Dale Hellenbrand’s first Culver’s restaurant, in the St. Louis suburb of Arnold, Mo., was flourishing in 2008, its second full year of operation, when the bottom fell out: A new development, with more than 30 restaurants, opened across town.
The next year, sales plummeted and profits evaporated. Hellenbrand, who eagerly handed out raises during that second year of business, had to sell his truck to make payroll.
“We definitely had our struggles,” said Hellenbrand, who started working at Culver’s when he was 15 years old, and opened his first restaurant at 24. “We were down $130,000, $140,000. We lost everything we had. We were losing money at that point. We started out doing well, and then all of a sudden, whoa.”
It was a cruel lesson in the competitive nature of the restaurant business. But it ultimately helped Hellenbrand become a better business owner. His response to the sales decline helped him run a more efficient restaurant, and by 2011, he had a second location. Today he has three units.
“Once you get open, it was a challenge,” Hellenbrand said. “Just being young and naïve on some things sometimes, you’re not always handling things perfectly. At 24, you’re not as mature. You don’t have all the experiences to go off of at that point. It’s a little bit of a learning curve. And it makes you a better person at the end of the day, maybe a better franchisee.”
The restaurant industry is rife with tales of young kids who worked their way to ownership, or immigrants who could barely speak the language but ultimately became multi-unit operators. It’s a story the industry is more eager to tell these days, as labor activists and union organizers push for higher wages and improved working conditions.
For instance, McDonald’s Corp. has been more eager to share stories of crewmembers who have climbed the ranks, and is now helping more workers finance their education.
However, the challenge for many seeking to advance in the industry is financing. While passion and hard work can get a crewmember into the management ranks, it takes more than that to secure the financing required for ownership. In short, many simply don’t have the cash.
“Most managers, usually, they’re high on desire and high on capability, and short of having resources to financially be able to do it,” said Culver’s president Phil Keiser, who will become CEO on June 15. “The existing operator is always a strong part of making the deal work for them.”
Mentorship program creates runway to ownership
Culver’s recently started a mentorship program to help more of these managers reach the ownership ranks. Under the system, existing franchisees can help finance a new unit for a manager or other employee whom they think has the potential to become a strong owner. The mentee becomes the operating partner for the new location.
Such a program could be important for a chain like Culver’s, which is built largely on an owner-operator model and encourages its franchisees to work in the restaurants.
“We like to have people in the restaurant as much as we can,” Keiser said. “It’s one of our critical success factors. Then we have a great group engaged in the business day to day. That’s just very important.”
It can also help the franchisee. Retaining talent can be challenging for restaurants, and skilled managers eager for advancement can easily go somewhere else if they run out of opportunities. The mentorship program, Keiser said, helps operators keep good talent by giving them a path to ownership.
“This gives them a way to hang onto these great people,” Keiser said.
The importance of hospitality
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Hellenbrand himself is eager to mentor such managers. He already has a couple in mind.
“I can’t wait for the day when I can put them into their own restaurants,” he said. “It’s my joy in life now. I’m going to open restaurants so my team can grow.”
Hellenbrand grew up in Wisconsin, and he started at Culver’s in 1997, working with founder Craig Culver. By the time he was 16, he was promoted to trainer at that unit, where he frequently showed those training to become franchisees how to make Culver’s ButterBurgers.
“That was a real neat experience,” Hellenbrand said. “When I was 17 and trying to think about what kind of future I wanted and stuff like that, I decided that Culver’s was the thing I wanted to do. I couldn’t picture myself doing something else. I couldn’t sit at a desk to save my life.”
Culver himself urged Hellenbrand to go to college. He did, working at Culver’s restaurants occasionally and during the summer along the way. He attended the University of Wisconsin-Whitewater and studied general business to learn “as much as I could about everything.” By his junior year, he was talking to Culver again about becoming a franchisee. By his senior year, he was looking for restaurant sites.
He secured financing from his parents and some family and friends, graduated in 2004, went through the company’s training program, and moved to St. Louis in 2005, when he started to look for locations. By 2006, he was running a Culver’s restaurant.
When sales declined, Hellenbrand learned a key lesson for franchisees: how to cut costs. He analyzed things like trash removal, changing his mats regularly and even how much he was paying for cable.
“You learn a little bit about business,” he said. “We were maybe overspending on this thing or that thing. You start to understand the business a little better, you’re identifying opportunities a little better, and know what you waste versus what you need to use.”
He also learned the importance of hospitality. Because there were 30 new competitors just a couple of miles away, Hellenbrand had to improve.
“You just had to be operationally sound, do the right things, figure out how to go above and beyond, so they [customers] just say, ‘Wow,’” Hellenbrand said. “Hospitality makes all the difference, making people feel welcome.”
Eventually, the restaurant’s sales lifted. Last year, sales exceeded those of that notable second year.
This story has been revised to reflect the following correction:
Correction: May 29, 2015 An earlier version of this story misstated Phil Keiser's position at Culver's. He is currently president, and will become CEO on June 15.
Contact Jonathan Maze at [email protected].
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