← How I Built This with Guy Raz
How I Built This with Guy Raz
Wingstop: Antonio Swad. A Brilliant Idea — And a Nail-Biting Exit
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Guy Raz
If you're a parent of a teen or have teens in your life, it
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can be hard to figure out the
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right way to approach social media and technology. Ultimately, if you feel like your teens are ready, there are tools to help. Instagram teen accounts have automatic protections for what your teens see and who can contact them, plus time management tools like daily time limits and sleep mode. And Instagram will continue adding built in safety features to help create age appropriate experiences. Learn more about teen accounts and Instagram's ongoing work to protect teens online@instagram.com teenaccounts that's instagram.com teenaccounts this message is brought
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Sponsor/Announcer
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Guy Raz
Every great founder story begins with a simple belief that things can be done better, more honestly, more securely. And that belief is exactly what drove the scientists at cern to build ProtonMail. Here's something I find remarkable. Your last 100 emails are more unique than your fingerprint. Think about that. Your inbox holds your bank, your work, your travel, your identity. And yet most email services were built to extract that data, not protect it. Scanning your messages, tracking when you open them. Building a profile you never agreed to. Most people didn't choose this system. They inherited it. ProtonMail changes that default end to end encryption so only you and your recipient can read your messages. Not advertisers, not big tech, not even Proton. No ads, no tracking, no surveillance. Go to proton me howIbuilt this to get started for free? Privacy by default.
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Antonio Swad
The principal of this group contacts me and he said, hey, I'd like to have a meeting with you. Because I said, what's it about? He said, well, it's about paying you your money. I said, well, I've always got ears for that. And we go upstairs at the Pizza Patron office building. We sit at the conference room and he said, I think I'd be able to buy your note from you. He said, I think we can give you $2 million for. Well, I said, wait a minute, you want to give me $2 million but you owe me $12 million. Is that right? He said, yeah, you could look at it like that. And I looked at him and I said, let me tell you something. I said, I'll spend every dollar I have collecting every dollar I'm owed. And with that, the meeting adjourned.
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Guy Raz
Welcome to How I Built this, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show
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today, how a pizza maker had a
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hunch that chicken wings would take off as a food concept and launched a restaurant that now has 3,000 locations around the world.
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Wingstop.
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Franchising in restaurants is one of the most powerful business models ever invented. You create a simple menu, a tight operating system, and a brand people recognize. Then you make it really easy to replicate. And suddenly other people are paying to build your business for you.
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What could go wrong? Right?
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Well, a lot. Because the moment the quality slips, the moment one location disappoints its customers, the whole system can start to feel it. Look at massive brands like TGI Fridays that are struggling to stay alive. Or even a chain like Quiznos, which once rivaled subway with nearly 5,000 locations. Today, there are barely 200 stores left in the US and that's part of why a lot of great restaurant concepts never franchise. But every once in a while, someone figures it out. Someone builds a system so simple, so focused, so repeatable, that it just explodes. And that someone, at least for the purposes of today's episode, is Antonio swad. He believed he could crack the code on franchising not once, but twice. First, with an idea that almost everyone told him would never work. A restaurant built entirely around one thing, the chicken wing. Now, at the time, wings weren't dinner. They were maybe a side dish or a bar snack, something you had with a beer, but not a food you built a business around. But Antonio saw something different. He saw a product people would crave and share in. A menu so simple it could be replicated almost anywhere. That business became Wingstop, and it started in a small city just outside Dallas in 1994. Today, Wingstop has more than 3,000 locations around the world. It's a publicly traded company with a market cap at this moment of around $5 billion. Antonio sold that business back in 2003, and then after selling Wingstop, he went back to an earlier idea, another franchise concept, this time around pizza. But not just any pizza. A pizza brand built with a very specific customer in mind.
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Latinos.
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And that brand was called Pizza Patron. Now, Pizza Patron is considerably smaller than Wingstop. Just about 70 or 80 locations, mainly in the Southwest. But like Wingstop, Antonio eventually sold pizza Patron as well, back in 2016. And as you'll hear, he brought incredible intuition to building both of these businesses. But when he eventually decided to sell, those same instincts didn't help him, especially with Wingstop. In fact, the story of how Antonio sold Wingstop and what happened after is one of the most surprising and cautionary tales we've ever told on this show. Antonio Swad grew up in the 1960s and 70s in Columbus, Ohio. His dad was a truck driver, and his mom waited tables. And as Antonio made his way through high school, his family had no expectation
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that he would go to college.
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Antonio Swad
Not only was there no expectation, there was no money. There was no money for that. My parents, both born in the 20s, and they were products of the Depression, and no one ever went to college. We were more, you know, I consider we were worker bees. You know, we were the blue collar worker bees. And by that time, I was already pretty deep into working in restaurants. I was in the restaurant business since I was 15. And I remember graduating from high school, and I had my steakhouse uniform on under my cap and gown, and as soon as the ceremony was over, I went straight to work and pulled my shift. At that time, I was working at the steakhouse, and I was there for a number of years. That's where I started washing dishes. And I eventually got promoted to the line. Got to come out and see, actually the public, and then broiler, cook, and every job.
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Guy Raz
All right, so you work at Ponderosa for some time, and I guess you
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move on to another restaurant, I guess
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a regional chain called the Smuggler's Inn. I read that through a connection there, you end up leaving Columbus and moving to Dallas. So what's the story there?
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Antonio Swad
Yes, defining moment. I had a. He's a friend and a mentor of mine, a little bit older than me, and he was.
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Guy Raz
Who's this?
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Antonio Swad
A guy named Gene Perkins. And he was the area supervisor of the Smugglers Inn. We formed a friendship, and he provided a mentorship for me. Well, he eventually left that job, moved to Dallas, Texas, and I left Columbus to come out and visit him. It was a time in the 80s and the late 80s, and Dallas was popping. Dallas was really on fire. And while I was out here in Dallas, I learned of a new nightclub that was opening, and I decided, I'm going to apply for the job. And it was a nightclub owned out of a. By a group out of Houston that had some of the hottest, highest volume Nightclubs gone in the country. It was called McFadden Ventures. And that night was probably one of the best decisions of my life, because Dallas has been, you know, with all the growth and all the opportunities, and I got the job, and I was a service bartender because I was very fast. But one night they called me in the office, and I thought. Honestly, I thought they were calling me in to give me an award because every time I would set a new record, pouring so many drinks, they kept track per hour. So manager said, hey, what, you're done? Come in. I need to talk to you in the office. I'm like, that's good, man. I knew I was busy tonight. He sat me down and he said, man, I'm going to let you go. You're. You're. You're fired. I. I said, you're kidding me, right? I said, all the records, I'm possibly the best bartender here. He said, yeah, that's no question about that. He said, but you're too intense. I've got too many complaints from the cocktail waitresses. You've made too many of the girls cry. He said, and it's a lot easier for me to replace bartender than it is for me to keep replacing these cocktail waitresses. And I made him cry because I didn't mean to. But the cocktail waitress at the service bar was supposed to know what glass every drink went in, and their job was to pull the glass, ice it, and get it set up. So the bartender just had to create the drink. And that's, you know, being kind of always competing with myself. When they didn't know what glass or how to get it set up, it would frustrate me, and they would get their feelings hurt. I guess so. You know, they say a lot of times things are a blessing. You don't think they are at the time, but all of a sudden, I'm here in Dallas, and I found myself without a job. And that allowed me to be kind of in the job market. And one of the people that I met over the bar was a young lady whose father owned a restaurant in a place called Watertown, New York. And I had no clue where that was. And she said to me, hey, my father is looking for a general manager. Would you like to talk to him? I looked up Watertown, New York, in my Funk and Wagnall Encyclopedia, and it said, beautiful Finger Lakes region, known for its dairy production. And I said, man, that sounds great. So once again, I got all my stuff loaded and drove and kept driving and driving and driving. It was in February, and I've never seen winter or cold like that in my life.
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Guy Raz
This was to manage and run a restaurant and a hotel right in Watertown.
