WEBVTT - Freddy’s Franchisee Focus Boosts Net Unit Growth 0:00:21.840 --> 0:00:24.600 Welcome to Chopping It Up. I'm your host, Michael Halen, 0:00:24.800 --> 0:00:29.280 Senior restaurant and food service analyst at Bloomberg Intelligence. Today 0:00:29.320 --> 0:00:31.840 we're joined by Chris Duhl. He's the CEO of Freddie's 0:00:31.840 --> 0:00:35.000 Frozen Custard and State Burgers. Thanks for doing this, Chris. 0:00:35.159 --> 0:00:38.280 Hey, Thanks Mike. It's a pleasure to be here and 0:00:38.640 --> 0:00:41.400 it's an honor that you would have us on your show. 0:00:41.479 --> 0:00:44.440 A sure thing, man, Why don't you kick us off 0:00:44.440 --> 0:00:46.920 with some history about Freddy's. You know, I'm in a 0:00:46.960 --> 0:00:50.519 business that's that's New York based, and from what I understand, 0:00:50.560 --> 0:00:53.160 there's a couple of Freddie's in New Jersey. I don't 0:00:53.159 --> 0:00:56.000 know how many are in New York, so, you know, 0:00:56.200 --> 0:00:58.360 maybe not all of our listeners are familiar. So if 0:00:58.400 --> 0:01:00.960 you can give us some history, talk about the service 0:01:01.040 --> 0:01:02.560 model and the menu, that would be great. 0:01:03.080 --> 0:01:03.400 Sure. 0:01:03.520 --> 0:01:07.440 So, Freddie's is a brand business that's been around since 0:01:07.440 --> 0:01:12.720 two thousand and two, was founded in Wichita, Kansas, celebrating 0:01:12.760 --> 0:01:16.520 our twenty first birth rate this year. With currently four 0:01:16.600 --> 0:01:19.640 hundred and eighty three units open and operating around the 0:01:19.720 --> 0:01:24.319 United States. We're not necessarily a regional brand because we 0:01:24.360 --> 0:01:27.280 do have units that span from New Jersey all the 0:01:27.319 --> 0:01:31.920 way to California, soon to open restaurants in Canada, and 0:01:32.360 --> 0:01:35.560 you know, saturate the southern half of the United States. 0:01:36.319 --> 0:01:38.760 But we do have a very strong presence through right 0:01:38.800 --> 0:01:42.000 through the middle of the country. And we are a 0:01:42.600 --> 0:01:49.480 standalone drive through custard burger and fry concept. We make 0:01:49.520 --> 0:01:52.120 all of our food from scratch, so. 0:01:52.120 --> 0:01:53.760 We are our. 0:01:53.520 --> 0:01:57.040 Food is fresh, our guests are able to order. They're 0:01:57.040 --> 0:02:00.280 not getting anything that's been sitting in a heating sure, 0:02:00.280 --> 0:02:03.920 anything of that nature. It's made on site and to 0:02:04.280 --> 0:02:06.280 order for each one of our guests. And we take 0:02:06.320 --> 0:02:11.000 a tremendous amount of pride in offering genuine hospitality. We 0:02:11.040 --> 0:02:13.800 are a very friendly group and love having folks in 0:02:13.880 --> 0:02:18.560 our restaurants. And we also operate in a very clean environment. 0:02:18.840 --> 0:02:24.200 We believe very strongly having a great, clean, family friendly 0:02:24.320 --> 0:02:27.600 environment for folks to come and enjoy a great, fresh 0:02:27.639 --> 0:02:28.639 made meal at Freddy's. 0:02:28.840 --> 0:02:29.040 Yeah. 0:02:29.160 --> 0:02:31.360 A lot of times it's about doing you know, those 0:02:31.840 --> 0:02:34.600 core important things and doing them well right. 0:02:34.919 --> 0:02:37.840 Yeah, And as New Jersey goes, we just opened our 0:02:37.880 --> 0:02:40.840 second location out there in Tom's River, So we're coming, 0:02:41.520 --> 0:02:42.000 We're coming. 