Why I Put Creating New Restaurants on Hold to Open Fried Chicken Franchises

Everyone in the restaurant industry is moving in the direction of fast-casual restaurants, because it’s so much easier to make money.
September 19, 2016, 9:00am

My whole life I always wanted to be a restauranteur, and when I was 26, I opened my first restaurant. I came up with the whole concept, had a big hand in the design, and created the menu. It basically became the hottest place in town overnight. We did massive business from day one. We literally had four-and-a-half hour waits at the door, and were just making money hand over fist. It was incredible. By my 30th birthday I had opened seven unique restaurants, and helped elevate the restaurant game in the Metro Detroit area. I've basically been living my dream. Now, for the next couple years, I'm focusing on opening up Gus's Fried Chicken franchises.

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Look, I love creating new restaurant concepts, but it takes a lot of time, and it's a lot of risk. The margins are incredibly narrow. You open up in a new market, you think you have a great concept, you can't find the right talent, you come out with the wrong menu, you're overpriced, you're under market, you come up with the wrong price or the wrong recipe, and it doesn't work out.

When you're designing a new concept, you have to worry about, "Oh my god, how am I going to design it?" So you hire a crazy design firm. You have to figure out what kind of kitchen and cooking equipment you need. You have to do recipe development for eight months, and travel across the country, and figure out what the servers are gonna wear. All of that costs a lot of time, money, and energy.

That's why you see everyone in the industry, from Wolfgang Puck to José Andrés, moving in the direction of fast-casual restaurants. Everyone is getting on board with this concept because it's so much easier to make money.

READ MORE: Fast Food Restaurants Are Trying Really Hard to Not Be 'Fast Food' Restaurants

A couple years ago, a friend approached me and told me he'd discovered the best fried chicken he'd ever had on a trip to Memphis. Gus's World Famous Fried Chicken is this amazing fast-casual fried-chicken joint in Memphis and they recently started franchising. Soon after we opened up a Gus's in Chicago, and another in Detroit last month. Brooklyn, Cincinnati, and Cleveland are next. We plan to open between 45 and 60 total.

I don't want to say that making money through Gus's is automatic, but let's put it this way: the success rate is very, very high. It probably only makes 30 percent to 40 percent of what one of my successful full-scale restaurants would make, but it's a lot less risky. And it costs a fraction of the price to open. I did my first restaurant, Social Kitchen and Bar, very cheap. Social cost me $800,000. My Chicago restaurant, Bernie's Lunch & Supper, cost $2.4 million. Opening a Gus's might cost me $500,000.

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With Gus's, everything is already analysed and calculated. The challenging part is finding locations, staffing them, and building a national platform so you can manage stores that aren't close to you. We do that with really strict operating procedures and different software, and regional managers and district managers. But the thing is, we already have this all built, and because we already have this whole system, we can just stamp out Gus's. I have to say, it feels great to be able to quickly and efficiently open a restaurant which I believe has a monopoly on the best fried chicken in the world (and GQ also called it the world's best fried chicken, by the way).

It's getting harder and harder to find great cooks. Culinary school enrolment is at a crazy all-time high, and these schools are just churning out cooks, but the programmes are less comprehensive than they used to be.

Our team is used to opening up full scale restaurants—those openings can be very chaotic, lots of unknowns. When you go from opening up your own restaurants to opening up these very calculated restaurants, it becomes just so much easier. It's 10 percent of work and a fraction of the risk.

The other thing is that Gus's takes nine cooks to run. A Social takes 20 cooks to run, and it's getting harder and harder to find great cooks. Culinary school enrolment is at a crazy all-time high, and these schools are just churning out cooks, but the programmes are less comprehensive than they used to be. So it's just easier for me to staff a Gus's than it is a full-scale restaurant. It's easier for Jose Andres to staff a sandwich shop. You don't need to go to culinary school to work at these restaurants. That's another reason everyone is moving towards these fast-casual concepts. Even Paul Kahan is opening in the airport. Rick Bayless has an airport restaurant.

READ MORE: Step Inside the Shop Making Oprah's Favorite Fried Chicken

We're a capitalist society and people have to make money. Minimum wage is going up across the country, and not only am I paying more expensive minimum wage, I'm paying for Obamacare. Two years ago I wasn't paying for Obamacare, which costs me a fortune. So it's getting harder and harder to find really good quality because it costs so much money. And there are so many restaurants, so people aren't being trained like they used to. To have a really great restaurant, you need to put in an enormous amount of hours and people just aren't being conditioned anymore to put in those kind of hours.

Part of me really likes developing, creating, cultivating concepts because it's kinda risky, it's more fun, and it's really gratifying. There's a lot more of my intellectual property, so I really enjoy that. However, Gus's gives me a platform that's less volatile so I have a little more stability to do something more gratifying. That's why I'll be focusing on building this franchise for the next couple years, and then I'll go back to getting creative and designing new restaurant concepts. And opening Gus's locations also gives me a different type of gratification. I've found happiness in employing people, investing in community and helping build a world-class organisation, and still making people smile with the world's best fried chicken.

As told to Brad Cohen, edited for length and clarity.