Chris Milton, CEO of The Toasted Yolk Cafe, talks to us about his breakfast restaurant concept and how the process effected his business.
Please excuse any typos in this hasty transcript.
Matt Register: Welcome back to the show, Texas Business Radio. Texasbusinessradio.com is the web site. We’re talking about franchises. Franchises, I know you’ve all been to them, I’ve been to. I’m not sure I fully understood exactly what they were and how that works. And what’s the process of taking a concept of a business, a proven concept of a business and experiencing rapid growth through franchising. But we have an expert in here. Chris Milton is CEO of Toasted Yolk Cafe, is here in the studio. I’m your host Matt Register. Jay Curry’s over there in the co-host chair. What do you think man?
Jay Curry: I think this is hot stuff and I think it’s a big part of where… We’ve seen it, you know, with the McDonald’s and others. But it’s going to become and probably already is, truly mainstream. It’s, this is big stuff and we’ve got a great example here in this segment of how to do it right, how to do it successfully.
Matt Register: Well, I’ll tell you what, I’ve always said that if I had to pick another industry besides the one that I’m in, the breakfast industry is the place to be. Right?
Chris Milton: Yes sir.
Jay Curry: That’s because you like to eat.
Matt Register: That a, that’s right. If you’re watching the video, you could certainly tell I’ve had my share of them. So, Chris Milton, CEO of Toasted Yolk. Chris welcome to the show sir.
Chris Milton: Thank you, glad to be here.
Matt Register: So talk to me about the Toasted Yolk.
Chris Milton: We are a breakfast and launch concept. It started right here in Conroe, Texas. We’ve had successful growth over the last couple of years. We started our first one in 2010. We’ve got three open and one on the way and two franchises sold.
Matt Register: Well and that’s interesting. Talk to me a little bit about the, you know, I jokingly say the breakfast industry but that is a, a concept that there is probably a, a hole in the market for. Talk to me a little bit about that.
Chris Milton: There is. You know we, when we started we looked around and everywhere you went on the weekends, every place was packed, you know. We said, you know there’s got to be a reason for it and there’s just not enough of them out there. So, we kind of came up with, you know, our concept. And we put a little different spin on it to where we do great on the weekends. But what we found is that we needed to find something to do to kind of get the weekday business. And so for us, you know, our lunch menu is just as big as our breakfast menu. We’re not a rooster on the wall kind of a place. We’re kind of a breakfast and lunch restaurant on steroids.
Matt Register: Sure. Now this is breakfast, lunch, close for dinner. Right?
Chris Milton: Yes sir.
Matt Register: So, y’alls day ends three, four o’clock. Right?
Chris Milton: Done every everyday at 3:00. Yeah. So as far as quality of life goes, if you want to be in the restaurant business, you can’t find a better place to be.
Matt Register: Sure. Now it took a couple of, of, of tries before you got kind of that flagship, well thought through, all the kinks worked out, kind of location. Walk me through that process a little bit because you started first going in Conroe and you have a couple of corporate owned stores. Right?
Chris Milton: We do. We have three open. Our first one we opened and just like anybody will tell you, those first couple of years were a struggle. We were rough.
Matt Register: Sure.
Chris Milton: It took us a while, I think, you know just pricing wise. I think we were giving away food when we first opened, you know, as far as how price worked and we got some efficiencies and over time, about the two year mark, it kind of took off. We went out and opened up our second one. Which was another second generation location, not necessarily…
Matt Register: Now second generation location meaning there was a restaurant in the, in the location prior.
Chris Milton: Correct.
Matt Register: Correct?
Chris Milton: A restaurant that was there that had closed down a few years ago. So the landlord gave us a deal we couldn’t refuse and we went in and opened it up. Same thing, started out kind of slow and then about a year into it, it took off and it’s been on, you know, double digit increases ever since. We had people approach us and said “Hey, how do we get into this business?” And we kind of started thinking the franchise was the route to go. But for us, we want to, you know, in order to make that a reality, we wanted to see a finished product.
Matt Register: Sure.
Chris Milton: So we decided to go out and had a designer come in and do the full work up for us. And we started our flagship location that opened up two and a half months ago.
Matt Register: Now in that flagship location is encompassing all the lessons learned throughout a couple of different locations. Right?
Chris Milton: Yes.
Matt Register: And that is the one that is going to be replicated. Right? The, the product of all the, all the lessons and all the hard work and all the, all, all the lessons learned.
Chris Milton: It really is. And it’s, you know, it’s, it’s, it’s exactly that. You know, if you’ve seen The Founder, you know the movie that’s out. Which is a fantastic franchise movie. You know it does take a little bit of time. But we have that stamp-able model now, that you can take that and just pop it into any kind of location for us. And we look for a place that’s got a lot of foot traffic. You know a lot of, you know, things around that, you know, we go on, you know, an hour wait on the weekends, you know. So you need a place for people can kind of go shop and kind of go tool around and come back, you know.
Matt Register: Right.