0:02:42.040 --> 0:02:43.800 It's just a matter of time for long we'll be 0:02:43.840 --> 0:02:44.320 in the city. 0:02:44.919 --> 0:02:47.359 Okay, very cool. Yeah, I have to get next time 0:02:47.400 --> 0:02:49.679 I'm at the Jersey Shore, I have to get down 0:02:49.720 --> 0:02:53.640 to the Toms River location. Can you discuss your career 0:02:53.680 --> 0:02:55.920 path a little bit and what attracted you to Freddy's. 0:02:56.240 --> 0:02:56.600 Sure. 0:02:56.840 --> 0:03:00.919 I've been in the food franchising business now for close 0:03:00.919 --> 0:03:05.000 to twenty seven years, and I started in restaurant. I 0:03:05.040 --> 0:03:09.440 started scooping ice cream at a marble slab creamer in Houston, Texas, So, 0:03:09.760 --> 0:03:13.000 you know, I got to learn, you know, how how 0:03:13.080 --> 0:03:16.480 life is. A platform level store level employee was and 0:03:16.919 --> 0:03:21.600 worked by way through corporate there and became the CEO 0:03:21.680 --> 0:03:24.840 of a company called Global Franchise Group out of Atlanta. 0:03:24.880 --> 0:03:29.960 I helped build that organization through acquiring multiple brands, and 0:03:30.320 --> 0:03:32.760 I served as the CEO of that company for fourteen 0:03:32.840 --> 0:03:33.840 years and then. 0:03:33.760 --> 0:03:35.280 I took a short hiatus. 0:03:35.320 --> 0:03:37.400 Fortunately for me, it was right about the time that 0:03:37.800 --> 0:03:40.880 COVID was happening, so it was pretty good timing. And 0:03:41.480 --> 0:03:45.400 in my career, I've I've got I've had the pleasure 0:03:45.440 --> 0:03:47.280 to get to know a lot of private equity firms 0:03:47.400 --> 0:03:51.240 and I was working with several groups on various acquisition 0:03:51.320 --> 0:03:56.000 targets and Freddie's was in the midst of a process 0:03:56.120 --> 0:03:58.960 with Thompson Street Capital Partners out of Saint Louis, Missouri, 0:03:59.600 --> 0:04:00.440 and they asked me. 0:04:00.400 --> 0:04:01.840 To come along as an advisor. 0:04:02.280 --> 0:04:05.600 And you know, I knew Freddie's like a lot of 0:04:05.600 --> 0:04:07.720 folks I had. You know, I had knew Freddie's. I 0:04:07.720 --> 0:04:10.440 had heard of Freddie's, but it wasn't in my you know, 0:04:10.800 --> 0:04:15.120 daily routine, especially being a Georgia guy where we didn't 0:04:15.160 --> 0:04:18.480 have any locations in the heart of Atlanta at that time. 0:04:18.960 --> 0:04:21.320 But very quickly I fell in love with the concept. 0:04:21.360 --> 0:04:24.039 And I think the thing that really stood out to 0:04:24.080 --> 0:04:27.680 me early on was the strength of the franchisees of Freddie's. 0:04:27.800 --> 0:04:30.880 While while we do operate thirty three company owned restaurants, 0:04:30.880 --> 0:04:34.760 the bulk of our system or franchise down and the 0:04:34.760 --> 0:04:40.680 Freddie's franchises were the most collaborative, smart, professional group of 0:04:40.680 --> 0:04:43.880 franchisees I'd ever been around, and I wanted to be 0:04:43.920 --> 0:04:46.880 a part of it. And so when the opportunity came 0:04:47.360 --> 0:04:50.320 post acquisition for me to step in as a CEO, 0:04:50.680 --> 0:04:53.960 I jumped at it. And it's been a great two 0:04:54.040 --> 0:04:54.799 and a half years. 0:04:54.960 --> 0:04:59.120 Oh that's awesome. Man, what percentage of the store basis franchise? 0:04:59.760 --> 0:04:59.880 Right? 0:05:00.000 --> 0:05:03.400 So now it's about ninety four percent franchise, six percent 0:05:03.440 --> 0:05:07.039 company owned. And we do develop one to two company 0:05:07.080 --> 0:05:10.080 owned restaurants a year, but this year we will open 0:05:10.400 --> 0:05:13.240 you know, right around sixty total restaurants. To date, we've 0:05:13.240 --> 0:05:16.760 opened twenty seven and only one of the twenty seven 0:05:16.839 --> 0:05:18.320 has been a company owned restaurant. 0:05:18.480 --> 0:05:21.600 Okay, well, that's good. It's at least enough to show 0:05:21.640 --> 0:05:24.200 that the franchisees that you have skin in the game, right. 