← Making It with Jon Davids
Making It with Jon Davids
182 - These Guys Were Flipping Burgers and Now They Do $1B in Sales
00:10:54
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- [00:00]
John Davids
These two guys were flipping burgers a few years ago, and now they do a billion dollars in sales. And it was all part of their crazy plan. I'm talking about Matt Perlman and Alex Stone. They run Garnet Station Partners, and I'm gonna tell you exactly how it happened. Welcome to the podcast. My name's John Davids, but you can call me JD if you don't know me. I'm the founder of influicity, where we help a lot of companies make a lot more money serving a lot more customers. And on this podcast, I share the stories of awesome businesses and how they do it. All right, let's get to the show. You're listening to Making it with John Davids. So rewind to 2015. Matt and Alex are best buddies, and they just got jobs in private equity, but they're bored. These two aren't built to stare at spreadsheets. They want to own something real and they want to get their hands dirty. And that's when they spot an opportunity. There are some Burger King franchises for sale, and the man who owns them is in trouble. He wants out. So Matt and Alex buy them up on the cheap. And then they get to work. Our boys hit the kitchen. They're flipping patties, dropping fries and taking orders, working every corner of the restaurant. And they're cleaning things up at every step. The people, the food costs, the entire operation. Things are starting to work really well. So they go on and buy more BK franchises. Rinse and repeat. By 2020, they own hundreds of locations. And then they flip the whole portfolio for $238 million. Now they're sitting on a pile of cash, and it's time for their next move. So the guys know how to run a fast food joint, and they figure the same formula will work across other other restaurants too. So they set up a firm called Garnet Station Partners, and they start buying up assets all over the country. Sandwich shops, seafood spots, pubs, and more. Using the same model and fine tuning operations to scale each business with a sharp focus on local markets. Today, their restaurant chains do a billion dollars in sales. But that's not all. They own many more businesses. Garden Station isn't just about food. It's about local business. They own dog groomers, collision centers, gyms, tire servicing. These are all basic services that you can find in any town. And Garnet's formula is the same every time. Find a solid business that's underperforming, then fix the operations and professionalize management. Now scale it up and sell for a juicy multiple it's been working for a decade and these guys are just getting started. Garnet Station is actually a classic example of micro private equity with a twist. They have a solid focus on the core economy. Car washes, home services, liquor stores, funeral homes. Garnet owns them all. Anything that serves your local community with room to scale. No hype, no AI, no crypto. Just real businesses throwing off real cash. Matt and Alex are now managing $3.3 billion in assets. And that sure beats flipping burgers.
- [03:14]
Neil Blondell
Business owners and marketers, honest question for you. Is the money you spend on media worth it? Can you point to sales you've made from Instagram or TikTok or LinkedIn? If the answer is no, I've got something for you. It's a playbook I wrote called how to Build a Social Media Selling Machine. It's a nine step formula designed to turn your social media into a true sales channel. One that produces revenue at scale. Get it now@johndavids.com Playbook if you're spending more than $100,000 a year on marketing, you can't afford to miss this. Grab it now@johndavids.com playbook so I shared.