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Antonio Swad
Yeah, it was called the Village Inn. It was actually not even in Watertown. It was in a suburb of Watertown called Black River, New York. And during that year, one of the things they offered was, they offered, they had a pizza. They made pizzas literally in the corner of the restaurant with a little four foot sandwich table the guy used as a pizza make table and had a 30 quart Hobart mixer, which is, everybody will tell you that's small to make pizza dough. But they had, they had a guy there that was studying to be a motorcycle mechanic. Motorcycle Mike. And he was the pizza guy. And I had, I worked seven days a week. And man, I grew up a lot. I was there a year and by that time I used it as a laboratory for learning all about pizza and how to make pizza. And I was able to save $11,500, saving all my money. And there's always a woman involved, too. And I had met a woman that eventually became my first wife.
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Guy Raz
Bernadette.
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Antonio Swad
Bernadette, Yeah, I met Bernadette like in the 10th month in Watertown. In Watertown, she came in for lunch and I met Bernadette. And I had this newfound knowledge of how to make pizzas. And eventually I'm like, well, I think I'll move back to Dallas because I like Dallas. And I didn't want to kind of go back to Columbus, Ohio, with my tail tucked between my legs. But I always wanted to have my own business, you know, I always did. And it was just a matter of how I would get the money. I had this $11,000, a little bit more, and I thought I could come to Dallas and start. Start a pizza business.
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Guy Raz
All right, so you go back to Dallas. This is, I think, 1985ish around then.
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Antonio Swad
Yeah, late 85, opened in 86.
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Guy Raz
And with $11,000, you had this idea to open. You were going to open a pizza
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place, and that was enough to do it.
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I mean, you could make that happen, like get a lease.
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Antonio Swad
And back in those days, you know, it's a lot different. You could literally go into the city hall with a drawing you made yourself on a piece of notebook, Pa, walk out of there with a building permit. I mean, a lot has changed. My friend Gene Perkins introduced me to a guy that had a bunch of property around Dallas. And it was, it was not the best real estate, believe me. And I didn't Know anything about this particular part of town. But I met. He introduced me to this guy, Victor Ballas, and he had a 750 square foot space in the southeast part of Dallas. And he agreed to rent me the space. But I was pretty nervous because I had a finite amount of money and not a great credit history. And he said, I'm going to need two things from you. And I'm like, oh, man, what could these two things be? He said, I'm going to need a check for the first month's rent. $500, 750 square feet, he said, and then a check for the security deposit, another $500. I said, those are the two things? He said, yeah, two checks. I gave him the two checks. And he put a key in my hand and said, I'll be back in 30 days. I collect the rent in person. He said, be sure you have your money ready.
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Guy Raz
And this space was just an empty 750 square feet, or did it have a kitchen? Did it have an oven? Did it have equipment inside?
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Antonio Swad
It had a bathroom at the back. That was it. It was.
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Guy Raz
There was no counter. There was no nothing.
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Antonio Swad
There was nothing. I couldn't hire anyone. I bought. I bought a used blodgeon oven just like the one that I was used to. I bought a used 30 quart mixer just like the one they said it was way too small and I didn't have money for a sign, but I did have enough money to buy a roll of red vinyl. And I cut the letters out of vinyl and stuck them on the front window because that's all I could really afford.
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Guy Raz
And you originally called it Pizza Pizza, right?
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Antonio Swad
Yeah. Yeah. I wanted there to be no mistake what we sold there.
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Guy Raz
All right, so you open this place. I think you finally get it open in 1986.
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Antonio Swad
April 16th.
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Guy Raz
April 16th. It's called Pizza Pizza.
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Antonio Swad
Yeah.
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Guy Raz
Clear. It's very obvious what you're selling, and you open up and what happens? Did people show up? Is it busy? Is there a line out around the corner?
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Antonio Swad
No, no, no. There were days when I would sell just, you know, less than 10 pizzas the whole shift.
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Guy Raz
And this was a slice shop or
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was it whole pizzas?
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Antonio Swad
No, it was whole pies. But I had a point of difference. You know, here's my point of difference. We didn't deliver pizza. And everybody and their brother. Pizza delivery was popping, and people would say, you're never gonna make it if you don't deliver right. But even Domin wouldn't deliver in this immediate area because it was too dangerous.
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Guy Raz
It was considered to be a rough neighborhood.
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Antonio Swad
Really rough. It was like order of robbery, you know, so. But we had something different. I had $5 pizzas, a large cheese and one topping. Pizza was 4.99. And wow. And even back then, that was a good value because pizzas were actually way more expensive than that, even in mid-80s. And, you know, people would call that. We had phone. We took orders by telephone. And the first question is, do you deliver? And we would say. If we said no, they'd hang up immediately. So we trained. I trained my guy and myself to say, we sell a large pizza, cheese, and one topping for 4.99. And. And a lot of the. A lot of the customers were. Were made that way. But the thing that really turned it around was, And I didn't know this when I leased the space was the preponderance of Hispanic people. I didn't know that it was the second densest Hispanic neighborhood in Dallas. And many times I would take a pizza order from a child who was translating for their mother or dad.
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Guy Raz
And you didn't speak Spanish?
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Antonio Swad
I spoke no Spanish, None. And I always worried, man, what if I'm not getting the exact pizza that they want? And so I kind of had this idea, what if I could get all the Hispanic business and didn't worry about anybody else and put it. And made it easy for people to order in Spanish? And that's when I decided to change it to Pizza Patron. And I looked. First thing I did was I looked in a Spanish language dictionary to the P's, because I wanted a P word. The double alliteration kind of worked. And one of the first words I came across was the word patron. And it was about the same number of letters. But what it said, a patron, was really stuck with me. It said, the benevolent leader of the community. And I was in business, and I hired a guy that was. Spoke mostly Spanish, a little English. Juan Solis. He became my first store manager. And we had this system. When somebody walked in the door, if they were. If they were black or white, I would wait on them. And if they looked like they were Hispanic, he would greet them in Spanish. And we were never wrong. And it got comfortable. And that customer base kept building and building and building. And eventually the store started to do very well.
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Guy Raz
All right, how did it go from you selling one or two pizzas a day to, you know, actually selling a lot of pizzas? Was it just because you changed the name?
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Antonio Swad
No, it was a concept based on respecting the customer, like, and showing them respect. Like, they never got. Most of these people were laborers, and they would come in after work and they were the people that were coming down off the roofs and. And a lot of construction people, a lot of they're working people. And they were able to order in Spanish. They got exactly the pizza that they wanted. It was an incredible value and high quality food. And they told their neighbor, and the business grew organically that way. We didn't have any money to advertise, but they told their neighbor. And then you go from 50, 60 pizzas a night to 80, 90, and eventually 200 on a Friday night or 300 on a Saturday night.
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Guy Raz
Wow.
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Antonio Swad
And after being open a little more than two years in that first location, I was able to open store number two. And this time, instead of being the second densest Hispanic neighborhood, I looked for a location in the first most dense area of Dallas called Oak Cliff. And Bernadette and I. Bernadette eventually moved. She moved to Dallas and was a tremendous help. We rented a third floor, one bedroom apartment. And every penny that I made, I put aside to open a second store. And that store, from the beginning, got off to a great start and produced profit from the first day.
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Guy Raz
With the cash flow from that second business, you are able to open another restaurant and then another one. I mean, also in predominantly Latino neighborhoods, or. I mean, tell me a little bit about that.
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Antonio Swad
Yeah, exactly. That's the old school way. Bootstrapping, I guess they call it. Never borrowed a penny along this journey from anyone. And I can see why it's very difficult to get somebody to loan money on a restaurant. The failure rate's incredible. But I used my own money all the time, used equipment and did the work, the construction work myself, and then opened a third, and then eventually a fourth store, Pizza Patron. And by this time, it was kind of, at least in my head, it was a brand. It was the Hispanic pizza brand. But I got interested too, in studying franchising. And people would say to me, why don't you franchise the pizza store? There was a million pizza franchises at the time, and very difficult, even with the Hispanic piece, which at that time, I didn't think that that was enough of a point of difference. I kind of wanted something else. And I had been studying franchising, and I found what I thought was the reasons a lot of them fail. But I also studied and realized that if you want to build a company that's worth a lot of money, franchising is a way to build it. And it's primarily the growth of the company. Is funded by other people. It's funded by the franchisee. And as long as I can control all the intellectual property and control the brand, that's what I was building intrinsic value in in the brand. And that was kind of the genesis of getting in the chicken wing business. But I had a couple of things in my past that made me believe a guy could. Could make a living selling. Selling chicken wings when nobody believed that.