0:05:24.440 --> 0:05:27.280 Yeah, And I think it gives us a great platform 0:05:27.480 --> 0:05:31.600 to test and try things and not put a franchisease 0:05:31.680 --> 0:05:34.839 investment at risk. You know, earlier this year, we opened 0:05:34.880 --> 0:05:40.760 our new prototype, which was an unproven operating structure. It's 0:05:40.839 --> 0:05:43.840 kind of like having a new race car, and we 0:05:43.880 --> 0:05:46.000 went in and we've driven it for a while and 0:05:46.040 --> 0:05:48.200 we've tweaked some things, and we've got it to where 0:05:48.880 --> 0:05:51.479 we really love it, and now it's starting to roll 0:05:51.480 --> 0:05:53.679 out through system. But being in the in the public 0:05:54.240 --> 0:05:58.320 I'm sorry, being in the company owned restaurant game gave 0:05:58.360 --> 0:06:01.120 us the opportunity to take on that risk and to 0:06:01.200 --> 0:06:02.640 try things out on our own dime. 0:06:03.360 --> 0:06:06.400 Okay, cool, and about how many franchisees do you have 0:06:06.480 --> 0:06:07.719 in the system? Opening source? 0:06:08.000 --> 0:06:11.599 So we have sixty eight total operating groups across the 0:06:11.600 --> 0:06:14.920 four hundred and eighty three restaurants. But I think one 0:06:14.960 --> 0:06:18.680 of the things that makes us super unique is over 0:06:18.760 --> 0:06:22.000 eighty percent of those groups are currently developing another restaurant 0:06:22.080 --> 0:06:27.160 right now. So you know, our folks are very aggressive developers. 0:06:27.520 --> 0:06:32.000 They love Freddy's, they love the investment, and they continue 0:06:32.040 --> 0:06:35.320 to build and open new restaurants with us, and we're 0:06:35.360 --> 0:06:36.640 super fortunate to have them. 0:06:37.240 --> 0:06:39.920 Okay, cool, And out of those restaurants that you expect 0:06:39.960 --> 0:06:42.159 to open the second half this year and next year, 0:06:43.080 --> 0:06:46.440 what percentage of those are coming from the existing seventy 0:06:46.560 --> 0:06:50.600 sixty eight operating groups and what percentage of those builds 0:06:50.600 --> 0:06:53.320 are coming from new people to the Freddy system. 0:06:53.560 --> 0:06:57.919 Yeah, this year, of our sixty ish openings, twenty three 0:06:57.960 --> 0:07:01.760 of them will be opened by groups that have zero 0:07:02.200 --> 0:07:05.920 to one restaurant. So we do have and on the 0:07:05.920 --> 0:07:10.160 heels of the transaction to private equity years ago, we 0:07:10.240 --> 0:07:12.760 really did, you know, light the fires on the development 0:07:12.760 --> 0:07:16.160 front and started to bring in some new developers and 0:07:16.280 --> 0:07:18.840 we're starting to see those folks open restaurants one in 0:07:18.880 --> 0:07:23.920 restaurants two now, So it's exciting for us. But I 0:07:23.960 --> 0:07:26.239 would say, you know, the split is not quite fifty 0:07:26.240 --> 0:07:29.520 to fifty yet on new to existing it's probably you know, 0:07:29.600 --> 0:07:32.760 closer to sixty forty somewhere in that range. 0:07:32.960 --> 0:07:35.720 Okay, cool, Yeah, but it shows, you know, when you 0:07:35.800 --> 0:07:40.520 have more more of the development coming from existing franchisees 0:07:40.760 --> 0:07:43.760 typically is a sign that the franchises are happy. So 0:07:44.720 --> 0:07:47.240 if you could talk a little bit about the unit economics, 0:07:47.800 --> 0:07:49.600 you know, the size of the units, how much they 0:07:49.640 --> 0:07:53.520 cost to build, and you know any other numbers that 0:07:53.560 --> 0:07:54.239 you'd like to share. 0:07:54.440 --> 0:07:57.480 Yeah, the typical Freddy's today is about three thousand square feet. 0:07:57.560 --> 0:08:00.720 Our new prototypes are slightly smaller than that at twenty 0:08:00.720 --> 0:08:04.200 eight hundred and twenty four hundred square feet. The total 0:08:04.240 --> 0:08:07.840 cost to build a restaurant, not including the investment in 0:08:07.880 --> 0:08:14.200 dirt or site work, is roughly one point six million dollars. Today, 0:08:14.200 --> 0:08:17.760 our average unit volume is right at two million. And 0:08:17.840 --> 0:08:21.160 in our company owned restaurants where we have you know, 0:08:21.200 --> 0:08:24.160 full visibility to our p and ls, we operate in 0:08:24.200 --> 0:08:30.160 the high teens from a ebidah margin four wall ebidah margin. 