Growing Franchise Sees Green 2010-03-01
Posted Date March 2010
By: AOL Small Business
Saladworks isn't a household name yet, but John Scardapane, 46, is working on it. His Conshohocken, Pennsylvania-based restaurant franchise has 100 locations throughout the U.S., mostly on the East Coast and throughout Georgia and Florida, with 120 additional restaurants in the pipeline.
So how did a guy become a success by selling the first course of a meal and throwing out the rest?
Scardapane's potential wasn't immediately obvious to the mall operators in Cherry Hill, Pennsylvania, when he started his empire 23 years ago. He was just a few years out of college and managing a country club when the mall officials approached him about available space in their food court. A relative who owned a jewelry store at the mall knew Scardapane was looking to own a full-service restaurant and had referred him.
But when the officials found out he wanted to open up a salad-only restaurant, they were skeptical. Scardapane had noticed how popular salads were at the country club and felt the nutritional value might draw adults who were weary of the food court's burger and fries.
The mall operators didn't see it that way. "They told me salads would never pay the rent in the mall," says Scardapane. "We had three meetings, and at the third meeting, they allowed me to take over the lease -- as long as I agreed to devote half of my space to serving sandwiches. So I agreed."
Two months later, Scardapane quietly replaced the sandwiches with more salads. It was an easy decision. Half his restaurant -- the salad half -- was doing a brisk business, and within 18 months, he was bringing in close to $3 million in sales. Because the price of his lease went up based on the profits, the mall operators weren't complaining; in fact, they quickly helped Scardapane open locations in 12 more of their malls. It was then that Scardapane decided to franchise.
"The stores weren't operating the way I wanted them to," explains Scardapane. "We weren't giving our customers fanatical service. We were doing well, but as an experience, it wasn't happening. I decided to franchise, so the franchisee would care as much as I did about the concept."
Scardapane convinced one of his best friends to buy the first franchise -- he must have liked it, since he owns eight locations now -- and spent his time bringing Saladworks into more malls, as well as strip malls and freestanding restaurants. Still, he faced the usual challenges any startup has in finding its groove.
"It took us awhile to figure out how much food to prep," recalls Scardapane. "We prep for lunch in the morning and dinner in the afternoon, and in the beginning, we had no idea how many people would be ordering, so we'd have 20 people in line, and we'd be in the kitchen, chopping lettuce and washing and drying it as fast as we could."
They also didn't have much buying power. Now, though, Scardapane says his company's buyers can "tell the farmers we'll buy X amount of lettuce this year, for a set price. Having that buying power can save about 15% off the street price," says Scardapane -- and that adds up to a lot of savings. From August 2008 to August 2009, for instance, they bought 22,643 pounds of chick peas, 38,607 pounds of broccoli florets and 256,560 pounds of radiatore pasta.
Mostly, serving good-for-you food has been good to Scardapane. While some parts of the population -- the burger-loving, vegetable-hating folk -- probably do stay away from Saladworks, Scardapane insists his restaurants serve a lot of salad-liking children and teenagers, and their customers seem to be split pretty evenly between men and women. He thinks that's in part because the salads are meant to be a full meal, so they're generally very filling as well as nutritious -- all their signature salads are fewer than 500 calories.
"We used to have a salad on our menu with cheese, pepperoni and ham, and it was 800 calories," says Scardapane. "Every time the media would do a story on us, they'd compare that one salad to a burger, and say the burger was 650 calories, and our salad was 800. We took a lot of heat for that."
So he took it off the menu (customers can still add pepperoni if they make their own salad). It took a little more strategic planning, however, to keep the business going when the recession hit. "It didn't affect sales in our stores, which are up about 8.5%," says Scardapane. "But when the banking crisis hit, most of the banks withdrew their commitments [to our stores slotted to open], so we had to spend a lot of time getting financing."
Scardapane ended up partnering with Vernon Hill, who used to be the CEO of Commerce Bancorp, to set up their own in-house financing department and can now finance franchise owners themselves. Therein lies a lesson any entrepreneur can emulate: If you don't like what you see on the menu, change it.
Franchise fee: $30,000-$35,000
Total turnkey costs: $356,350-$649,200, including everything from permits and licenses to signs and opening inventory; see a breakdown of costs by clicking here
Where they're seeking franchises: nationwide
Contact: Saladworks.com; especially helpful is their FAQ page