D O M I N A T O R S
2002 , Wendy ’ s went through a 10-year quiet period as a brand , a period of soulsearching . Then Emil Brolik came along [ as CEO ] and gave it a shot in the arm with facilities , marketing , and product upgrades . He handed it off to Todd Penegor , whose father is a Wendy ’ s franchisee in the Upper Peninsula of western Michigan , so he ’ s been around the brand his whole life .”
What ’ s happening in 2016 with Wendy ’ s “ speaks more to where the brand has always strived to position itself — highest quality in QSR , particularly the hamburger ,” says Schermer . “ Now , we ’ re into chicken products and the salad line , all healthy , high quality , fresh .” And , as a fitness buff , he regularly enjoys the salad offerings .
When Schermer began by acquiring 22 Wendy ’ s restaurants in western Michigan , it made sense . There were about 79 McDonald ’ s in the same market , and he saw the growth opportunity . First , he renovated the 22 restaurants and then started building new ones . For five years Meritage built a new Wendy ’ s every eight weeks in western Michigan . The company now operates Wendy ’ s in Michigan , North and South Carolina , Ohio , Oklahoma , Georgia , Florida , and Virginia .
To those who caution against growing too rapidly , Schermer points to what he ’ s seeing today . “ Going back 18 years , it took 12 months between identifying the site , dealing with entitlements , building the restaurant , and serving the first burger . Today , because of regulatory creep , that can take 24 to 36 months . Our market had development opportunities , so we got into the flow of opening new restaurants . We built a deep pipeline of real estate because of the time required today compared to 18 years ago .”
Schermer says it ’ s an interesting period for franchising . “ A lot of franchisors are pursuing asset-light models . They want high-margin cash flow , royalty and rental income — and from their perspective , it makes sense ,” he says . “ On the flip side , guys like us , multi-unit franchisees , are building a base for more sophisticated operations , and we ’ re investing in our operations while they do products and marketing .”
The ongoing shift to larger , more sophisticated multi-unit operators , he says , makes it more important than ever for franchisees to hold up their end of the franchise model . “ This means having an HR department ( at Meritage , we have an organizational development department , which encompasses more than HR ), a real estate department , in-house legal for real estate , an IT department offering 24 / 7 services , POS in all restaurants , as well as operating and accounting platforms . These are things that smaller franchisees may not have or be able to afford .”
Schermer says he ’ s also seeing more people coming out of major brands such as Wendy ’ s , McDonald ’ s , and Burger King and getting into the franchisee side . “ They ’ ve seen things at a higher level with more sophistication and they understand the moving parts involved .” Also , he says , the first generation of Wendy ’ s franchisees is approaching retirement age . “ They ’ re either keeping their restaurants in the family , giving them to the next generation , or selling them and making sure their people are taken care of .”
Business and regulatory trends aside , it all comes down to retaining what he calls “ Dave Thomas values ,” says Schermer . “ I remember meeting him years ago and he wore his heart on his sleeve . There was nothing fake about him . We are in the people business and put a lot of resources into and emphasis on people . We say we have two types of people : those who serve guests and those who serve those who serve guests . We live by those values .” It ’ s no accident that Meritage ’ s corporate office is called the Restaurant Service Center .
Though he ’ ll be focused on growing Wendy ’ s through 2021 , Schermer enjoys the best of both worlds with what he calls his “ recreational sidebar ”: the four original casual dining brands he keeps close to home in Michigan .
First job : Corporate fi nance in the securities industry .
Formative influences / events : A true turning point in my career was when I joined the company nearly 20 years ago . The transition from corporate fi nance to full-time franchisee was a challenge . However , my previous work experience gave me the competitive edge to succeed in this environment .
Key accomplishments : I see our continued growth as a key accomplishment . When I joined the company in 1998 , our sales were $ 27 million and last year they reached $ 228 million . That is a 744 percent growth rate .
Next big goal : 300 restaurants by 2021 . Best business decision : Always hire people smarter than myself .
Hardest lesson learned : Staying focused on long-term goals and not deviating from the set plan .
Work week : Whatever ’ s required ! The restaurant industry never shuts down .
Exercise / workout : Health and fi tness are very important to me . I work out each morning at 4:30 a . m .
Best advice you ever got : To have a successful company , you must drive value for all stakeholders involved . I try to make every decision with that in mind .
What ’ s your passion in business ? Creating opportunities for people . I ’ ve always said the sky is the limit .
PERSONAL
How do you balance life and work ? When you love what you do it ’ s rarely considered work .
Guilty pleasure : Who can resist a Dave ’ s Single with a large fry and a Frosty ?
Favorite book : Scaling Up by Verne Harnish . The perspectives and resources shared in the book have helped Meritage drive and manage our exponential growth .
Favorite movie : Honestly , I am a very active person and can rarely sit through an entire movie .
What do most people not know about you ? I love sailing and spending time on the water .
Pet peeve : Governmental regulations and red tape .
What did you want to be when you grew up ? An investment banker .
Last vacation : Earlier this year , I spent a relaxing week with friends and family in Florida .
Person I ’ d most like to have lunch with : Dave Thomas , founder of Wendy ’ s . I met him years ago when I just started in the franchise business , and his passion for this company was extraordinary . Although the Wendy ’ s brand continues to grow and develop , Dave ’ s values are still at the heart of all we do .
32 MULTI-UNIT FRANCHISEE ISSUE IV , 2016