0:08:31.560 --> 0:08:35.000 You know, a lot of our franchises actually acquire their land, 0:08:35.720 --> 0:08:39.760 build their buildings and own the dirt and building and 0:08:40.360 --> 0:08:43.640 operate in what we refer to as an ebadar environment 0:08:43.720 --> 0:08:48.160 because they're paying themselves rent. And you know, I think 0:08:48.200 --> 0:08:52.080 that while that can take a little bit more time 0:08:52.160 --> 0:08:55.319 to get restaurants open when you're dealing with purchasing land 0:08:55.360 --> 0:08:58.040 and site work yourself and all of that, we love 0:08:58.200 --> 0:09:02.720 that it gives our franchisees the ability to create real wealth, 0:09:02.960 --> 0:09:05.920 not just cash flow business, but actually have an asset 0:09:06.000 --> 0:09:10.360 that's worth quite a bit. And you know, when you 0:09:10.360 --> 0:09:12.600 look at the bulk of our developers, that's that's the 0:09:12.679 --> 0:09:13.760 route that they are going. 0:09:14.200 --> 0:09:16.680 Cool. So I think you touched on it a little 0:09:16.679 --> 0:09:19.840 bit at the top. But where are you strong geographically 0:09:20.000 --> 0:09:22.440 and and what areas of the country are you most 0:09:22.520 --> 0:09:24.120 focused on developing right now? 0:09:24.440 --> 0:09:24.840 Sure? 0:09:25.080 --> 0:09:29.920 Well, when you look at absolute strength, the Midwest is 0:09:29.679 --> 0:09:32.440 a is a is a is a huge market for us, 0:09:32.520 --> 0:09:34.440 right up the middle of the United States, you know, 0:09:34.520 --> 0:09:39.800 going from Texas, Arkansas, Oklahoma, Colorado, New Mexico all the 0:09:39.800 --> 0:09:45.440 way up to uh Michigan and everything in between. We 0:09:45.480 --> 0:09:48.760 do have you know, a significant number of units in 0:09:48.800 --> 0:09:53.040 the southeast. We have growing very strong market in Arizona 0:09:53.040 --> 0:09:57.160 and growing quickly in Nevada. Just recently awarded an eight 0:09:57.280 --> 0:10:02.200 unit development agreement in La County Callfornia. Currently operate three 0:10:02.280 --> 0:10:05.120 units out there, but we'll be adding a meaningful growth 0:10:05.120 --> 0:10:08.080 in California this year. We have a unit that's opening 0:10:08.080 --> 0:10:12.120 in Barstow here in the next couple weeks, and we 0:10:12.200 --> 0:10:14.319 do have a lot of focus on the Eastern and 0:10:14.400 --> 0:10:17.920 Northeast for our concept. We believe very strongly that we 0:10:18.000 --> 0:10:22.480 can be great in the northeast. We feel like there's 0:10:22.520 --> 0:10:27.200 a void of really that better Burger, and so we 0:10:27.240 --> 0:10:30.200 are working hard to secure some strong developers up in 0:10:30.200 --> 0:10:30.840 the northeast. 0:10:31.080 --> 0:10:34.800 Very cool. Are you and your franchisees having any issues 0:10:34.840 --> 0:10:37.840 finding quality real estate for twenty twenty four and beyond. 0:10:38.160 --> 0:10:41.600 You know, our real estate pipeline is pretty robust, and 0:10:41.800 --> 0:10:46.360 we like to see somewhere around, you know, fifteen or 0:10:46.440 --> 0:10:50.959 twenty sites of middles every period, and that doesn't mean 0:10:50.960 --> 0:10:53.160 that all of those get approved, but it's a good 0:10:53.240 --> 0:10:55.840 flow for us. And that's kind of where we've been 0:10:56.720 --> 0:10:59.280 coming through COVID. There were some periods where it was 0:10:59.280 --> 0:11:02.880 a little light, but on the backside of that, we've 0:11:03.000 --> 0:11:06.840 we've seen strong flow of sites and where Freddie's operates 0:11:06.920 --> 0:11:10.400 is a is an interesting demographic. You know, you won't 0:11:10.559 --> 0:11:13.600 typically find Freddie's right in the heart of major metro 0:11:14.320 --> 