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Guy Raz
But where did that come from?
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I mean, had you. Did you have experience with wings before? I mean, Buffalo wings have been around right there, I think, reputedly. Maybe not invented in Buffalo, or maybe it's a Buffalo sauce. I don't know.
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Antonio Swad
But Anchor Bar. Yeah. In Buffalo, New York.
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Guy Raz
And. And so how did you. Did you have experience with, like, chicken wings before?
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Antonio Swad
You know what my first experience was? This is back when I was a waiter back at the Smuggler's Inn in Columbus. In Columbus. I'll make this make sense in a moment. One of the side jobs of the waiters was keeping the free buffet in the bar side. They had free hors d' oeuvres every day from like 4 to 6, 30 something.
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Guy Raz
So then people would order a bunch of booze.
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Antonio Swad
Yeah. Back in those days, there was a product made by Pierce Foods. It was called Wing Dings. And they were the tiniest darn chicken wings. They must have come off of pigeons. I mean, they were really small, but they were salty and they had this kind of like a coating on them. And on Wednesdays, that was the free food. We gave wings and then a couple other things. And I can remember a time my manager, the general manager came to me and he said, he said, man, these Wednesday happy hours, they're even bigger than Friday. People come in and load up on these Wing Dings, on these pierced food. They're terrible. I mean, there was just a little bit of meat on each one. They were so tiny. But people absolutely loved them. And I kind of remembered how people would have these big plates of bones and stuff. So fast forward a couple years later, I'm in the pizza business, and I go to visit my friend and mentor, Gene in Atlanta, Georgia. And he took me to a place with funny. It had a name, it's called Taco Mac. But the number one thing they were known for was chicken wings. With a name like Taco Mac. Go figure. So he takes me there, and I've never seen a dining room full of people. And they're sitting there and there's chicken wings in front of every one of them.
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Guy Raz
There's buckets of chicken wings. Everyone is killing it. Mauling chicken wings.
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Antonio Swad
Killing it.
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Guy Raz
But I'm trying to understand. You had four pizza restaurants in Dallas and you say, I want to open up a different kind of restaurant, another concept with just chicken wings. I'm just wondering why you would not have tested that idea with the pizza. Like, why, why wouldn't you just have introduced chicken wings at the pizza restaurants?
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You already had pizza restaurants. Why wouldn't you have just done that there?
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Antonio Swad
Well, a couple of reasons. The pizza restaurants had type 2 hoods. Okay. It's a heat only hood.
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Guy Raz
Right.
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Antonio Swad
And even back then, you couldn't deep fat fry without, without a fire suppression system. It's called a type 1 hood.
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Guy Raz
And that would have cost a lot of cash to retrofit.
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Antonio Swad
Yeah. Just to add a menu item. I was kind of swinging for the whole concept to develop a, a frying concept.
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Guy Raz
Okay. This is 1994, right?
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Yes.
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And I'm just trying to think about the logistics of chicken wings at that point. Because one bird produces, I guess, four wings, right. It's like the drumette, the little drumette, and then the wing tip on each side. So four wings. And then, and now it's different. Like now chicken producers are just making chickens for the wings. But in 1994, was it easy to
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get that many wings?
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Like, just because you just need the wings.
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Antonio Swad
The chicken market, the price of chicken is set on what was called the earner berry market, and it was all based on the breast meat. And at that time, I'd never witnessed this, but they said a lot of the wings went to pet food manufacturers. Wow. And they boiled.
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Guy Raz
They would just get rid of them.
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Antonio Swad
They get rid of them. They weren't seeing it. They weren't. The real driver in what chicken was worth was based on breast meat.
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Guy Raz
Yes.
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Antonio Swad
I, when I first got into the wing business, I was, I paid 55 cents a pound for whole wings.
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Guy Raz
55 cents a pound.
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That's like, I mean, the arbitrage on that is incredible. Right? You, yeah, you could convert that into what you're selling it for by the pound is probably like, you know, seven, eight bucks, maybe, who knows, five bucks. But before you open this restaurant, right, you know, you want to open it, you start experimenting with recipes. And really the, if I'm, if I'm not mistaken, the chicken, the frying part is pretty straightforward. It's salt, pepper, maybe some baking powder to make it crispy. And you just drop it in hot oil. You deep fry the chicken wings for a couple minutes and then the magic is in the sauce that you dip it in.
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Antonio Swad
Totally, right? Totally, totally. I bought a used propane powered deep frat fryer that we, we set out back of our house on the deck. And after we closed the pizza stores, we had the employees come over and I, they were kind of my guinea pigs.
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Guy Raz
At night.
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Is it like midnight?
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Antonio Swad
Midnight, One in the morning? I mean, we had so much energy back then, you know, we were all younger and full of energy and I would make up different sauces and then we'd try them out on these people and say, what do you, what did you think? What'd you think? I didn't eat the chicken, but I licked sauce.
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Guy Raz
You didn't eat them because you were vegetarian?
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Antonio Swad
I didn't eat chicken.
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Guy Raz
So you didn't even like, you didn't take bites to chew it or anything?
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Antonio Swad
I licked the sauce. I mean, I could remember what chicken tasted like because.
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Guy Raz
Why were you a vegetarian?
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Antonio Swad
Oh man, I was a vegetarian because of. It was my way. And I remember the last time I hadn't meat in my mouth at this time, it was when I was working up in Watertown. I came to the conclusion that the industry of commercially raising these animals was so full of cruelty and the only way that I could personally protest it was to not eat meat. It was all I, it was, quite honestly, it was all I can do. I was in the restaurant business. I had to sell meat.
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Guy Raz
Yeah.
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Antonio Swad
You know, but hopefully we'll get to that. I mean, I had to sell meat right up into the moment I decided I didn't have to sell meat.
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Guy Raz
So you are, and you're convinced this
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is going to work? So first of all, where's the location that you find to open this up?
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Antonio Swad
It's in Garland, Texas. And it was 1100 square feet.
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Guy Raz
It had a hood, it had everything already there.
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Antonio Swad
It didn't have a type 1 hood, it had a heat only hood. I don't know, but it wasn't big enough and it wasn't the hood I needed. But it had two restrooms and to put in a restroom, especially an ADA compliant restroom, is pretty expensive. So it had two restrooms already. And the first manager, Rex, very important in this story, he had some construction skills and he also had some good food training and he worked for a cafeteria chain and we even used a couple of the recipes in the first wingstop, you know, that he knew from the cafeteria.
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Guy Raz
Is Garland considered?
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Antonio Swad
I don't.
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Guy Raz
Garland's not considered. Maybe an outer exerb of Dallas, but it's not even Considered a suburb of Dallas. Is it? Or am I wrong?
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Antonio Swad
It's a suburb. Yeah. And this shopping center, this is what it had gone for. It had a Blockbuster Video as the anchor.
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Guy Raz
Okay?
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Antonio Swad
And to me, that. To me, that was gold, because this.
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Guy Raz
Did you. Did you think that, hey, this is the perfect place to be because people will get a bucket of chicken wings with their movie?
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Antonio Swad
Yeah, I thought that they would. It was a great food to go to go with movies. And I had. And I had people coming on the lot already, and that's why we sampled to them, you know, and a lot of our customers were developed from that, you know, and eventually, you know, Blockbuster, you know, went out of business. But by that time, you know, Wingstop was pretty well established, you know, and
- [32:20]
Guy Raz
Wings eventually would become like. I mean, God, I can't imagine how many wings are sold during the football season. It's just unbelievable. But you open this place in Garland and as expected, it's a hit right away. No, no, okay.
