%. Frank.

David Bloom [00:45:51]:

We have shops that are operating 22, 23%. We also have shops operating at 13%. So it varies a lot depending upon revenue, depending upon those occupancy costs, fixed costs. But, you know, those margins are, I think, pretty typical for our industry for an operation without. Without beer and wine, obviously, you know, that changes the model a little bit, right?

Angelo Esposito [00:46:17]:

Mixed touch. I love it. So I think. I think there's a lot of good nuggets that our audience isn't able to take from this. Maybe just to wrap up, I'd love to just under, you know, maybe share with the audience if they do want to get into, you know, a capitalizer zone. What does the process just look like? Can you walk them through first steps and just kind of, you know, what they physically can do to learn?

David Bloom [00:46:36]:

Sure. Look, we try to be 100% transparent to help people make the right decision. That's our philosophy. So we're going to tell you everything we can about us and who we are and how we do business right up front to help you make a good decision, and then we kind of let the laws of natural selection kind of take it from there. So you can just go to ownercapriates.com, or you can go to Wing Zone franchise, either site, and there's a ton of information you can get. Our franchise disclosure documents we send out. Once you inquire, you're going to be, quote unquote, on our mailing list. And we have about, I think, 90 emails that go out to people that are not about, hey, buy a franchise.

David Bloom [00:47:21]:

They're about, this is how we think about the business. This is how we think about supply chain or training or marketing or real estate, to kind of educate people on what it is we do and how we do it again to help them make a good decision, are we a good fit for them and vice versa? And that's our process. Just to be 100% transparent. You'll meet the team, you'll meet all the major department leaders along the way. We do monthly webinars. We do everything we can to just open up the funnel. And at the end of the day, we get about, between the two brands, we get about ten to 12,000 inquiries a year for people interested. And we move forward.

David Bloom [00:48:02]:

We actually move forward with less than 1% of them. So just to give you, and again, it's not, it's always people saying, yeah, this is. And a lot of times, interestingly, people that we do move forward with are people that have inquired a year or two ago or even five years ago, they're like, hey, I love you guys. I'm following you guys. It wasn't the right time for me. This is the right time for me or whatever. So for us, our reputation is everything, and so we do everything we can to maintain that.

Angelo Esposito [00:48:31]:

That's amazing. Well, you heard it here, guys. David Bloom, chief development and growth officer at Capriotti's and Wing Zone. Thank you for being here. Thank you for sharing this wealth of knowledge with our guests.

David Bloom [00:48:44]:

Awesome. This is always really fun to do for me to get to talk about what we do and what we're so passionate about. So thank you, Angelo.

Angelo Esposito [00:48:52]:

Feel free to check out WISK.ai for more resources and schedule a demo with one of our product specialists to see if it's a fit for.

Meet Your Host & Guest

David Bloom, Chief Development and Growth Officer of Capriotti’s and Wing Zone

David Bloom is a seasoned executive with over 25 years of C-level leadership experience across diverse industries. Renowned for his growth-driven approach, David specializes in strategic planning, implementation, and execution of national and international brand expansion and operations. Throughout his career, he has demonstrated a knack for establishing high-performance strategies, teams, and processes that accelerate growth and operational excellence while meeting financial benchmarks and performance goals. Currently serving as the Chief Development and Growth Officer at Capriotti's Sandwich Shop and Wing Zone Franchise Corporation, David leads the direction and execution of all aspects of franchise development, company-owned operations, franchise operations, and training. Under his leadership, both brands have experienced significant growth, with an annual growth rate increase of 25%. Passionate about excellence and alignment with organizations that share his values and priorities, David Bloom continues to drive success through his unwavering dedication and expertise.

ANGELO ESPOSITO, CO-FOUNDER AND CEO OF WISK.AI

Meet Angelo Esposito, the Co-Founder and CEO of WISK.ai, Angelo's vision is to revolutionize the hospitality industry by creating an inventory software that allows bar and restaurant owners to streamline their operations, improve their margins and sales, and minimize waste. With over a decade of experience in the hospitality industry, Angelo deeply understands the challenges faced by bar and restaurant owners. From managing inventory to tracking sales to forecasting demand, Angelo has seen it all firsthand. This gave him the insight he needed to create WISK.ai.

Recent Episodes

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S2E5 - The Recipe for Capriotti's Phenomenal 300% Yearly Expansion, Revealed by David Bloom

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Show notes

Episode Notes

In this conversation, David Bloom, Chief Development and Growth Officer for Capriotti's and Wing Zone, shares his journey in the restaurant industry and discusses the growth and success of both brands. He highlights the importance of franchising for scalability and wealth building, as well as the role of technology in the industry. David also provides insights on expanding into different markets and regions, and emphasizes the commitment to maintaining quality as the brands scale. In this conversation, David Bloom, Chief Development and Growth Officer at Capriotti's and WingZone, discusses the challenges of managing the supply chain and the importance of having strong distribution partners. He also shares insights into owning a Capriotti's or WingZone franchise, including the specific metrics and costs involved. Additionally, he provides an overview of the restaurant industry's key numbers and targets, such as prime costs and occupancy costs. Finally, he explains the franchise process and emphasizes the importance of transparency in helping potential franchisees make informed decisions.

Takeaways

  • Franchising can be a viable option for scaling a restaurant brand and building wealth, but it requires careful consideration of the economic model and finding the right partners.
  • Technology plays a crucial role in the restaurant industry, and staying at the forefront of technological advancements is essential for success.
  • Expanding into different markets and regions requires a combination of experienced teams, local partnerships, and understanding the unique dynamics of each market.
  • Maintaining quality as a brand scales requires strong relationships with vendor partners and a commitment to using high-quality ingredients. Managing the supply chain in the restaurant industry requires careful planning and coordination with distribution partners.
  • Owning a Capriotti's or WingZone franchise involves operating in the fast casual space with specific price points and quality standards.
  • Key numbers and targets in the restaurant industry include prime costs below 60%, rent at 8% or less of sales, and overall costs below 80%.
  • The franchise process for Capriotti's and WingZone involves transparency, education, and a selective approach to choosing franchisees.

Timestamps

00:00 Introduction and Background

01:14 Capriotti's - Upscale Sandwich Concept

03:02 Wing Zone - National and International Growth

05:07 David Bloom's Journey in the Restaurant Industry

09:58 Choosing Franchising for Scalability and Wealth Building

19:17 Pros of Franchising and Building from Scratch

22:14 Considerations when Choosing a Franchise

25:13 Building a Scalable Concept from Scratch

29:35 The Importance of Technology in the Restaurant Industry

33:51 Navigating Different Markets and Regions

36:07 Expanding Internationally

38:02 Maintaining Quality as the Brand Scales

39:33 Managing the Supply Chain

41:12 Owning a Capriotti's or WingZone

44:50 Restaurant Numbers and Targets

47:09 Franchise Process

Resources

Follow David Bloom on Instagram!

Connect with David Bloom via Linkedin!

Learn more about Wing Zone!

Learn more about Capriotti!

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