0:11:17.000 and you won't find Freddie's in the super small towns 0:11:17.000 --> 0:11:20.120 where you might only find a dairy queen. But somewhere 0:11:20.120 --> 0:11:23.200 in between there is where we like to be. We 0:11:23.320 --> 0:11:28.440 also liked I call it the edge of suburbia. You know, 0:11:28.559 --> 0:11:34.280 we love millennials, We love the family, the millennial families 0:11:34.320 --> 0:11:37.240 that you know are growing and they love Freddie's and 0:11:37.240 --> 0:11:40.120 we like to be convenient for those folks. And in 0:11:40.120 --> 0:11:42.199 that environment there seems to be quite a bit of 0:11:42.240 --> 0:11:43.040 available dirt. 0:11:43.679 --> 0:11:49.800 Okay, that's great. You know when we spoke previously, you 0:11:49.840 --> 0:11:53.079 know what really stood out to me and about our 0:11:53.080 --> 0:11:57.040 discussion was when we really got into the franchise ease, 0:11:57.360 --> 0:12:01.160 and you know, you said some things that were reminiscent 0:12:02.160 --> 0:12:06.360 to me of Cheryl Batchelder and Popeyes and her dedication 0:12:06.520 --> 0:12:09.720 for really helping the franchisees grow their p and l 0:12:09.840 --> 0:12:12.640 not just the top line. So if you could talk 0:12:13.000 --> 0:12:17.640 a little bit about how you're helping your franchisees booster profitability, 0:12:17.640 --> 0:12:18.520 I think that would be great. 0:12:18.840 --> 0:12:19.480 Absolutely. 0:12:19.800 --> 0:12:24.320 So you know, unit level economic and profitability is at 0:12:24.360 --> 0:12:27.880 the very top of importance at Freddie's. We are highly 0:12:27.920 --> 0:12:32.280 focused on our franchisees and their return on investment. And 0:12:33.120 --> 0:12:37.480 you know, just recently we went from going from an 0:12:37.600 --> 0:12:40.480 annual p and L template to. 0:12:40.800 --> 0:12:43.160 Receiving those p and ls quarterly. 0:12:43.679 --> 0:12:47.760 And not only do we receive full p and L quarterly, 0:12:47.840 --> 0:12:51.120 but we also have a team of field business coaches 0:12:51.160 --> 0:12:56.120 that work with our franchisees to measure their profitability against 0:12:56.200 --> 0:13:00.800 the system and our expectations. And also we have a 0:13:00.880 --> 0:13:05.680 great list of KPIs that help us see where there's 0:13:05.800 --> 0:13:09.959 opportunity to drive more bottom line in each of our restaurants. 0:13:09.960 --> 0:13:12.280 And so we have a great bi tool that we 0:13:12.440 --> 0:13:17.160 use that populates the data for us and for our franchises, 0:13:17.320 --> 0:13:20.160 and then we meet with our franchises on a regular 0:13:20.200 --> 0:13:25.120 basis and walk through. In many cases it's period by period. 0:13:25.240 --> 0:13:28.040 You know, here you are on a KPI basis, here's 0:13:28.080 --> 0:13:31.840 where you're deficient, Here's where there's some opportunity for you 0:13:32.000 --> 0:13:35.080 to make improvement, and here's a look at your peer 0:13:35.120 --> 0:13:38.280 group as to where they're at. And and you know, 0:13:38.320 --> 0:13:41.240 if we need to call them to understand how they're 0:13:41.280 --> 0:13:43.959 achieving these higher levels. Let's do that because at the 0:13:44.080 --> 0:13:47.640 end of the day, there's nothing more important than the profitability. 0:13:47.880 --> 0:13:51.160 And I think you know, also as we look at 0:13:51.320 --> 0:13:56.160 product development and limited time offerings and all things that affect, 0:13:56.400 --> 0:13:59.320 you know, the top line and sail through, we're in 0:13:59.360 --> 0:14:02.680 a constant state of pushing products forward that have greater 0:14:03.400 --> 0:14:08.520 bottom line contribution than the products that they might potentially cannibalize. 