Podcast Summary: Making It with Jon Davids

Episode 213: "Here's Why Most Restaurants Crash and Burn" | Guest: Gregg Majewski, CEO, Craveworthy Brands
Release Date: September 19, 2025

Episode Overview

In this episode, host Jon Davids sits down with Gregg Majewski, CEO of Craveworthy Brands and former CEO of Jimmy John's. Together, they dissect the brutal realities of the restaurant business—why most concepts fail, what it really takes to build a $100M+ company, and the pitfalls entrepreneurs hit when scaling restaurant brands. Gregg shares candid lessons from his vast experience, highlighting everything from the dangers of chef-led startups to picking winning brand bets, and the traits he values in franchisees.

Key Discussion Points & Insights

1. Why Most Restaurants Fail

• Many restaurant founders are skilled chefs but lack business acumen.
• Chefs often underestimate the importance of financial management and operations.
  • "I get into bed with them because they don't know how to do the business aspect of it. So we do the business aspect for them until they get paid... then we can hand it over to them to make sure they survive." — Gregg (00:23)
• The stereotype of the chef as a poor business operator is, in Gregg’s experience, often accurate.
  • "Chefs... suck at paying bills because again, they don't keep track of everything. And that's just the stereotype. And unfortunately the stereotype is true sometimes." — Gregg (00:50)

2. Entrepreneurship in Restaurant Private Equity

• Gregg’s strategy focuses on building brands from early stages (4 to 20 units) up to ~300 units, where they become "machines" that can be run by bigger franchise groups.
  • "I'm really, really good at building brands up to that 300 unit number. After 300, it just becomes a machine. Anybody can sort of take it..." — Gregg (01:17)
• There’s a market inefficiency: Investors overlook very small chains but overpay for those at 20–50 units.

3. The Unpredictability of Restaurant Hits

• Even with experience, it’s tough to guess which brands will resonate with consumers.
• Current strategy: Acquire and try multiple brands at once, understanding that some will fail.
  • "You don't know what brand is going to catch fire in this industry. You can have the best food in the world, and yet the restaurant never grows because it just doesn't resonate." — Gregg (02:39)
• Ethnic food can be fantastic, but sometimes the market isn't ready for it at scale.

4. Fads vs. Long-Term Viability in Dessert Concepts

• Gregg highlights Crumbl’s explosive growth as an example of a trend, noting many fads don’t last past a few years (e.g., cupcakes, cookies).
  • "You would think the industry would learn from the sprinkles and the cupcakes and all that that have come and gone, but yet there's just a new version of doing a cookie." — Gregg (03:38)
• To survive, dessert brands must diversify their offerings (e.g., move Dirty Dough beyond just cookies).
  • "If you bank on just one [product], you're not going to survive in the dessert field." — Gregg (04:25)

5. Most Profitable Restaurant Model

• According to Gregg, breakfast restaurants can be surprisingly lucrative.
  • "Breakfast cost on food is so cheap." — Gregg (05:40)
  • Drinks have become pricier due to premium ingredients and alcohol costs.
• Breakfast chains like First Watch succeed by doing high volumes in short hours:
  • "They're open typically from seven until two... they do volumes that most of us would love to have in a condensed time." — Gregg (06:22)

6. Evergreen vs. Fund Model in Brand Building

• Gregg's brand holding company is structured as "evergreen" (no forced exit), allowing for organic, market-driven growth.
  • "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..." — Gregg (06:51)

7. Betting on Culinary Trends—Being Early or Just in Time

• Craveworthy is taking a calculated risk launching an Indian food brand, betting on future trends in American taste.
  • "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." — Gregg (07:36)

8. Traits of Great Franchisees

• Ideal franchisee: Passionate, entrepreneurial, willing to bet on themselves—not necessarily industry veterans.
  • "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." — Gregg (08:21)
• Previous food experience is actually less valuable—industry newcomers don’t bring entrenched habits.
  • "Startups are way better off without food people because they have no bad habits." — Gregg (09:23)

9. Nightmare Franchisee Story

• Gregg recounts a story about a stubborn franchisee who refused to adapt to new changes, even as others saw results:
  • "'I've been doing this for 15 years, I don't need to make any changes.'... As brands don't continue to evolve, you die." — Gregg (09:57)
  • This franchisee only changed course after seeing his sales drop while others improved.

Notable Quotes and Memorable Moments

• On Chef-Driven Concepts:
  "Chefs don't have... most chefs don't have the other aspect. They all think it's just about their food and the service and they're great at that aspect. They suck at paying bills... Unfortunately the stereotype is true sometimes." — Gregg (00:23–01:03)
• On Industry Fads:
  "Those [dessert brands] 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." — Gregg (03:38–04:13)
• On the Restaurant Life Cycle:
  "Desserts tend to be a life cycle into the ones that have survived, have pivoted and survived because they've done other things." — Gregg (04:25)
• On Restaurant Growth:
  "You can’t force restaurant success. You can’t make something go faster. Restaurants either go when they go or they don’t." — Gregg (06:51)
• On Hiring Franchisees:
  "I’ve actually found out that the startups are way better off without food people because they have no bad habits." — Gregg (09:23)

Timestamps for Important Segments

• Intro to Chef vs. Operator Trap – 00:07
• Building Brands & Private Equity Strategy – 01:17
• Predicting Restaurant Trends and Multi-Brand Bet – 02:39
• Fads in Restaurants: Cookies, Cupcakes, and Pivots – 03:38
• Most Profitable Restaurant Type: Breakfast – 05:36
• Fund vs. Evergreen Structure – 06:51
• Picking Winners in Ethnic Food Concepts – 07:36
• Qualities of Great Franchisees – 08:21
• Nightmare Franchisee Story – 09:57

Episode Takeaways

• Restaurant success is more than just great food—it’s about having strong business fundamentals.
• The best operators hedge by running multiple brands, knowing not all will succeed.
• Fads dominate the dessert space, requiring constant innovation to outlast trends.
• Passion and grit matter more than experience for new franchisees.
• The restaurant business requires both patience and adaptability—timing and the willingness to pivot are crucial for survival.

For more insights, visit Jon Davids’ website or listen to the full episode for additional stories and actionable advice from industry leaders like Gregg Majewski.