- [32:39]
Antonio Swad
No, it wasn't. It was like, you know, people couldn't believe that I had a place that sold only chicken wings. And we were building it. Rex helped me with the construction. We were building it, went into a Home Depot to buy some of this stuff. And a guy waited on me and we had our tape measures on our way. So he thought we were like the contractors. He didn't really know that we were the restaurateurs. And he said, what are you fellas building? I said, oh, we're building this little place over there in Garland. And he said, well, what's it going to be? I said, it's going to sell chicken wings. And he's like, and what else? I said, well, pretty much. Pretty much just chicken wings. He said, come on. I said, no, it's true. He said, let me give you some advice. You be sure and get all your money from that man, because there's nobody can make a living selling nothing but chicken wings. And, man, you talk about a chin drop. I remember walking out of the Home Depot going, man, I sure hope he's wrong.
- [33:39]
Guy Raz
When we come back in just a moment, Antonio launches the business, then totally rethinks it after imagining a football stadium full of chickens. Stay with us. I'm Guy Raz, and you're listening to How I Built this. Your website can really set the entire tone for your brand. I know that when I hear about a new company, the first thing I do is go to their website. Keeping your site updated and making changes quickly should be easy. That's why so many companies, from early stage startups to Fortune 500s are turning to Framer. Framer works like your team's favorite design tool. It's built for real time collaboration with a powerful CMS that's great for SEO and analytics that help you understand what's actually working. And here's the key part. Framer doesn't slow you down. Any change you make goes live in seconds with just one click. Learn how you can get more out of your.com from a framer specialist or get started building for free today@framer.com built for 30% off a Framer Pro annual plan. That's framer.combiltine for 30% off framer.combilt rules and restrictions may apply as you've heard on this show, running a small business means hustling and figuring it all out a lot of times on your own. But that doesn't mean you have to spend every night guessing at tax forms or looking for onboarding docs. Gusto handles all of that so you can spend your time on the parts of your business you actually love. Gusto is online payroll and benefits software built for small businesses. It's all in one remote, friendly and incredibly easy to use so you can pay, hire, onboard and support your team from anywhere. Gusto does it all. Automatic payroll tax filing, simple direct deposits, health benefits, commuter benefits, workers comp 401k. And Gusto has options for nearly every budget you get. Unlimited payroll runs for one monthly price with no hidden fees and no surprises. Try gusto today@gusto.com BILT and get three months free when you run your first payroll. That's three months of free payroll@gusto.comBILT One more time gusto.comBILT.
- [36:18]
Hey, welcome back to How I Built this. I'm Guy raz.
- [36:21]
So it's 1994 and Antonio, along with Bernadette, his wife at the time, have opened the first Wingstop restaurant in Garland, Texas. It's right near a Blockbuster Video store, which is great, but aside from that, it's not a prime spot.
- [36:36]
Antonio Swad
The location wasn't the best it was on the road takes a radical curve and this space in the shopping center was kind of like where the curve was most extreme. The Blockbuster was on one end and there was a Remco Rent to Own furniture store on the other, but right in the middle where that kind of did this big bend so it wasn't very visible. And again, I didn't have a lot of money to advertise. I ran these Little tiny ads in the. We had a free paper called the Dallas observer, and I would make up these catchy little ads, and the observer was given away free all over the Metroplex. But you still had to convince people to drive from wherever to try it. You know, you got it. You got to get. You got to get trial. And once we got people got the food in their mouth, you know, we had a real good shot at getting them back. Because, again, it wasn't that I had to teach people to love chicken wings. I had to teach people that you can buy chicken wings from us.
- [37:43]
Guy Raz
And also, the challenge is that it's not like a burger or a sandwich, which people think of as lunch or a meal. Right at that time, certainly, I would imagine most people didn't think of it
- [37:56]
Antonio Swad
as a meal, more like an appetizer or something.
- [37:59]
Guy Raz
Yeah, an appetizer.
- [38:00]
Antonio Swad
It was not known to be a center of the plate item. It was not.
- [38:04]
Guy Raz
So was your business mostly takeout?
- [38:07]
Antonio Swad
Yeah, it had to be. I only had 22 seats, and in order to achieve the sales that I really wanted to achieve, majority of the business was takeout. Takeout business is great business. You exchange the money for the product, and they turn around and leave. You know, the integrity of the food, I don't think is as good, because as soon as you put a hot item, particularly a fried item, it starts to degrade. But people didn't care. It was good enough, and people loved it enough. The flavors were interesting enough that they came back.
- [38:42]
Guy Raz
Okay, so you are experimenting with chicken wings. And so, again, the frying part isn't what makes it special, of course. Basically, it's a vehicle. A chicken wing is a vehicle for sauce. Right. It's a crispy vehicle for just tasting a bunch of different sauces. Super spicy to savory and sweet or whatever.
- [39:05]
Antonio Swad
You're correct. And that's good for growing a company, because you can buy chicken at a certain spec pretty much anywhere in the world. It's the sauce that makes the difference,
- [39:15]
Guy Raz
because you could make the sauces, and that would be the special. That's the secret sauce. The secret sauce is the sauce.
- [39:21]
Antonio Swad
And keep in mind, too, that these sauces that we developed were proprietary. None of them. We could. A food salesman couldn't just open his notebook and say, oh, I'll sell you the same sauce that they're getting down the street. It was none of that.
- [39:35]
Guy Raz
I mean, I imagine, you know, you're sort of describing the sauces as, like, this really special proprietary thing, but, like, I imagine you had Buffalo sauce. You had ranch dressing. You had maybe a barbecue sauce. Like, what was so special about the sauces?
- [39:50]
Antonio Swad
We did have buffalo sauce, which is
- [39:53]
Guy Raz
standard, and we had hot sauce and
- [39:55]
Antonio Swad
butter and cayenne pepper and vinegar based sauce. And we had a mild version of that, which was essentially half that and half butter. Yeah, this, this. This butter called whirl. It's not real butter, but it's the base. It's a butter base. So we had that for sure. So we had that covered. But then we used. We had a Hawaiian chicken, which was essentially a recipe that Rex brought over from his days in the cafeteria.
- [40:22]
Guy Raz
Like a teriyaki pineapple.
- [40:24]
Antonio Swad
Yeah, exactly. And then I developed the compound seasoning sauce. The lemon pepper was one. The garlic parmesan was. Was another. Then we'd use the hot sauce as a base and mixed Cajun seasoning with it. And then that was a Cajun. You'd have to. You'd sprinkle Cajun seasoning on top of the wings, and it just looked fantastic. They just. You could just eat them with your eyes, you know? And then we developed, using fresh habanero pepper, the sauce that became known as atomic.
- [40:55]
Guy Raz
Oh.
- [40:56]
Oh. And the other thing about this concept that I think is interesting is it's almost like make your own meal, right? Because you get the wings, there's nothing on them except salt and pepper. But then you decide, like, how to dip them and like. Right. You could order a bunch of different sauces. Is that right? And you dip them or were they, like, rolled in the sauce?
- [41:14]
Antonio Swad
No, they were rolled. They were sauce. And this is. This is an important part of making wings. You have to sauce them as soon as they come up out of the fryer, because I don't have any scientific evidence of this, but it seems like if you sauce the wings when they're at their hottest, the sauce is kind of drawn into the. Into the meat a little more. And the wing, the entire wing is more flavorful that way. If. And that was. That's. That was part of our program. We would sauce them to order. Then we had a couple of side items. We had this pearl potato salad and bourbon baked beans and fries. And that was it. And in the early stores, too, I sold beer, but it was like 3% of the sales. But I put beer in the store to position the concept as an adult concept and not fast food because I wanted people to think of it as a place where it's okay to spend more money than you would spend in a typical fast food restaurant. We had music I had the lights down low, but the majority of the sales were to go sales.
- [42:22]
Guy Raz
Okay, you opened the store in 1994 and it's a slow burn, but it's going to grow.
- [42:28]
Meantime, you have four pizza restaurants.