0:14:09.040 --> 0:14:11.360 And so if we're going to sell something, we're going 0:14:11.400 --> 0:14:13.520 to sell it understanding that our guest loves it and 0:14:13.559 --> 0:14:17.760 wants it, but also that it's a product that generates 0:14:17.760 --> 0:14:20.920 a greater bottom line for our franchise community. So we 0:14:21.000 --> 0:14:27.080 are hyper focused on profitability and it is as important, 0:14:27.080 --> 0:14:30.560 if not, I'll just say it's as important as anything 0:14:30.560 --> 0:14:35.280 else in the restaurant. Cleanliness, quality, hospitality, all of that's paramount, 0:14:35.680 --> 0:14:39.440 but nothing trumps profitability for our franchisees. 0:14:40.520 --> 0:14:44.720 Yeah, that's fantastic, And i'd imagine that that stack ranking 0:14:45.000 --> 0:14:50.600 of your franchisees kind of creates some competitive fire with them. 0:14:50.720 --> 0:14:53.120 You know, from what everything I've heard and the people 0:14:53.160 --> 0:14:56.320 I've met, the franchisees can be a pretty competitive group. 0:14:56.560 --> 0:14:57.239 Absolutely. 0:14:57.520 --> 0:15:02.040 You know, they those folks want to win, and they 0:15:02.080 --> 0:15:04.560 take a tremendous amount of pride in their operations. And 0:15:04.600 --> 0:15:06.600 so when you're able to say, hey, you know, you're 0:15:06.600 --> 0:15:12.200 doing great, however, you know you're you're you're three percent behind. 0:15:12.840 --> 0:15:15.800 You know these folks over here, and here's where it's 0:15:16.160 --> 0:15:20.680 coming from. You can you can generate some pretty immediate 0:15:20.960 --> 0:15:24.000 action on on those opportunities. 0:15:24.040 --> 0:15:26.360 And so it's exciting. It's exciting. 0:15:26.360 --> 0:15:29.520 And our franchisees are all close. You know, Freddy's is 0:15:29.640 --> 0:15:33.480 very familial, and and so there's a lot of banter 0:15:33.640 --> 0:15:34.800 between the groups. 0:15:34.440 --> 0:15:36.960 And who's gonna who's gonna win, who's going to be 0:15:36.960 --> 0:15:37.440 at the top. 0:15:38.120 --> 0:15:41.480 That's good stuff, man. Yeah, and I love your dedication 0:15:41.600 --> 0:15:43.800 to the franchisees. I mean my mentor you know, we 0:15:43.840 --> 0:15:46.360 are talking about the stock business, but it definitely holds 0:15:46.400 --> 0:15:49.120 true here as well. You know, he always said money, 0:15:49.960 --> 0:15:52.200 money flows to where it's treated best, right, And so 0:15:52.240 --> 0:15:54.280 when you have a lot of operators, you know a 0:15:54.320 --> 0:15:59.000 lot of operators that are building different brands underneath their umbrella, 0:15:59.520 --> 0:16:00.760 you know, they what they want. 0:16:00.560 --> 0:16:02.520 To Yeah, and I think it's important to point out 0:16:02.520 --> 0:16:05.400 that Freddie's was you know, The founders of our company 0:16:05.440 --> 0:16:10.320 were franchisees, and so they came into this business understanding, 0:16:10.520 --> 0:16:12.400 you know, the challenges that you can have in a 0:16:12.400 --> 0:16:15.960 franchise e, franchise or relationship. Even when you look at 0:16:15.960 --> 0:16:18.720 our pricing structure, you know, Freddie's charges a four and 0:16:18.720 --> 0:16:21.480 a half percent royalty, and even though we have a 0:16:21.520 --> 0:16:24.280 three percent ad fund, we only collect a percent and 0:16:24.280 --> 0:16:26.920 a half of that today because we don't we feel 0:16:26.920 --> 0:16:30.120 like those dollars, the remainder of those dollars today are 0:16:30.160 --> 0:16:32.520 best in the hands of our franchise partners. And so, 0:16:33.440 --> 0:16:35.560 you know, we try to create an environment all the 0:16:35.560 --> 0:16:38.960 way through the business where we're setting our franchisees up 0:16:39.440 --> 0:16:41.800 to be successful and profitable, and at the end of 0:16:41.880 --> 0:16:44.840 the day, if they are, they're going to grow. And 0:16:44.920 --> 0:16:47.800 while we're sitting here opening sixty restaurants this year and 0:16:47.840 --> 0:16:50.160 probably close to eighty next year and one hundred the 0:16:50.200 --> 0:16:52.800 year after that, I think that the proof is in 0:16:52.840 --> 0:16:53.280 the pudding. 