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- [00:01]
A
Welcome back to the Business of Beers podcast. Your daily dose of strategies, tools and tips to help you build an eight figure business. Today's episode is a clip from one of my YouTube lives. If you'd like to hear the whole thing, there's a link below in the description. Cheers.
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I would rather have 10 locations, each doing a very consistent number than saying, hey, we got this one master like cash cow. It's like a, I guess A, understanding the business model, B, understanding like what are the downsides, what is the current cash flow and then how do I scale it? Like is it all worth it? I think that's for me like the biggest thing. It's like if I'm going to put the time and the effort and take the risk and hire the people and do all the work, whatever I do, I want to make sure the juice is worth the squeeze because there's lots of ways to make money. There's lots of brands out there and so you want to make sure that whatever you're going to do is going to be worth it. Eight units is a pretty good number in terms of like you got to have a good ratio between district managers to locations. Now in our business, in these businesses it's probably going to be like 5, 6ish, maybe 7 locations, kind of like max, maybe 8. It really depends on how much hands on work they need. Our DMs in our business, I mean we have, they each cover about six to seven locations and the DM in the model is the one who's directly responsible for hiring hybrid hiring people, holding everybody accountable, like dealing with like, you know, if there's customer issues to resolve, payment issues, just like they're like the main point of contact at the multi unit level. And then the five DMs report up to the CEO, CFOs and then they report to me. And so if you're gonna start with a package, right, it is kind of nice to have enough stores that can support then you know, the salary of the district manager. So I think that's like a pretty good established thing. Maybe you have two people or you have like a senior one and a junior one. To be able, you'd have to figure all that out. And this is how I like, this is how I think about it like my whole business it's like if I can get to 150,000 a store, if I have seven stores, right, that's a million dollars a year. Then if we can get to 175, right, we can pick up another location and you Know, there we're at 1.4. And it's the same idea of, like, I view it as what can I get each location to on a per profit per year location. And then can we scale it, you know, from maybe you start one or two or five or whatever it is. If you can do five, then can you get six, can you get eight? Can you start to stack these where all of a sudden there's other guys that want to get out or gals that want to get out. And, you know, we can build a business with 20 or, you know, 35, right? Like, and then you focus maybe at a certain point of iron, we have like enough locations for volume, but then the real levers are, you know, can we get to. To. To. To. To 20 a store, to 30 a store, to 50 a store. And you know, multiplied by number of locations. That's where. That's where it really, really starts to, to add up. But so it's somewhat of a mentality, right, of like in the franchise business, where it's this per unit game. And if you can, if you can conceptualize that, you know, I personally don't care about, you know, I care more about the consistency across the board. Like, like, I would rather have, you know, a bunch of locations making 200k each, right, than saying, I got this like, one location that makes a million dollars or whatever, and then I have a bunch of locations that make like, nothing. Because. Because think about, like, you diversify your risk and when you have more locations at a consistent number, you're less, like, susceptible to like, you know, single point of failures where if you have another business that say, hey, you know, if, if I was like, let's just say the other way. 1, 2, 3. Let's just do this. Let's just say we had 10 locations, right? And I've. And we've had this in the past where, you know, we had one location making $800,000 and then something happens or whatever, sales don't go as good the next year, right? And this is kind of how some people operate. They'll have like one store that like, makes, you know, 50% of the money versus can we have a bunch of stores that do consistent numbers? And at the end of the day, it's like the same amount of money, but it's also, where do you put your efforts and how do you view the whole business? And so a lot of how I approach it is like this. And so when I think about new concepts or like, partnering with people or investing in things, what I really want to model out is what does the single unit box look like. And so for this case it's like what do we think this thing could cash flow as it is today and the day we buy it, is it profitable? In this case it is close to being profitable. It's not that far off. And then you know, if we can get the revenue up to average numbers, how much money can we make, right? Like I think a good, a good like barometer for, for any franchise is. And I heard this once from a really successful franchisee. It's like you want an average performing franchisee running an average volume location in an average like geographical location to make a good amount. You know, a good return on their money is like the easiest way to think. Like you want, you want an average, average person. So like you don't, you don't want to have to be like a rock star to be able to be successful, right? Doing average volume. So the volume that you're gonna do at your location is consistent across the other. And so you don't have to be like a top 10 thing in an average location. Cause like there's some brands that you look at and some of these deals and then all this should equal like, you know, I'm gonna say suitable, right? Like a suitable return on your investment that you are happy and willing to take. Otherwise like if a franchise is like you gotta be the best performer the country with doing the top quartile in volume at a killer like a plus location that not many exist to be able to equal a suitable return on your investment. That means like otherwise you're going to like not, not do very well at all if you're not the best at all. And like part of the goal of a franchise, right is that is, is this that like not anybody, you know, but like people who are good leaders and are driven and want to be entrepreneurs and are willing to do the work. But like you know, average entrepreneur can, can make it, can make it work. And so if you're gonna buy like if you're gonna get into a value add situation, like you want to like do the roll up play even a lot of the stores that I bought like you know, at the 35 stores, like I want to say a good, I mean a good amount of them were below average volume. So like not terrible, not terrible, terrible stores. Some of them. I mean we've, we've purchased literally the worst store in the market that is now doing well and profitable. And so like we've proved it to ourself. That we can go and take bad stores and, like, make them better. But, you know, overall, you want to be able to prove it. So that's what I would look at. I would. If you're going to look into, like, I want to implement, I want to copy Brian's like, roll up play. Know that, like, a lot of times, at least what I was buying and what you would probably have to buy are below average locations that are barely making money. And you have to have the ability to go and turn them around and, like, get them up to, you know, average. Or right now, you know, we're above average in terms of Midas, I don't think. I think the system average might be, you know, 1 3, something like that, and we're like 1 4, 1 5. So we're like, we're above it, but we're not, like, crushing it. And, you know, our locations are, you know, average. Like, we don't have killer A plus locations. And, you know, we get a good return. That's what I would work to start modeling out. If you said, hey, I'm interested in getting into this, I think Burger King could be an opportunity. It's like making sure we model out and you're super comfortable with it, and then we go from there.