- [42:30]
So tell me how you were.
- [42:32]
Because it seems like your attention all
- [42:33]
of a sudden is really shifting to Wingstop because you see this as also a great franchise opportunity. So how are you dividing your attention between pizza patron and this wings concept?
- [42:50]
Antonio Swad
Anybody that achieves anything doesn't do it alone. And I certainly didn't do this alone. I had some key managers. They ran the stores, they ran the pizza stores. And I spent very little time in the pizza business. I was 100% focused working at the Wingstop, listening to customers. And so the pizza business was kind of on. I don't want to say autopilot, but it was for me because I had had these key people that knew the, knew the business. They both were bilingual. And it was only four stores, you know, so we had a, we had a pretty, pretty tight little operation and it kind of took care of itself during the early years of Wingstop.
- [43:33]
Guy Raz
So did you. In your mind, you knew that you, you'd been exploring this idea of franchising. And franchising is, is, can be a good way to expand a business because it doesn't require a whole lot of capital on, on the owner's part. Right. The, the, the money is put up by the franchisee. There are other challenges with it, which we'll get to, but it could just be replicated. Turnkey, everything, the logo, the menu, the sauces, all there. All you have to do is just fry the chicken.
- [44:01]
Antonio Swad
It was trainable. And I'm selling a widely consumed protein with proprietary sauces that you could only get if you walk through the door of a Wingstop.
- [44:13]
Guy Raz
And the mar.
- [44:14]
I imagine if it works, the margins are pretty great.
- [44:19]
Antonio Swad
The margins were good. Now, chicken wings didn't remain at 55 cents a pound as the popularity grew, you know, in a lot of ways, as Wingstop grew, you know, we contributed greatly into the popularity of wings. It got a lot of competitors, a lot of people opened wing concepts of their own. And then eventually the price of wings certainly went up a lot. But when we opened the store, Ten Piece Wings was 299.
- [44:49]
Guy Raz
Wow. Okay, so I believe after three years of proving this concept out, you decide that it's time to franchise this thing.
- [44:59]
Antonio Swad
Yes.
- [45:00]
Guy Raz
And how much was it to buy in? What was it cost? Do you remember?
- [45:05]
Antonio Swad
$20,000. At first it was 20,000 7,500 dol. It was divided into two fees. 7,500 was called a development fee. And you paid that up front. Then you started to look for a location. And then after you found a location, you paid the balance of 12, 5
- [45:23]
Guy Raz
and 20 grand would get you. That's a franchise fee.
- [45:26]
Antonio Swad
Yeah.
- [45:27]
Guy Raz
And then.
- [45:27]
But you would be responsible for finding the. The real estate, or would. Would. Would you guys help them?
- [45:33]
Antonio Swad
Well, they would be responsible for finding it. And this is a very important point. If you find the real estate for them, you pick up some contingent liability, almost assuring their success. And this is something I learned early
- [45:47]
Guy Raz
on, almost assuring their success by saying,
- [45:50]
Antonio Swad
this is a good spot. You'll do great here. You never said that. You never want to say that in franchising because there's so many moving parts. And at the end of the day, it comes down to human behavior and human performance.
- [46:01]
Sponsor/Announcer
Yeah.
- [46:02]
Antonio Swad
So they would say, I want to open a store. And they'd pick an area. And then you would define a development area and say, okay, you can look between here and here and here and here. And once you found the location, it was up to us to approve it or not approve it. But that's different than picking it out for you.
- [46:24]
Guy Raz
And just to like to dig into this for a moment, I mean, it was $20,000 to open up a franchise location. In today's just back of the envelope math, that's like a little over $40,000. And I checked this out. To open a Wingstop today, it's at least 300,000. Some of them are up to a million. So that's low. I mean, presumably you're getting 15% or maybe of sales and maybe like a percentage of profit. But I mean, that even in 1997, that was like, pretty cheap to go
- [46:57]
Antonio Swad
to buy in a couple things here. 20,000 was just for the fee. It was the franchise fee that included the development fee and the franchise fee together was $20,000. You still had to fund the construction of the store and furniture, fixtures and equipment. But even saying all that, all in, you could open a store at that time for about $125,000.
- [47:26]
Guy Raz
All right, so you've got this first franchise.
- [47:29]
And where was that location?
- [47:30]
Antonio Swad
Louisville, Texas, Just. Just north. Now that is a suburb, and that is north of Dallas maybe 20 minutes. And it was owned by two women. And the one woman, it was a school teacher, phys Ed teacher. She cashed in her retirement as her down payment. That along with an SBA loan, she was able to fund the store. And like many of the original franchisees, they went on to become own multiple stores and become multi millionaires in many cases.
- [48:03]
Guy Raz
Well, you have to, I mean, if you own one Wingstop or one Taco Bell or one McDonald's, you can do pretty well. But you really, to see serious money, you gotta own 10 to start seeing like, significant. Right. Dollars. That's right. That's what I've. From the time I've spent around these places. So, okay, so this door opens and you are again, like, I think people think of, wow, franchise businesses, like, they basically can generate a ton of money for the owner, the mothership. And that is true in many cases. But I wonder, I mean, were you all of a sudden like, seeing significant money come into your business and your life?
- [48:45]
Antonio Swad
The store that I owned, it quickly continued to grow, eclipsed a million dollars in sales. By the time the franchising program was in full swing, the store was doing well over a million dollars a year. And eventually the store did over $2 million a year. It's crazy.
- [49:03]
Guy Raz
It's kind of hard to believe because it's just wings and. But yeah, I mean, I mean, I, you know, you look at like the average Chick fil A, I think they do like 7 million a store or 8 million, maybe more. But to do a million dollars for just chicken wings is kind of amazing.
- [49:22]
Antonio Swad
Yeah. And the money that I was seeing, most of the money was the profit from the stores. The company owned, stores that I owned, but then started to see some royalty revenue. And royalty was 5% of sales. 5%. I'm sure that's low or not. Yes, yes, Fair. It was fair. And the higher their sales, the higher the royalty that they paid. So, you know, I had a vested interest in having every one of the stores do well, do extremely well. And nothing sells franchises better than successful franchisees. And eventually it got to that point where the number of franchise leads that we got was just, was darn near overwhelming because the stores did well.
- [50:12]
Guy Raz
Okay, let's get into this because there
- [50:15]
is a story you've told, and I really want to dig into this because I'm skeptical of it and not because I don't think you're telling the truth. I really do. I'm just, I want to interrogate it a little bit because it doesn't entirely make sense to me.
- [50:28]
Antonio Swad
Okay.
- [50:29]
Guy Raz
But five years in, Wingstop has grown to 150 locations. I mean, we clearly, it's going up and up and up, and you decide that year that you want to get out. And I just I'm trying to figure out why. I mean, you finally have this concept that is really working and you want to sell. And I mean, okay, okay, money is one thing, sure. And security, financial security. But, like, it's going up and up. So help me understand what was going through your head at that time.
- [51:07]
Antonio Swad
Well, give me a moment to tell you the story, and I'll tell you the defining moment. And, you know, it was never about the money. Which is funny. Usually when people say it's never about the money, it's usually always about the money. But in this case, it wasn't. I had a defining moment, a vision, if you will, at a football game, Dallas Cowboy football game. Bernadette and I went. And usually at the end of the third quarter, they came on the loudspeaker and they announced the attendance of the game. And this stadium held about 65,000 people. And so I'm sitting there and I started to imagine that in 65,000 people, and I'm looking around and, you know, it's a sellout, that there was a chicken on every seat instead of a person. I'm just trying to get my. Wrap my head around 65,000 chickens. And I started doing the mental math. And you keep in mind, at this time, you know, I was feeling more and more like a hypocrite, growing this company that sold nothing but chicken, not eating chicken myself, and knowing what the industry was like, you know, it was football Sunday. It was the busiest day. And that thought of killing all those chickens. If we killed every chicken in the place, it wouldn't be enough to supply even half of the use of the time it took to watch the game.
