B (2:39)

I mean, it is hard. And that's also why we bring 11 brands in right now, because we don't know which brand is going to hit with the American population. You don't know what brand is going to catch fire in this industry. You don't know what food is going to catch fire. You can have the best food in the world, and yet the restaurant never grows because it just doesn't resonate. And you've seen a lot of brands right now focusing on ethnic food that have struggled because of it. It's incredible food. It's just maybe too early to go down that road and scale. And so it's to find those right ideas and find the time on what you want to do. It's not easy, but that's why we're playing our odds across many brands and not just putting everything into one, because you just don't know. And we will have failures. We'll get out of brands. We know that. And that's okay in our sort of philosophy.

A (3:30)

Have you had concepts that surprise you? Something that you thought, there's no way this is going to work, or you've seen it and then it actually worked?

B (3:38)

Yeah, I mean, the cookie thing is one of them. I never would have thought crumble would have gotten to 900 units the way it did, ever banking all in on one. You would think the industry would learn from the sprinkles and the cupcakes and all that that have come and gone over the course of time, but yet there's just a new version of doing a cookie. It's just cupcakes of today, just a different product. Those tend to be fads. It's why at Dirty Dough, we're pivoting from just cookies to other things to make sure that we can survive past that point. Cause they just don't. They don't survive.

A (4:13)

Yeah. It sounds to me like you don't actually Think dirty dough as it stands today is a long term business. It has to get into other things, as you said, drinks and other categories in order to survive. Is that true?

B (4:25)

Yeah, without a doubt. You need multiple revenue streams. If you bank on just one, you're not going to survive in the dessert field. You're not going to be around. Someone else is going to come up with something completely different. I mean, who knows, it could be hand pies, it could be. I mean, someone's going to come up with something else that catches that Instagram moment and then grow. It could be cinnamon rolls. It could be. And again, cinnamon rolls had it. It just. Desserts tend to be a life cycle into the ones that have survived, have pivoted and survived because they've done other things.

A (4:57)

This episode is brought to you by my AI Growth Cheat Sheet, available now at johndavids.com AI if you're a business owner and you're wondering how to use AI to actually grow your business, this is the answer. It's a fully custom AI growth cheat sheet that'll give you the tools you need to grow your business today. Available right now@johndavids.com AI just answer a few questions, wait a few seconds and you'll have your list of tools and it's free. Get it right now@johndavids.com AI what's the most profitable? Okay, I have a hunch and I'm going to write it down. We'll see if I'm right afterwards. What is the most profitable kind of restaurant?

B (5:36)

You can have breakfast.

A (5:38)

Breakfast. Why?

B (5:40)

Breakfast cost on food is so cheap.

A (5:42)

Interesting. Okay, I would have said beverages. I would have said just like drinks.

B (5:47)

Yeah, drinks have gotten expensive lately because of all the other ingredients and the liquor and stuff like that that have come in. They become too crafty. And you know, high end breakfast is still flour and eggs.

A (6:00)

Interesting. So a breakfast shot. And are there big breakfast only chains out there?

B (6:05)

There's some great ones out there. First watch right now is the one that comes to mind that's just absolutely killing it. And they do an incredible job.

A (6:14)

Yeah, I would think the downside though is that I guess you could keep the hours appropriate, but the downside would be that you really only open for four or five hours a day.

B (6:22)

They're open typically from seven until two because they all pivot to lunch and then they close and they do volumes that most of us would love to.

A (6:30)

Have in a condensed time.

B (6:32)

Yeah. And first watch is probably the best out there right now in that segment.

A (6:37)

So where do you see this from going, you said you got a strategy, like you're going to be holding some, but you're not afraid to spin off and sell. Have you structured this as a fund that you have to liquidate at some point or is this just an evergreen type thing?

