Pre-Sell It Before You Build Anything

0:00All right, Ali, you're the you're the uh I think the last the last of the Brohicans. >> How are you, Mr. Alex? My name is Ali. How's How's your Monday? >> [laughter] >> Good. >> Beautiful Monday. >> What's cooking? >> Um so my question is about strategy. >> All right. >> I first So, I was a regular employee. I took over managed the restaurant. And um in about a year, I doubled that restaurant, and we had a very good profit-sharing deal.

0:30>> Great. >> So, thankfully, you know, um >> What'd you do to double? You run ads or what? >> Uh no, just ran the basics, actually. >> Okay. >> Like very simple. Fixed fixed prices. Mainly, actually, increased prices. Took your advice on that. But uh fixed prices, fixed the you know, costs inside. Improved recipes. Just the basics. I didn't do anything crazy, actually. No nothing about ads, actually, with restaurants. The restaurants are also still fine.

0:55>> Yeah. >> Um So, now I'm actually operating three restaurants with >> All right. >> um with those. So, I have two co-owners. >> Mhm. >> And um So, I I'm on a profit-sharing deal and a management deal with in two of the main restaurants, and then there's a third one that I own a little bit of equity not a little bit, like a substantial amount of equity in it, like more than a third. >> Okay. >> Um doing well. Things are moving forward, but I don't see those concepts scaling.

1:23And I'm kind of tied down as to what I should do in the future. I spoke with Eddie. He suggested I go all in on a fourth location all by myself, so I can retain all the equity. >> Yeah. >> Um It's pretty tough because um good income right now. >> Mhm. >> Uh So, I don't want to kill all the cash coming in as I >> What do you want? What do you want?

1:48>> Um I want to build a very a big restaurant chain um >> Okay. >> built around a healthy concept, but still very good food. Maybe a billion-dollar enterprise value. >> Fast casual, maybe a billion-dollar enterprise. Just throw it out there. >> That's my goal. >> Toss out a billion. Yeah. We call that a casual billy, Savante. Um okay. All right. So, fast casual is what you're you're focused on?

2:13>> I'm I'm in fast casual. We do We do potatoes. We do burgers. We do fish. We do chicken. I I know a lot like I know a fair bit about those concepts. >> You're you're you're going to want to You're basically going to need to enter the franchise world. Not have to. Um that's not true. You don't have to enter the franchise world. I don't want to say that. But the key to those models is huge simplicity. And nailing the very limited things that you have on the menu.

2:39Like I think the absolute like I don't know. Have you studied Chick-fil-A? >> Oh, yeah. I Yes, definitely. >> studied Raising Cane's? >> Sure thing. Yeah. >> Like those >> 12 12 12 item menu. I was actually watching a video about this couple days ago. >> Yes. >> 12 item menu, yeah. >> Yeah. [laughter] Like those guys need to become your your you know, your restaurant heroes. Like you need to just only consume the stuff that they put out, but it's all about radical simplicity. Um >> Okay.

3:08>> You can absolutely become a billionaire in the restaurant space. There are there are there are people who have done that. Um and in the fast casual space, there are um >> Just after 45 years. >> Yeah, it's going to take time, dude. I mean like you know, sorry it's not going to be a six-year billion-dollar exit, man. You know, there's only you know, there's only 3,000 billionaires on Earth out of eight eight billion. So, you know, whatever. Um I think the advice that I gave is is sound.

3:38What it comes down to is you need to you need to nail the model. >> Okay. >> Like you've learned from these three stores. You've learned from these other people. You have to have a unique model that is as simple as humanly possible, which is what it Like you have to build You have to build it day one for scale. >> Okay. So, that's actually what I'm working on. I'm I've acquired a fourth location. Now, I'm also in trouble in in in like trying to figure out what it what to do with my co-owners in the other three places because they do take a little bit of my time. And you know, I own no equity in two of them.

4:08>> Yeah. >> I good you know, good property and good but no equity >> have the I mean, you will the goal will be to fire them as fast as you can. >> Okay. >> So, you can focus. >> Okay. >> Cuz you're not going to side hustle your way to a billion dollar company. >> It's yeah, it's tough. I mean, I'm I'm already trying just for this week. I mean, very little sleep. >> Yeah. You're Yeah, I mean, you can't it's like it's not a thing, right? And so, um I think the fourth location is fine.