- [52:40]
Guy Raz
If you killed 65,000 chickens, like there were 65,000 fans, that would still not be enough to feed all those people who wanted chicken wings. Cause each person's eating, like 10, 15 chicken wings.
- [52:51]
Antonio Swad
Yeah, it would only give you 520 cases of wings, and that's not very many. And the vision to me, was kind of horrifying and haunting, and I kind of held it to myself because it was ridiculous. You know, it's ridiculous. And I had arguably one of the best restaurant concepts going with phenomenal growth, tons of development, agreement signed, lots of stores under construction. But I was kind of haunted by that vision. And I felt like a huge hypocrite as someone that didn't eat chicken.
- [53:31]
Guy Raz
I just want to reflect on this moment. I'm thinking, like, if the movie of your life, you're there in the stadium, then every person turns into a chicken yes, right. Like every. Okay, so I can see that. And I know that you had become a vegetarian earlier, years before. Before, very much impacted by how animals were treated, cruelty. And I would not ever want to debate that because I think there's such great arguments for not eating meat, even though I do. But I would think that some other people might say, especially in the business, say, listen, hang on, it's a business, and you're also providing, you know, livelihoods for people. And you are. You know, this business is employing thousands of people and has created, you know, wealth for people who didn't and access for people who could not normally buy into a franchise. So, you know, there are other things to think about here. That's what I'm trying to figure out.
- [54:25]
Like, it doesn't make sense to me
- [54:26]
that it was just your conscience.
- [54:28]
Antonio Swad
Well, when I gave you the rest, the rest of the story, I think it'll. It'll come into focus for you a little bit more. At that moment, I didn't decide, oh, man, I got to sell this company. I got. I mean, I wasn't necessarily thinking that.
- [54:43]
Guy Raz
Yeah.
- [54:43]
Antonio Swad
And I was loving the growth, and I realized that I really had finally had a concept that had legs and I was fulfilling my dream of.
- [54:52]
Guy Raz
And by the way, dude, you come from a working class background. Truck driver, dad, waitress, mom, barely finished high school. Like, now you built something really big. Like, there's a lot to be proud of.
- [55:05]
Antonio Swad
A ton. One of those Only in America stories, for sure. So about two weeks later, from that football game, I remember where I was, defining moment. I was on a ladder doing the interior decor at the Marsh Lane Wingstop. And my phone rang and I looked at who it was. It was the loan packager guy.
- [55:30]
Guy Raz
Okay?
- [55:31]
Antonio Swad
He was a loan packager for SBA Loans. So I broke for lunch and I called him back and I said, hey, yeah, what's up? And he said, hey, I'm just going to ask you, and this is kind of out of left field, but I want to ask you, would you ever consider selling the company? And it's first time this ever came up. I said, man, I don't know. You know, it seems like we're rolling pretty good, but inside of me, I had this little tick, you know, this thing bothering me. He said, well, listen, you. I got a guy, a friend of mine that's coming into town in a couple of days, and he's got a lot of experience. He's bought and sold a lot of businesses and that. And I remember the one thing he said about it is that he's the guy that took Burger King to Saudi Arabia. He's an American guy, lives in Tennessee. And that gave him credibility, I guess, in my mind. He said, would you sit down or at least have a conversation with him? I said, I guess so. Yeah, sure, I'll have a conversation with him. Sure enough, a couple days later, this guy comes into town, and we sit down, and he said, hey, listen, I think I could sell your business. And I said, oh, really? You think so? And then he said, I think I could get you $20 million. I'm like, $20 million? You think it's worth $20 million? He said, I. I think it is. I just couldn't imagine numbers like that.
- [57:03]
Guy Raz
Yeah.
- [57:04]
And you had no. You had no investors, right?
- [57:07]
Antonio Swad
100% owned it. 100%?
- [57:09]
Guy Raz
Yeah.
- [57:10]
Antonio Swad
But, you know, he said, 20. I said, $20 million? He said, yeah. I said, well, I don't know. Let me think about it. So I did think about it, and I eventually said, okay, if you could bring me that, you know, I would certainly look at that. And he brings a guy to meet me, and I like the guy right away. Experienced restaurant guy. And he turns out he had been watching Wingstop for a number of months, and he. I was shocked at how much he knew about my company. You know, he drove an old Lexus, and he walked me around to the trunk of his Lexus, and he popped the trunk open, and he had files. He had a file on every store that I had opened. You know, he had built this file, and he was, like, really, really into it. So this guy, his name is George, he said, I'm gonna line up the funding. I'm gonna be able to raise the money for this. We're gonna do this. I said, all right, George, you know, if you can do it, if you could raise the money. He did. He brought in some guys from. I believe they were out of Boston, and they were at sbic, you know, Small Business Investment Corporation, division of. Funded by the sba. And I had had great success building this company with SBA money.
- [58:31]
Guy Raz
Yeah.
- [58:31]
Antonio Swad
And I sat there and watched him, and George sat there and watched him, and he's just hoping that they're going to say yes and fund the deal for him to buy the company. So the. The deal that we ended up with was this 20 million turned into 22 million. The deal got sweeter, but it would only give me 10 million at closing. And that was part of the reason that we bumped the price up by 10%. Then I would carry the note for 10 years on the $12 million. For 10 years. And you. I never had that much money in one pilot together in my life.
- [59:18]
Guy Raz
So you get 10 million up front and then 12 million basically over a 10 year period or after.
- [59:25]
Antonio Swad
Okay, That's a pretty fat payment. You know, when you finance $12 million over 120 months, I mean, it's still nice. Check. And I thought, man, you talk about mailbox money. This is going to be great.
- [59:40]
Guy Raz
Yeah.
- [59:40]
Antonio Swad
And I was kind of. I was a baby in the woods, you know, I didn't know about M and A Attorneys and people that, you know, specialize on transactions like that. And there's a lot of money at stake here. The lawyer that I used was back to my franchise guy, okay, the guy that did the franchise documents. It's the only lawyer I knew at the time. Boy, you, you, you talk about, you know, what is that expression? Taking a knife to a gunfight. I mean, what I had was like my boy scout pocket knife. And these guys, they rolled in with big law firm out of Houston and all this stuff. And I didn't realize it at the time, but my lawyer was pretty overwhelmed. Well, wait, there's this. I learned this technique where the closer they get you to closing on a transaction like this, at this point, you're emotionally kind of already there. You're. You might even be spending the money, you know, in your mind, oh, when I get that check, here's what I'm gonna do first and all that. And pretty soon at the end, the deal is not exactly the same deal that you lived in, but by this time, you're kind of emotionally bought into it. You might have even mentally moved on. You're no longer owning the company. What are you gonna do next kind of thing. And I knew what I wanted to do do next. I wanted to. Now I'm armed with some money and franchising knowledge. And I was going to go back and get my pizza concept turned up, get it ready for prime time.
- [61:12]
Guy Raz
Got it. Okay, so this was your plan?
- [61:14]
Antonio Swad
That was my plan.
- [61:15]
Guy Raz
Okay.
- [61:15]
All right.
- [61:16]
And so what happens when you get close to the closing?
- [61:19]
Antonio Swad
So the deal closes. Shortly after the deal close, they fire George. The guy sold the company to. They had in the documents that they had the ability to get rid of him. He wasn't in the seat two weeks, right? They unload him and they bring in their own guys, then bring in some of these Boston guys. And the way I set them up, when they took control of the company, with the amount of revenue the company was Doing based on only royalty revenue. If they didn't sell another franchise, they would have enough money to make my payment. So first payment comes due. Nothing. Go to the mailbox. Mailbox is empty. So the second month comes nothing. And in this interim, I'm getting pizza patron ready for the big stage, reworking the logo, reworking all this stuff. I mean, I know what to do now. I'm a dangerous man. I got a little bit of money and a lot of knowledge, and I love the pizza business. I love the concept. I'm seeing the explosive growth of the Hispanic community. So my focus is over there.
- [62:35]
Guy Raz
Yeah.