0:16:54.160 --> 0:16:56.240 Yeah, it took the words out of my mouth, man. 0:16:56.280 --> 0:16:58.480 It It explains why you're able to grow at such 0:16:58.520 --> 0:17:02.120 a rapid clip. That's oppressive. What do you doing have 0:17:02.200 --> 0:17:05.720 Freddy's to attract some of the younger demographic cohorts like 0:17:05.760 --> 0:17:08.159 gen Zs, the gen Zs of the world. 0:17:08.960 --> 0:17:11.760 Yeah, you know, I think it's a great group there. 0:17:11.880 --> 0:17:16.040 You know, gen Z is such a super smart, digitally 0:17:16.160 --> 0:17:18.640 savvy group. 0:17:19.200 --> 0:17:20.680 They're there. 0:17:21.800 --> 0:17:23.639 We get the feeling that that's a group that really 0:17:23.640 --> 0:17:26.960 loves the ability to, you know, make things their own. 0:17:27.000 --> 0:17:32.000 They like to customize things they like. They like a 0:17:32.080 --> 0:17:34.960 menu that's flexible that way, and so at Freddy's, everything 0:17:34.960 --> 0:17:38.320 that we do, from our custard to our burgers, you 0:17:38.400 --> 0:17:40.920 can make it your way. And we have tons of 0:17:41.400 --> 0:17:45.480 great sauces and condiments that you can add to any 0:17:45.520 --> 0:17:48.080 build to make make it special, make it yours. And 0:17:48.119 --> 0:17:51.160 I know that that's definitely important to our our gen 0:17:51.280 --> 0:17:55.920 Z guest. Also, when you look at you know, speed 0:17:56.080 --> 0:17:59.119 and convenience, this is a fast paced group. 0:17:59.160 --> 0:17:59.920 They're on the move. 0:18:01.440 --> 0:18:05.080 They may not want to, you know, spend nine minutes 0:18:05.119 --> 0:18:07.919 in a drive through line waiting for something, or you know, 0:18:08.040 --> 0:18:10.160 ten minutes in the dining area waiting for a meal, 0:18:10.200 --> 0:18:14.199 and so we focus heavily on being fast, and we 0:18:14.320 --> 0:18:17.040 like to call it Freddy's Fast. It's made to order, 0:18:17.680 --> 0:18:21.119 but it's fast, and we think that that's important to 0:18:21.160 --> 0:18:24.240 our gen Z giest, you know, and then the restaurants, 0:18:24.359 --> 0:18:26.960 you know, you've got to have a fun atmosphere or 0:18:27.000 --> 0:18:30.479 something that they feel connected to. Gen Z loves to 0:18:30.480 --> 0:18:32.800 to talk about what they're doing and put it out 0:18:32.840 --> 0:18:35.159 there in social media, and so making sure that you 0:18:35.280 --> 0:18:39.760 have spots in your restaurant that are friendly for photo 0:18:39.840 --> 0:18:44.760 ops and and gathering and creating content. We make sure 0:18:44.760 --> 0:18:47.679 that we're cognizant of that. And I would say that 0:18:47.720 --> 0:18:48.879 the development. 0:18:48.359 --> 0:18:48.920 Of our app. 0:18:49.040 --> 0:18:51.440 You know, last year we launched a brand new app 0:18:51.480 --> 0:18:54.800 that really puts us in the game digitally and and 0:18:55.040 --> 0:18:59.200 is a great you know, medium for ordering, but it's 0:18:59.240 --> 0:19:03.720 also a wonderful loyalty place where you can receive some 0:19:03.760 --> 0:19:07.840 great awards for rewards for being a loyal fred Head 0:19:07.880 --> 0:19:11.000 as we like to say. And so, you know, I 0:19:11.040 --> 0:19:13.360 think that you've got to be digitally sound, you got 0:19:13.400 --> 0:19:15.800 to have a great place that makes them feel connected, 0:19:16.800 --> 0:19:19.000 and you've got to you've got to offer that customized 0:19:19.720 --> 0:19:20.800 net meal opportunity. 0:19:21.720 --> 0:19:22.040 Awesome. 0:19:22.119 --> 0:19:24.200 Yeah, So we have gen Z to thank for those 0:19:26.400 --> 0:19:29.520 what's it called the Ivy covered walls or fake Ivy 0:19:29.520 --> 0:19:32.040 covered walls with the Neon signs on it, right. 