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PLANO, Texas—At the end of October, Mooyah's co-founder Rich Hicks announced to franchise owners that he and the firm's new CEO Bill Spae were parting ways. Spae came to the startup better burger chain of now 54 franchises from his stint as chief operating officer of Cici's Pizza, with its 512 franchised units.
Rich Hicks took over as the franchising company's interim CEO. "It's my baby as the co-founder and owner of the brand. I felt like my involvement back into the business was important," co-founder Hicks would say to Nation's Restaurant News about replacing the CEO he had hired just ten months before.
This journal reported at the time "Dissatisfied franchise owners in the Mooyah Burger, Fries & Shakes chain have sparked the immediate removal of the firm's chief executive officer and president Bill Spae." At this time restaurant analyst John Gordon of San Diego-based Pacific Management Consulting Group also said, "A groundswell of franchisee commentary was critical of CEO Spae and his leadership."
Mr. Spae disagrees. He would like it to be known that this was not the case on "why I left Mooyah." Co-founder Hicks said in a letter to franchisees, "Todd [co-founder] and I mutually agreed to unwind our partnership with Bill Spae, effective immediately." The questions from Blue MauMau and Spae's answers were corresponded through email. "I simply want to clear the air on this since it is my reputation that is impacted," writes Spae. He added: "My only purpose in contacting you is to clear up the 'franchisee dissatisfaction' issue and allow me to move on to new challenges."
Some have publicly come to his defense. A single-unit franchisee told Blue MauMau over the weekend: "I thought Spae was excellent. He was very concerned about franchises being profitable."
The chain is characterized by single-unit franchise owners and a few area representatives, which the company calls development agents. Area representatives sign an area contract with a franchisor to sell franchises in an area for a fee and/or support franchisees for a part of their royalty.
Here is the interview.
BMM: What problems and competition did you assess in Mooyah when you joined?
Bill Spae: Clearly the better burger segment is highly competitive and getting more crowded each year.
I spent the first few weeks talking to each franchisee and operator, asking what they felt we needed to change.
It was clear to me that to be successful we had to adjust our franchisee recruitment and compliance approach to ensure we brought in operators who could develop in tier 1 and tier 2 markets where volumes would be higher and there was more opportunity for organic growth. This was not the case when I joined. We also had to develop a site modeling/selection program that would improve our ability to select trade areas to develop using specific guest profiles, demographic and lifestyle segmentation data, and a broker network that provided for accurate 'boots on the ground' site analysis and review.
Entry cost for construction was also an issue and had to be reduced.
We had also gotten into the habit of discounting and while certain types of discounting can be helpful at times, too much trains the guest to come in only for a deal.
Franchisees were also very concerned about their cost of goods, which had steadily risen.
And lastly we simply were not executing consistently in the restaurants: every shift, every day.
BMM: What were you able to fix in your short stint at Mooyah?
Spae: In the short time I was there we added staff and restructured the franchise recruitment process with added 'safeguards' and a greater level of scrutiny to ensure we brought in high quality operators, we created a data-based site selection model and identified the tier 1 and tier 2 markets we needed to focus on. We lowered the cost of construction by $60-80k depending on the market, we stopped the heavy discounting and when we did discount we made sure it was done so that the cost to the franchisee for the discounted item was neutral and they could gain profit from add-ons like fries, drinks, shakes, etc.
I also hired a head of supply chain to work with our distributor and vendor partners to reduce the costs of product to our franchisees. This took more time than I anticipated, but coupled with a new menu rollout that will help differentiate the brand, the cost reductions will yield a projected 2 plus per cent cost of goods improvement. We also installed a quality assurance program to ensure that vendors complied with our standards and that we protected our operators and guests.
There were many other smaller improvements we made, but these were the major categories.
BMM: What would you like the next guy [CEO] to fix?
Spae: The one area where we did not make the headway I would have liked was in our operational consistency and that would be the focus that I know Rich will have for any new hire he brings in. By the way, Michael Mabry was promoted to help with this issue and one of the great strengths Rich Hicks brings to the brand is his operational awareness and knowledge.
BMM: In your view, why was there a parting of ways between you and founder Rich Hicks just a few months after he hired you? Why did he feel he had to come back in to lead the company? If there was a difference of opinion over strategy, what was it?
Spae: After this many years in the restaurant business on the corporate side and having been a franchisee myself twice in my career, I have taken my "lumps" for decisions I made that did not result in the anticipated outcome.
Being held accountable for your mistakes is a good thing and hopefully a learning experience.
My concern with what you wrote is that it simply is not accurate. I take great pride in my relationships with franchisees. One common frustration for many franchisees in the industry is that franchisors don't listen. In my view, a franchisor should always be willing to sincerely listen to their franchisees and I did just that at Mooyah. We may not agree, but we can work through almost any issue if we work together.
I know that there were franchisees in the Mooyah system who were struggling and were not happy with their business and we had set a strategy in place to help them.
I also know that there may have been a few disgruntled development agents / franchisees who were unhappy because I defaulted their agreements for nonperformance. That comes with the territory.
But overall I have been told that the majority of the Mooyah franchisees agreed with the direction we set and were not unhappy with me specifically.
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