B (6:51)

It's an evergreen type thing. There's no fund, no requirements. We can liquidate things when we want to and sort of grow at the speed that we need to. That's the other reason why we did it this way. Instead of the fund mentality. The fund mentality, you have to grow no matter what. And we didn't want to be stuck by that because that tends to be what kills restaurants. Restaurants need to grow at their organic growth and not at. Because someone says, I want to sell in three years. So you can't force restaurant success. You can't make something go faster. Restaurants either go when they go or they don't. And you just have to give them the tools to see if it catches on or if it doesn't.

A (7:27)

Yeah, as you said, it's about timing also. It's the, it's the culture of the moment. What are, what do people want? You talked about ethnic food and sometimes ethnic food hits and sometimes it hits three years later.

B (7:36)

Correct. I mean, we're, we have an Indian concept that we're bringing into the portfolio and that's a gamble and a very, very ethnic version. But is Indian right today? Maybe, maybe not. I do feel in the next three to five years it's going to be a big component of our food space. So we're bringing one in now, going to get it working the way we think it should and then go ahead and hopefully in the next three years get the traction that we need because it finally catches up. We may be too early, but it's worth the gamble because we think that's a space that is necessary in America today.

A (8:12)

What do you look for in a franchisee? So someone comes to you and they say, I want to open a Dirty Doe, I want to open a Jimmy John's. What do you actually look for to say, okay, this is somebody I want.

B (8:21)

To work with, somebody who has passion for the industry and passion for building themselves. So I don't need the experience of multi unit guys to run my brands. I need somebody who believes and is willing to bet on themselves to build a company. And that's more important to me than anything. It's that desire and having that entrepreneurial spirit that they're going to come into this, work their butts off and do everything they need to to make it successful. And if they have that and they have that sort of built into them and you can tell almost instantly who has it and who doesn't, those are the people you want to take gambles on and those are the people that are going to go in and fight every day like a restaurant needs to fight. As your concepts grow, it's easier to go and get those multi unit guys, those investment guys that just come in and say, I want to buy 30 or 40 of these, you know, and have the team in. But at the beginning you want to partner with the people that are hungry and the people that want to bet on the concept and you, because you're going to be such partners when you're building these things at the start that you guys have to have full faith in what you're going to do.

A (9:21)

Do they have to be food people or no?

B (9:23)

No. I actually have found out that the startups are way better off without food people because they have no bad habits. And bad habits from other industries are under. Just like anything, if you work in Google, you have habits from there that don't translate to, you know, some are able to use the best of both, but there's a lot of people that can't change. Food works the same way. Oh, I did this for 15 years. This is the way we've always done it. Well, that's not the way my brain does it. You gotta do it this way.

A (9:50)

Have you had nightmare? I know you have, have you? Can you tell us about a nightmare franchisee?

B (9:57)

So we had one that constantly thought that everything that we were trying to do is just against them and the brand is old and the brand is a legacy brand in our eyes. So we're trying to turn it around. And we went in there and sort of laid out, hey, this is what you got to do. This is why we're going to do it. You either got to get on or get not. And he looked at us point blank and he said, I've been doing this for 15 years, I don't need to make any changes. Well, for the last seven years, sales were going like this slowly, but going like this. As brands don't, they don't continue to evolve, you die. And he finally said, no, no, no. So we did it on the other side. So this is a consulting job. We did everything else that we wanted. We put everything in place. The rest of the stores started going like this and his started to go like this. He came to us and said, you never told me that we needed to do this. You left me out of it. And we're, like, looking at him going, what? I go, we asked you to clean up your restaurant. We asked you to be hospital clean. We asked you to put in the new menu. You told us, go to hell. I don't have time to fight with you. You know, I'm going to prove that the other stores are going to be successful. And then if. If they are, I'm going to bank on the fact that you're going to come running to us saying, please, let me do it now. And sure enough, he did.

A (11:07)

Thanks for listening. Get my best stuff to your inbox@johndavids.com I'll talk to you next time.