4:39Build it as well as you possibly can. Try to nail the model. Once you nail the model, we'll probably have another conversation, which is just are we going to scale this privately or are you going to franchise it? Franchising works better for food businesses because they literally are recipes and you can you can standardize the outcome much more easily than you can with like a service business, which is why service businesses are hard. Plenty of people do franchise them, but they're just much harder to franchise um because you have to sell basically arbitrage on labor.

5:07So, yeah, I think as like as soon as you can, I would go all in on the fourth location make it your main thing. >> So, quick follow-up. So, I'm going to focus on the fourth location whenever the as soon as I can. Um my time I was getting you know, a good return on my on my time and then I'm going to have those let's say 70 hours a week to focus on the fourth location. What's the best way to spend those 70 hours? I'm not going to be, you know, as little operationally of course, more building, but

5:38>> in the fourth? >> Yes. I'm going to be there of course, but you know, >> Yeah, I would I would for sure be there. >> I'm [laughter] going to be there. >> Like you I mean, you need to you need to understand where every fry goes. You know what I mean? Like, it has to be like, you need to know that thing like the back of your hand so that you can really make sure that like that you don't have a a single square foot extra that you don't need. Like, what what what you're going to be building towards is return on invested capital.

6:02That is going to be the metric that you'll need to optimize around and payback period. So, just like you have a payback period for a customer, when you chunk up a level to the business side, it's it's payback period per location. And so, if you spend $100,000 I'm making simple math. $100,000 to open a location, if you can get that $100,000 back in 3 months, then it's like, "Great, I can open another location, right?" And so, if it takes you 3 years to get it back, it's going to be very hard to scale this thing, right? Which is why you need to really, really aggressively control costs um on the build-out, but also on the day-to-day in terms of like, "How few people can I use to make this run?"

6:39Um and I'm telling you, you got to study the like, Raising Cane's right now, like, he's he's the best in the game right now, in my opinion. >> Yes. >> Like, just everything that he puts out, which is so little, which is a [ __ ] pain. But, everything he puts out, that would be the guy. >> We're doing beef tallow chicken actually. It's very close, so. >> Yeah. Just I mean, as simple as possible, as few ingredients as you can, smallest, you know, footprint. You going to do a drive-thru?

7:08>> Yes. Yes, we do have a drive-thru. Yeah, that's going to be good. >> All right. And then it's going to come down to location picking and then like, you know, and then crushing the grand opening. >> Sure thing. >> That's the big thing. >> I actually don't know much about that one. I'm sure >> to. So, brick and mortar comes down to return on invested capital, like I just said. You need to have a a career path structure so that you can have some sort of, call it pseudo ownership of each individual location so you have somebody who feels like an owner who's worth there, like Chick-fil-A has mastered this.

7:36Um and you need to have a banger grand opening strategy. Like, these are the things that are required in order to make uh brick and mortar work at scale because remember I said that payback period thing? >> Yes. >> If you If you crush the grand opening, you can pull forward the payback period so you can start opening the next ones. >> Makes total sense. Makes total sense. >> And I'll I'll give you one more thing which is just that once you do the grand openings, we should be able to sustain the store off of word of mouth because food the margins are so low.

8:07There's obviously little things we can do but like the margins are low enough that we should we should be good enough the chicken should be good enough that people eat the chicken and want to come back and tell their friends about it. So, it's like we want to spend the marketing up front so that we basically have enough people to try the food and tell their friends that the people who churn out are equal to the amount of people who come for the first time and then it stays at that capacity and then it keeps on printing money. >> Makes total sense. Yeah. >> Appreciate you.

8:33>> Thank you, Alex. We appreciate you. >> All right. Appreciate. All right. If you like this video and you're business owner who wants to break through your current revenue ceiling, I distilled every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling road map that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so, you can click here and you can check it out. Again, absolutely free. And since you're business owner, I appreciate you and enjoy.