- [03:53]
John Davids
This story on social media and I got so many people weighing in. Lots of opinions, lots of questions, lots of good things to say, but also a lot of question marks like how exactly did they pull this off? How do you pick up Burger King locations unless you already are in the business? And these guys were super young. So let's go back to the beginning of this story. The most asked question when I put this up on LinkedIn was how did Matt and Alex come up with the cash to buy that very first Burger King location? Well, Neil Blondell on LinkedIn actually explained it all. So here's what happened back in 2014. Initially, they approached KFC with a proposal to become franchisees. But KFC rejected them because they had no experience. They were super young, they had limited financial resources. So strike one. They got nowhere. But our boys are undeterred. They pivoted to Burger King, a brand under the restaurant brand's international umbrella. And Burger King actually was more receptive. And they approved these guys as franchisees. And then they went one step further. They connected them with an existing operator by the name of Ray Meeks, who already owned a struggling chain of 23 Burger Kings in Henderson, North Carolina. So this guy, Ray Meeks owns a bunch of Burger Kings. They're not doing so well for all kinds of reasons. He might want out. And so Burger King just connects the guys with him to see if there's an opportunity there. So next, the guys want to deeply understand the business. So Matt and Alex actually spend that summer living with Ray and his wife, immersing themselves in the day to day operations of the restaurant. This is kind of crazy. We're talking hands on due diligence, which ends up paying off big time when they strike a deal with Ray to acquire all of his 23 Burger King locations. And it gets even crazier. You see, they made a deal with him to buy 100% of the business without any cash payments up front. And Ray's business wasn't even doing that bad. It had made a profit of $700,000 the year before. So why would Ray Meeks give up a business with 23 BK locations and $700,000 in net profit? Well, that answer is one level deeper. Burger King was requiring all franchisees at the time to do these restaurant remodelings, which would have cost Ray $8 million. And he didn't want to put up that kind of cash, so he needed a way out. And Matt and Alex were cool with that. So they took the problems off Ray's hands. And Ray's $8 million problem becomes Matt and Alex's $8 million problem. And now our guys are in the Burger King game. And now let's solve this last problem, because I know what a lot of you are probably thinking is what happened with the $8 million remodeling? Well, the answer is Matt and Alex could have gotten a bank loan to pay this. They could have gotten private investment to pay for it. They could have negotiated with rbi, the owner of Burger King, to defer the costs. Maybe they borrowed the money from rbi. Maybe they asked rbi, who had already connected them with Ray Meeks, if there was another franchisor who would loan them the money to do the remodeling. Maybe it was a combination of all these things. Guys, the point is there are lots of options. And smart business people are really just good problem solvers. They're resourceful. They don't look at problems as dead ends. They look at them as opportunities for arbitrage. I had a similar experience in my business early on in fluicity. My agency had a bunch of investors and we had raised money because we were going to do one thing and then decided to do something else. Then I had to figure out a way to pay all that money back. I got to be honest, it wasn't easy, but I figured it out. The reality is, if you can put yourself in a Situation where you are able to solve problems where others don't even want to solve those problems, you can make out really well. The bottom line is, opportunities arise when you figure out how to solve problems, when you don't throw in the towel. Because as I always say, the biggest opportunities often come right after the moments of chaos. There are gonna be so many people in the comments who are just gonna come up with lazy excuses. These guys went to an I school, they had rich parents, they had connections, blah, blah, blah. I don't know, maybe some of those things are true, but the reality is none of that had anything to do with their success in pulling off that very first Burger King deal, which is what led to everything else. You know something else here? I love how these guys took skills from one industry and applied it to another. Now, they were already private equity guys, so they knew how to read a spreadsheet and how to analyze a business. And then they took those skills over to the operating side and they literally spent time in the kitchen working, flipping the burgers, dropping the fries, taking orders to know what it was like on the ground floor, working with customers, working with coworkers, and seeing how they can make the business better on the ground. A lot of the time when you have a business like a restaurant or a plumbing company or an agency or an E commerce company or whatever, when the company's not doing well, it's because the math isn't mathing. Your cost of goods sold is too high, your pricing is too low, your labor costs are out of whack, maybe your payment terms are too tight, your cost of capital might be too high. It's a math problem. And of course I'm assuming you have a decent product, which a lot of companies don't have to be fair. But we can assume that Burger King does have a decent product and it works. So these guys had a good understanding of how to math out the business. And then by immersing themselves in the business, they could get a feel for the actual operations. They actually lived with the owner, they worked behind the counter, they flipped the burgers, they talked to customers. So they had the math down and they had the operations down. Well, now you've got a pretty killer combination. Taking skills from one industry and combining it with another. Maybe you're a stand up comedian and you want to get into insurance sales. Well, having a solid comedy background could actually be super useful in sales. Or maybe you're a graphic designer and you want to move into product design. Again, those are really good skills to have in combination. Take your existing skill set and see how you can best apply it to somewhere else in the market. Those skills could be much more valuable than you think if you put them to the right use. So that's the story of Garnet Station Partners. That's the story of these two guys who went from flipping burgers to a billion dollars in sales. If you're a fan of the podcast, let me know in the reviews on Apple and Spotify or wherever you like to listen. Get my best stuff to your inbox@johndavids.com.