Episode Summary: "These Guys Were Flipping Burgers and Now They Do $1B in Sales" (Episode 182)

Podcast: Making It with Jon Davids
Host: Jon Davids (JD)
Guest: Matt Perlman and Alex Stone, Co-founders of Garnet Station Partners
Release Date: April 1, 2025

Introduction: From Fast Food to Fortune

In Episode 182 of Making It with Jon Davids, host Jon Davids delves into the remarkable journey of Matt Perlman and Alex Stone. The two entrepreneurs transitioned from flipping burgers to overseeing a billion-dollar sales empire with their company, Garnet Station Partners.

Opening Remarks

Jon Davids (JD) [00:00]:

"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."

JD sets the stage by highlighting the dramatic transformation of Matt and Alex, emphasizing that their success was not accidental but the result of a meticulously crafted strategy.

The Genesis: Humble Beginnings in Private Equity

Early Career and Motivation

In 2015, Matt and Alex, best friends fresh out of college, secured jobs in private equity. However, the conventional financial environment failed to ignite their entrepreneurial spirit.

JD [00:30]:

"These two aren't built to stare at spreadsheets. They want to own something real and they want to get their hands dirty."

Disillusioned by the monotonous nature of their roles, they sought a more hands-on and impactful business venture.

Identifying the Opportunity: Burger King Franchises

Their breakthrough came when they identified struggling Burger King (BK) franchises for sale. Recognizing an opportunity, they decided to pivot from their private equity careers.

JD [00:50]:

"They buy more BK franchises. Rinse and repeat. By 2020, they own hundreds of locations. And then they flip the whole portfolio for $238 million."

Matt and Alex purchased BK franchises at a discounted rate, stepping into the operational trenches to revitalize each location.

Operational Excellence: Hands-On Management

Immersive Approach to Business

Instead of merely overseeing operations from a distance, Matt and Alex adopted a ground-level approach. They actively participated in daily tasks to understand the intricacies of the business.

JD [02:00]:

"They're flipping patties, dropping fries, and taking orders, working every corner of the restaurant. And they’re cleaning things up at every step."

This hands-on methodology allowed them to identify inefficiencies and implement effective improvements, leading to enhanced performance across their franchises.

Scaling the Model

Their success with BK franchises provided a scalable blueprint. By refining their operational model, Matt and Alex expanded their portfolio beyond fast food.

JD [02:20]:

"Using the same model and fine tuning operations to scale each business with a sharp focus on local markets."

By 2020, their refined strategy enabled them to acquire and optimize hundreds of BK locations, culminating in a lucrative $238 million sale of their portfolio.

Garnet Station Partners: Diversifying and Expanding

Establishing Garnet Station Partners

Post-BK success, Matt and Alex founded Garnet Station Partners, a firm dedicated to acquiring and scaling a variety of local businesses beyond the restaurant industry.

JD [02:45]:

"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."

Broadening the Portfolio

Garnet Station's investments span diverse sectors including dog grooming, collision centers, gyms, tire servicing, car washes, home services, liquor stores, and funeral homes. This diversification underscores their commitment to strengthening the local economy.

JD [03:00]:

"Garnet Station isn't just about food. It's about local business. They own dog groomers, collision centers, gyms, tire servicing... Anything that serves your local community with room to scale."

Micro Private Equity with a Twist

Unlike traditional private equity firms focusing on large-scale, often volatile industries like AI or crypto, Garnet Station emphasizes stable, cash-generating businesses essential to everyday communities.

JD [03:10]:

"Garnet Station is actually a classic example of micro private equity with a twist. No hype, no AI, no crypto. Just real businesses throwing off real cash."

Overcoming Challenges: Strategic Problem-Solving

The Initial Hurdle: Acquiring BK Franchises

Many listeners were curious about how Matt and Alex financed their initial BK purchases, given their limited resources and lack of experience.

JD [03:16]:

"The most asked question was how did Matt and Alex come up with the cash to buy that very first Burger King location?"

Navigating Financial Obstacles

Initially rejected by KFC for lack of experience, Matt and Alex redirected their efforts to Burger King. Their persistence paid off when Burger King connected them with Ray Meeks, an operator looking to exit the business due to onerous remodeling costs mandated by the franchisor.

JD [03:35]:

"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?"

The solution was innovative: Matt and Alex agreed to take on Ray's $8 million remodeling requirement, structuring the deal without upfront cash payments. This strategic maneuver not only resolved Ray's predicament but also cemented their entry into the Burger King franchise network.

JD [03:55]:

"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."

Strategic Insights: Combining Skills and Adaptability

Leveraging Diverse Skill Sets

Matt and Alex's background in private equity provided them with the analytical skills necessary to evaluate and optimize business operations. Their willingness to engage directly in daily tasks ensured a comprehensive understanding of each business's functioning.

JD [04:20]:

"They had the math down and they had the operations down. Well, now you've got a pretty killer combination."

Cross-Industry Application

Their ability to transfer skills from one industry to another was pivotal. Whether it was applying financial acumen to operational challenges or understanding customer interactions firsthand, their multifaceted approach drove success across various sectors.

JD [04:40]:

"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."

Overcoming Common Business Challenges

Matt and Alex addressed typical business pitfalls such as high cost of goods sold, inadequate pricing strategies, labor inefficiencies, and excessive capital costs. By meticulously analyzing and rectifying these issues, they ensured sustained profitability and scalability.

Key Takeaways: Lessons from Garnet Station Partners

1. Hands-On Engagement: Direct involvement in daily operations fosters a deep understanding of business mechanics.
2. Adaptability: Pivoting strategies in response to challenges is crucial for sustained growth.
3. Diversification: Expanding into various sectors mitigates risk and leverages cross-industry insights.
4. Resourcefulness: Innovative problem-solving can turn obstacles into lucrative opportunities.
5. Skill Synergy: Combining analytical prowess with operational experience creates a robust foundation for business success.

Notable Quotes

• JD [02:45]:

  "They set up a firm called Garnet Station Partners, and they start buying up assets all over the country."

• JD [03:10]:

  "Garnet Station is actually a classic example of micro private equity with a twist. They have a solid focus on the core economy."

• JD [03:55]:

  "Smart business people are really just good problem solvers. They’re resourceful. They don’t look at problems as dead ends."

• JD [04:20]:

  "They had the math down and they had the operations down. Well, now you've got a pretty killer combination."

Conclusion: The Road Ahead for Garnet Station Partners

As of the episode's release, Garnet Station Partners manages $3.3 billion in assets, a testament to Matt and Alex's relentless drive and strategic foresight. Their journey from flipping burgers to steering a billion-dollar enterprise illustrates the power of combining hands-on management with sharp financial acumen.

JD [04:50]:

"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."

Final Thoughts

Jon Davids encapsulates the essence of entrepreneurial success through Matt and Alex's story, emphasizing that real growth stems from a blend of practical involvement and strategic financial management. Listeners are encouraged to apply these lessons to their ventures, fostering resilience and adaptability in the face of challenges.

For more insights and success stories, subscribe to Making It with Jon Davids on Apple Podcasts, Spotify, or your preferred podcast platform.

This summary captures the key points, discussions, insights, and conclusions from Episode 182 of "Making It with Jon Davids." It is structured to provide a comprehensive overview for readers who haven't listened to the episode.