- [62:35]
Antonio Swad
Third month comes, no money. So I get another. I'm introduced to another lawyer who ended up becoming one of my dearest friends. He's a litigator. He's not a franchise specialist or anything like that, but he's just a general litigation lawyer. And we started to dig into the documents, and you have to understand, the documents were so voluminous. So buried in the documents was this little provision. And it's just. This is. This is a great lesson for people, the use of how a word is used. It came down to. It said the payment would be made based on available cash flow. Available cash flow. So when we got into the documents, basically, well, it's based on available cash flow, and there's no cash flow available. There's none available.
- [63:31]
Guy Raz
But you're still guaranteed to get the rest of the payment before the end of the 120 months.
- [63:36]
Antonio Swad
Well, at this point, I was still a little optimistic, but it became clear as the months rolled on that they had no intention of paying me. They had no intention. Instead of using the money to make the payment to me for the company that I built, they took the money and they built corporate stores with it, which was adding to the intrinsic value of the company. They were bonusing themselves. If it ever looked like at the end of the month there was money left over, they made sure there was never any money left over.
- [64:10]
Guy Raz
And they were able to do this because of the way the contract was written.
- [64:13]
Antonio Swad
The way it was written.
- [64:14]
Guy Raz
Okay. So. So, I mean, I'm on. I'm on the edge of my seat here. Did you get the rest of your money?
- [64:23]
Antonio Swad
Well, me and that one lawyer, we sued him.
- [64:29]
Guy Raz
Yeah.
- [64:30]
Antonio Swad
And keep in mind, they owed me $12 million.
- [64:34]
Guy Raz
Yep.
- [64:34]
Antonio Swad
Okay. That's a lot of money to a young, young man from Ohio who started off at the dish machine, you know, So I sued him. I sued him for my money.
- [64:51]
Guy Raz
When we come back in just a moment, how that lawsuit Landed.
- [64:55]
And how a jalapeno infused pizza got a ton of attention when people refused
- [65:00]
to call it by its name. Stay with us. I'm Guy Raz, and you're listening to How I Built the this. Hey, welcome back to How I Built this.
- [65:21]
I'm Guy Raz.
- [65:22]
So it's around 2003, and Antonio decides it's time to do something that he's wanted to do for a franchise Pizza Patron. But meanwhile, he's got some unfinished business with a Wingstop. He's suing the investors that bought it from him.
- [65:38]
Antonio Swad
The principal of this group contacts me and he said, hey, I'd like to have a meeting with you. Because I said, what's it about? He said, well, it's about paying you your money. I said, well, I've always got ears for that. So by this time, I had bought a building and had a corporate headquarter building for Pizza Patron. And I'm getting ready to roll this amazing franchising program. And he comes in with his lawyers and all his minions. It's like a, you know, entourage of people. And we go upstairs at the Pizza Patron office building. We sit at the conference room. And I said, okay. You said you were here to talk to me about paying me my money. He said, I think I'd be able to buy your note from you. My notes for $12 million. They've paid nothing on it. He said, I think we can give you $2 million for it.
- [66:37]
Guy Raz
Wow.
- [66:38]
Antonio Swad
And it took me a moment to comprehend what the guy's trying to do. I said, wait a minute. You want to give me $2 million, but you owe me $12 million? Is that right? He said, you know, one of these faces like, yeah, you could look at it like that. He said, but I want to buy your note. And I tell you what, I said this, and I don't think I've ever had. I've never said this before, and I don't think I've ever said this after. And I looked at him and I said, let me tell you something. I said, I'll spend every dollar I have collecting every dollar I'm owed. And with that, the meeting adjourned. And they got up, all these guys got up, they went downstairs, got in their car and drove off. My next call was to Marty, my lawyer. I said, listen, I just had this meeting. These guys have no intention of ever honoring the agreement in any form or fashion. And you have to understand, the idea with this SBIC money is they buy a company, they grow a company, and then they flip it and the whole plan is to sell the company in four or five years, make an ungodly amount of profit and move on to the next deal. We were able to keep the litigation wheel turning with me and one lawyer, one guy that it was. They were starting to think, I think that this is going to be hard for us to work our plan and flip this company if it has all this litigation attached to it.
- [68:17]
Guy Raz
Did they. Did you eventually get the money you were promised or most of it, or some of it.
- [68:22]
Antonio Swad
We ended up settling. We never went to court. I eventually got every penny.
- [68:31]
Guy Raz
Oh, wow. And how long did it take before you got that? I mean, did you get it within a few years?
- [68:38]
Antonio Swad
Seven years?
- [68:39]
Guy Raz
Okay. So actually, in the end, it worked out that you got it faster than what it would have originally been.
- [68:45]
Antonio Swad
I did. Because it was the only way for them to sell the right.
- [68:49]
Guy Raz
Because there was litigation and this group of investors would turn around and sell Wingstop to another group of investors. So they made some money off of it, but that was it. You had to fight to get your money. Which is. You're right. An important lesson, which is in something like this, you can't mess around. You gotta get very experienced lawyers who are going to look at every single word and line in a document, because that's where the conflict begins when you don't agree on the language.
- [69:24]
Antonio Swad
Absolutely. And just the meaning of one word in the document can change the entire spirit and intent of the document. And, man, I learned the lesson the hard way.
- [69:34]
Guy Raz
Okay, so let's. So now finally, I mean, you're dealing with this litigation, but you finally get paid and in the meantime, you're trying to turn Pizza Patron into. Into a franchise, because that was on sort of on hold for several years while you're focusing on Wingstop. But Pizza Patron, if I remember now from our earlier part of the conversation, it was inexpensive and it catered to people in Latino neighborhoods. But how are you going to turn that into a franchise concept that was unique or different?
- [70:03]
Antonio Swad
Well, it was unique or different because we focused. We focused on that customer, that Hispanic customer, majority of them foreign born and first and first generation. Many of the things we did, how we, how we generated business were things that resonated with this, with this particular customer base. I don't, I don't know if you can remember, we had three very successful promotions that made national news. The first one was the Pizza for Pesos program.
- [70:37]
Guy Raz
You accepted Mexican pesos.
- [70:39]
Antonio Swad
Yeah, that.
- [70:40]
Guy Raz
Okay. Which got you a lot of, A lot of, like, blowback too. A lot of people were not happy about that. Yeah, but you got a lot of
- [70:48]
Antonio Swad
attention for it got a lot of attention, global attention. It catapulted the brand and the franchising program into a light. I couldn't have, couldn't have bought that much publicity at any price. And that, and that's what, when we really started to go. But it galvanized that customer base to this brand better and faster than anything else we could have done. It basically said, we stand with you. We know that you travel back and forth. And just like a lot of us that come back from foreign travel, you always come back with a little bit of the currency left over. And what do you want to do with it? Well, you can turn that into a nice piece of pizza.
- [71:28]
Guy Raz
And were you, when you were thinking about like when, when you were looking for new locations to open this up, were you specifically looking again at predominantly Latino neighborhoods?
- [71:40]
Antonio Swad
100% got it. And by this time, you know, things have advanced with this demography has got to the point where you could just put in a. You could put in your parameters in any city in America and they would, would show you the best locations to achieve that density of population that is foreign born, predominantly Hispanic. Here's the income I'm looking for. So you develop a formula and the stores generated significant volume relative to their investment. And that's one of the. In any successful franchise program, I mean, there's a relationship there, there's a relationship between sales and investment, you know, and both of these concepts were very favorable.
- [72:30]
Guy Raz
And part of, like you mentioned briefly that there was promotions you guys did that got a lot of attention. One of them was you accepted pesos, Mexican pesos. Another one was you, I guess you would get a discount if you ordered in Spanish at one point. And then the one that really got a lot of attention was you introduced a pizza. I'm gonna say it because, you know, we don't bleep things out. La cingona. I think cingona was the name of the pizza, which you guys translated as badass. But some stations, like Spanish language TV stations and radio stations would not mention it on air because it was considered to be quite offensive.
