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Burger King franchisee triples size in 5 years

Surge in acquisitions help father-son operator triple in size in just five years

Harsh Ghai and his father, Sunny, spent the past several weeks of 2016 finalizing a pair of acquisitions that would double the size of their company, Ghai Management Services. And they did it all while spending 3.5 weeks in India, celebrating the wedding of Harsh’s sister.

“I don’t know how we pulled this off, to be honest with you,” Harsh Ghai told NRN. “It was two of the largest deals we’ve ever done in a one-week period. We threw an amazing wedding all the while we were closing the deals out, essentially.”

The two separate deals, one for Burger King restaurants in Northern California, and the other for Taco Bell locations in Portland, Ore., helped vault the Livermore, Calif.-based Ghai Management Services into one of the largest franchisees in the country.

In the first deal, the company bought 21 Taco Bells from the franchisor in Portland, adding to the nine Taco Bell restaurants the company already operated.

In the second, GMS bought 45 Burger King locations from Strategic Restaurants Acquisition Corp. — the same company that sold most of its locations to Atlanta-based franchisee GPS Hospitality. That gave the company 106 Burger Kings.

“We doubled in size in the process,” Ghai said. 

Sunny Ghai founded the company in California in 1999. The family had immigrated to the U.S. in 1994. Sunny Ghai, who had a career in hospitality in India, tried some things before deciding to open a quick-service restaurant on some real estate he owned in Pleasanton, Calif., in 1997.

He applied to operate a Burger King there but was turned down. “He had no fast- food experience and hadn’t raised capital,” Harsh said. So he went to work for a two-unit Burger King operator in Northern California and worked his way up over the next two years.

By 1999 he bought his first restaurant. “It was a low-volume restaurant that did $40,000 to $50,000 a month and was open seven days a week,” Harsh said.

Sunny Ghai slowly built his business from there, developing restaurants in Northern California. By 2012, GMS had 25 to 30 locations.

That’s when the company put its growth into high gear. In 2012, GMS got into the Taco Bell system, buying six locations.

Harsh Ghai, who had worked in his father’s restaurants through college before he tried a couple of things on his own, rejoined the company to run the Taco Bell. Today, Harsh runs the entire operation, which now totals 140 locations. Sunny focuses on development and financial.

“We’ve more than tripled in size in the last five years,” Harsh Ghai said. “We have an amazing portfolio of restaurants. We have a good real estate portfolio.”

Among that portfolio includes two Corner Bakery locations and one Blaze Pizza location. GMS is developing two more Blaze Pizza locations.

And the company boasts 10 of what it calls “Power Pumpers,” or gas stations with one or two restaurants attached, either Burger King, Taco Bell or both or, in one case, a Starbucks. “That has been very, very lucrative,” Harsh Ghai said. By putting multiple businesses on a single property, the businesses share some costs while each draws traffic to the other. And build-out is cheaper than it is if each were to be opened on its own.

The new acquisitions give the company more exposure to a pair of brands that Ghai considers among the best in the quick-service business. 

“They’re the two best concepts in QSR right now as far as growth is concerned and where the future of the brands are going right now,” he said of Burger King and Taco Bell.

The Taco Bell locations the company bought in 2012, for instance, have “increased in value tremendously” since the acquisition, he said.

“The sales growth has been awesome,” he said. “There’s so much success in the brand. We’ve been looking for opportunities to grow. Portland is a great fit for us.”

He praised the chain’s management and the way it has engaged with Millennials while focusing on franchise profitability.

The Burger King deal came as part of a complex sale of Strategic, once among the largest Burger King operators in the country. “We really idolized those guys,” Harsh Ghai said.

“This was just a natural fit. The operation is extremely well mixed with our existing operation” in Northern California. The locations are in Sacramento, Fresno and the San Joaquin Valley. “It’s a natural fit for us,” he said. 

As part of the deal, Ghai pledged to remodel all of the acquired Burger Kings. The company also plans to develop locations with both concepts. 

The combination of remodels and development could build the reputation of the brands in their respective markets, Ghai said. “When you give a large operator geographic independence and they remodel restaurants and run good restaurants and develop hard and fast, you get a big lift for the entire brand in that area,” he said. 

Contact Jonathan Maze at [email protected]

Follow him on Twitter at @jonathanmaze

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