0:19:32.160 --> 0:19:36.640 Right, right, Well, and Freddie's. But luckily, part of our 0:19:36.680 --> 0:19:39.520 interior to core has always been a super bright Freddie's 0:19:39.560 --> 0:19:43.199 Neon sign. And when you go out there in the 0:19:43.200 --> 0:19:46.200 world of social media, it's in a lot of backgrounds, 0:19:46.200 --> 0:19:47.160 and so we'll take it. 0:19:47.200 --> 0:19:49.800 We love it and and it works. 0:19:49.960 --> 0:19:54.119 That's perfect, very cool. How's the pandemic change your business, 0:19:54.160 --> 0:19:57.800 both inside the restaurants and where and the locations where 0:19:57.840 --> 0:19:58.600 you're opening them? 0:19:58.760 --> 0:20:01.040 Sure, I would say the the biggest change that we 0:20:01.080 --> 0:20:05.200 saw through COVID was really a shift from our dining 0:20:05.280 --> 0:20:11.080 rooms to our drive throughs now. Our loyal Freddy's guest 0:20:11.359 --> 0:20:16.080 has been a dine in guest since the inception of 0:20:16.119 --> 0:20:19.959 the concept, and we are very much fast casual, you know, 0:20:20.240 --> 0:20:22.000 order at the counter, have a seat, and we'll call 0:20:22.040 --> 0:20:26.120 it or bring it to you. And pre pandemic, we 0:20:26.119 --> 0:20:28.439 were seeing levels of about sixty five percent of our 0:20:28.480 --> 0:20:31.800 guests dining in the restaurant and only you know, call 0:20:31.840 --> 0:20:34.840 it thirty percent through drive through. Folks preferred to come 0:20:34.840 --> 0:20:37.879 into Freddie's and through pandemic, they were forced to drive 0:20:37.960 --> 0:20:42.280 because the dining rooms were closed. And what they discovered 0:20:42.400 --> 0:20:45.600 is that we are also hospitable in our drive through 0:20:45.640 --> 0:20:46.680 and we are fast. 0:20:47.040 --> 0:20:48.800 We you know, the style at which. 0:20:48.600 --> 0:20:52.119 We press our burgers, we our patties are cooked quickly, 0:20:52.160 --> 0:20:54.960 and so we can create a meal in you know, 0:20:55.080 --> 0:20:58.639 less than five minutes, four and a half minutes on 0:20:58.800 --> 0:21:02.479 average in some cases, you know, at four or lower, 0:21:02.480 --> 0:21:04.400 which is right up there with fast food, and you're 0:21:04.440 --> 0:21:07.080 getting a made to order product that's super fast. And 0:21:07.119 --> 0:21:10.240 so coming out of pandemic, you know, we went to 0:21:10.520 --> 0:21:12.520 you know, one hundred percent drive through at one point, 0:21:12.600 --> 0:21:15.119 and now the business has really settled around you know, 0:21:15.240 --> 0:21:18.640 forty eight forty nine percent drive Wow, so we kind 0:21:18.640 --> 0:21:21.000 of move it is. It's quite a bit up and 0:21:21.040 --> 0:21:23.840 we've seen our you know, dining rooms fill back up 0:21:24.520 --> 0:21:27.680 and so you know, the dining room has come back. 0:21:28.119 --> 0:21:32.439 The drive through has been mostly incremental and so, you know, 0:21:32.520 --> 0:21:34.960 pre pandemic, this was a concept that had an average 0:21:35.000 --> 0:21:38.560 unit volume of a million six and post pandemic two million, 0:21:40.000 --> 0:21:43.639 and so we you know, we we feel like COVID 0:21:43.640 --> 0:21:45.960 did a great job of highlighting to our guests that 0:21:46.000 --> 0:21:48.040 our drive through is a great place to go as well. 0:21:49.520 --> 0:21:51.720 Very cool. Do you have any initiatives in place now 0:21:51.760 --> 0:21:54.320 to to you know, continue to improve on that speed 0:21:54.320 --> 0:21:54.760 of service? 0:21:55.880 --> 0:21:56.520 Absolutely. 0:21:57.600 --> 0:22:02.119 You know, we have recently made several line improvements in 0:22:02.400 --> 0:22:06.680 our kitchen, in our prototype, which starts with a grill 0:22:06.720 --> 0:22:09.000 that we refer to as an accelerate, which is a 0:22:09.119 --> 0:22:15.000 clamp or or press grill, and it is a much 0:22:15.040 --> 0:22:19.000