- [73:09]
Antonio Swad
Yeah. What's interesting is then that became the story. The story was no longer the pizza. The story was why won't you let us say the name of this pizza? And, and we were able to convert that to mentions, you know, to build the brand. And again, it was the kind of thing that the customer resonated with. They say it commonly It's a common thing and it's not a derogatory thing. It's actually when you use that expression, something's chingon. You know, the chingona. She's a fine, fine lady. You know, it's a term of endearment, to be honest with you. And it was the perfect fit for this particular pizza that we had developed. So it was these kind of things, you know, in the pizza business, I was basically at war with some of the largest companies. The dominoes, the Papa John's. We didn't have the funding to do that. We had to be inventive. We had to come up with things that didn't cost a lot of money, but got thousands and millions of brand impressions. And we were successful with that. And I attribute it all to the team that I had working with me.
- [74:20]
Guy Raz
Okay, so you are expanding Pizza Patron and you have the finances to do it because you've got the, you know, you've got the capital and it's growing mainly, I think, in Texas and a couple of other states. And you get. And again, like, you get it to
- [74:41]
a point, I think.
- [74:42]
What, by 2015, how many, do you know, how many restaurants you had? Like more than 20.
- [74:47]
Antonio Swad
Oh, yeah, 2015. Yeah, I think so, yeah. When I sold the company, it was right at 100. 100.
- [74:56]
Guy Raz
A hundred restaurants.
- [74:56]
Yeah, yeah.
- [74:57]
So let's get to this, because you grow it again and 2016, you sell it, presumably again, because it was an interesting offer or you were just tired, you wanted just like move on, you were done.
- [75:12]
Antonio Swad
Well, let me point out, one difference is with Wingstop, I the. I had two company owned stores, one of each model, the dining model. And with the pizza business, I continued to open up my own stores. And at the time, I personally owned 11 stores. And I had another franchisee in the system that also owned 11 stores. He owned the stores in Phoenix, he owned the stores in San Antonio. So he came to me and said,
- [75:39]
Guy Raz
listen, this is Charles Laughlin.
- [75:41]
Antonio Swad
Charles, yeah. And I thought that again, I'd been in the pizza business for 32 years. This goes the pizza business. I was always in the pizza back to 1986. Yes, yes. And at some point in your life, you get to the point and say, man, I love the pizza business, but man, 32 years is long enough. And I thought Charles would be a great fit. And we came up with a number. He immediately had 22 company owned stores. My 11 and his 11, and became the franchisor. And that's kind of where it stands today.
- [76:22]
Guy Raz
And you sold your 11 stores as well.
- [76:24]
Antonio Swad
Packaged it. Yeah, packaged it up with the licensing company.
- [76:27]
Guy Raz
Got it.
- [76:28]
So.
- [76:28]
And, and did you. I mean, it's undisclosed. The deal is undisclosed. But it was. I have to assume it worked out well for you.
- [76:39]
Antonio Swad
Worked out great. And Charles, unlike the first group, Charles was honorable and he paid me every penny. Every penny.
- [76:50]
Guy Raz
All right, so you are here. You are, right, almost 70. And I mean amazing. Right. You have built two. You built two franchises that both went in slightly different directions.
- [77:05]
Before I ask you about that, how
- [77:07]
do you feel about Pizza Patron today? Because I don't think it's got as many stores as it did when you sold doesn't.
- [77:13]
Antonio Swad
And this is. It really comes down to franchising. You know, franchising isn't just about the food or the product in as much as it's about relationship management. You're managing the relationship with the franchisee and the franchisor and the franchisee believes that they've invested all this money and you get your money first, whether they're profitable or not. So inherently the relationship kind of has a little bit of a feeling like you're getting over on me. And obviously that's the result of a lot of litigation and franchising. I sold a very healthy company to a guy that really, it's a great guy. But franchising isn't for him developing these relationships and actively selling franchises. It's not for everybody. I think he's more suited to own company owned stores. But you have to want to develop these relationships with people you haven't met before. You have to believe that you can trust them with your baby, which is your brand. And it's not for everybody, quite honestly.
- [78:23]
Guy Raz
Yeah.
- [78:23]
And Pizza Patron has a pretty small footprint today.
- [78:27]
I think about like 70 or 80
- [78:29]
stores, mostly in Texas and Arizona. But Wingstop, on the other hand, is a different story.
- [78:35]
Right.
- [78:35]
I mean, we didn't get into this, but it went public in 2015 and it is a massive multi billion dollar business. I think There are about 3,000 locations around the world. Just a massive business.
- [78:46]
Right.
- [78:47]
And I wonder what you think of that, like what you make of it. I mean, it's kind of mind blowing
- [78:54]
to just see how it grew.
- [78:56]
Antonio Swad
I know. I mean, sitting on my couch watching an NFL game and now they're buying national ads on Sunday football. I mean, it's amazing and I'm happy for them. And people ask me all the time, aren't you sorry you sold that company? No, not, not completely. Because I tell you, these guys, some very smart people Were involved. They were able to grow it. They continue to grow it. And I'm. And I'm happy for them, but I'm not filled with regret in any way. I really don't think of it that way. I'm more living in the moment. And you know, I'm not. When you live in the moment, you kind of take responsibility for what are you doing today? Not what I did years ago.
- [79:40]
Guy Raz
Yeah, yeah.
- [79:42]
I wonder.
- [79:42]
I mean, you think about like, we touched on this a little bit, but where you grew up, how you grew up, you know, and I know there have been ups and downs in your life. You've had a lot of ups. How many kids do you have?
- [79:56]
Antonio Swad
Two.
- [79:57]
Guy Raz
And you were, you know, you were married and those ended and you remarried. I think you still have a. A decent relationship with at least one of your former wives, maybe both. But life is complicated, right? I mean, that's not. That's that we all have complicated lives. And I. And.
- [80:18]
And so you've been through a lot
- [80:19]
and you have seen a lot. And you came from a background that, you know, didn't set you up or tee you up for financial success, right? Because it. Cause you didn't know anybody. You didn't have a network of people. Like, you grew up in Columbus, not a rich kid, and yet you built two really successful franchises. How much of that do you attribute to the work you put in the grind and how much do you think had to do with being lucky?
- [80:47]
Antonio Swad
I attribute it to the ability to attract and maintain real, excellent people. I read a book years ago by Victor Kayam, the guy that bought the Remington Shaver Company.
- [81:02]
Guy Raz
Oh yeah, I remember him.
- [81:04]
Antonio Swad
Prior to that, he was the sales manager for Playtex bras and girdles. This was years ago. And in his book he said he had the best sales team because he would sit him down in a chair and he was able to paint the vista. He'd make them look out a window and he'd call it painting the vista. He could get people to believe in what he wanted him to believe in and then work towards it. And in my life, I look at. I've built two amazing teams and I was able to convince them to look out the window, look at the vista, and help me row towards it. And when people can see it and they believe that you see it, and I did see it, they're willing to play above the rim and pull out of themselves abilities and things that they didn't even think that they had inside of them. And nobody achieves anything great. Alone, and I certainly didn't. I've had many, many great people in my life, and I'm grateful for all of them.
- [82:06]
Guy Raz
That's Antonio Swad, founder of Wingstop and pizza patron, by the way, and this isn't exactly a side hustle, but Antonio has also dabbled in national politics. In 2022, he actually ran for Congress as a Republican in Texas 32nd District. He didn't win, and he says the experience was so unpleasant he's not interested in ever trying again. Hey, thanks so much for listening to
- [82:34]
the show this week.
- [82:35]
Please make sure to click the Follow button on your podcast app so you never miss a new episode of the show. And if you're interested in insights, ideas and lessons from some of the world's greatest entrepreneurs, sign up for my newsletter at Guy Raz or on Substack. This episode was produced by Sam Paulson,
- [82:51]
with music composed by Ramtin Arablouei.
- [82:53]
It was edited by Neva Grant with research help from Olivia Rockman. Our engineers are Patrick Murray and Jimmy Keeley. Our production staff also includes Kathryn Cipher, Chris Masini, John Isabella, Alex Chung, Kerry Thompson, Casey Herman, Rommel, Wood Norgiel, and Elaine Coates. I'm Guy Raz, and you've been listening
- [83:11]
to How I Built this.