Chris Milton: And it works out great for us. You know the way that technologies work, where everything’s through your phone. And you get on, you know, you get on the wait, you go shop, we text you when your table’s ready, you come back and eat. So, we found out that that’s really working, you know, great model for us.
Matt Register: Yeah, no doubt. Now, the word franchise in the legal community is very specific term. Right?
Chris Milton: It is.
Matt Register: There are several ways in which to expand into multiple locations. Right? Franchising is one of them. Right?
Chris Milton: It is.
Matt Register: You could have corporate owned stores, joint ventures other, other things. But you chose franchising. Why do you think franchising was the right model for you guys?
Chris Milton: We are actually are doing both. You know, we are still, you know, we have, you know, a pace to probably open three to five ourselves, a year, is what our goal was. And then we’d like to do another five to seven franchises a year. It’s not a race.
Matt Register: Sure.
Chris Milton: We’d open, yeah, we’d like to have 10 great restaurants a year versus you know 50 mediocre restaurants. You know, so for us it’s a way to kind of get out there and expand to what I think could be a nationwide restaurant. You know at a pace that, you know, for us would outpace, you know, our competition. So that’s, you know, why we chose franchising. I think it makes a great growth strategy for us.
Jay Curry: So I see a couple things of success here to look at. First of all, has the company proven its concept. You don’t want to look at a franchise if they’re thinking about opening score, they’ve got one. You’ve actually opened it, you’ve developed and perfected your model.
Chris Milton: We have.
Jay Curry: And then, you’ve gotten good professional help about how to do this. Because this is a highly regulated industry, whether it’s food or whatever. Right?
Chris Milton: It is.
Jay Curry: I mean, it is actually worse.
Chris Milton: You know getting into it I had no idea, you know, what was involved, you know, on the legal end of it. We’d have guys that approaches us and wanted to buy a franchise. And we’re like “Man, that’s great. You know how do we, you know how do we go out there and do it?” And then once you kind of dig into it you realize that it’s not for everybody. You know, it’s certainly, you know, regulated and it’s tough to do and it’s expensive.
Jay Curry: So… I’m sorry. How do you, how do you then choose, what kind of person are you looking for to come on board with you?
Chris Milton: I’ll be honest with you. A franchise is like a marriage. You know we want, you know, we don’t want to be tied to a guy for 10 years that you don’t want to be around.
Matt Register: Sure.
Chris Milton: And so to me it starts with, you know, finding somebody that you like, you know, first and foremost. You know, obviously somebody that’s got the financial, you know, ability to go do it. And then for us, we really look for somebody that’s in the restaurant space. That’s got some experience or bringing somebody that’s a part of that group that’s going to be in the restaurant business.
Jay Curry: So, to me, that tells me that another important aspect of this, if I’m looking into franchising, is a company that’s very picky about who they’re going to let into their franchise.
Chris Milton: Absolutely. If you had somebody out there and they’re going to sell a franchise to anybody, that’s not a company you want to be a part of. You know there’s, you know to me, you know, it’s not that important to me. You know we want to go out there and build great relationships. And at the end of the day, you know, you want to be able to protect the brand. You know, so if you’re buying into a franchise, you want to make sure that, you know, that consistency is going to stay there. You know it’s an investment that you’re going to be into the next 10 to 20 years.
Matt Register: Well and it is critically important that the first two or three or five franchisees that you have are successful. Right? And you’re not looking for warm bodies, you’re looking for guys that have the ability to make these things successful. Because again, that’s your track record for, you know, expanding even further.
Chris Milton: It really is. You know it’s, you know, everything is disclosed. At the end the year, we’ve got to tell you, you know how all these locations are doing. If we want, one closes, ones not doing very well. Obviously, anybody can pick up the phone and call. So it, within that first, I’d say it’s the first 10, to be honest with you, need to be home runs. You know if, if one of them doesn’t make it, the chances of you selling another franchises is pretty slim.
Jay Curry: So, you are very focused on making sure these work. That’s why it works. I mean you’re not going to just sell it and then go chase the next one. You’ve got to make it work, so you’re, you’re going to get involved.
Chris Milton: Absolutely. And I think that, you know, for us, it starts with having a successful concept. Which I believe we have. And I think were, you know, well-positioned that, you know, I think you could put a Toasted Yolk anywhere and it would do well. So I think you start with a great concept and then the next thing is you try to tie that with, you know, somebody that kind of embodies what you’re looking for. Somebody that, you know, has the same work ethic and the same drive that you have.
Matt Register: Well, a proven concept and a great concept for a restaurant is, does not a franchise make. That is the start. You have to start with that. But there is a lot of legal work, documentation work, training work, all kinds of other things involved in it. But you get to the other side of that, now you have something that could be poised for significantly, you know, rapid growth using the franchise model. Very, very interesting. We have Chris Milton, who’s CEO of the Toasted Yolk Café. Chris thank you very much for joining us.
Chris Milton: Thank you for having me.
Matt Register: What’s the easiest way, if somebody wants to learn more about the Toasted Yolk, to find out more?
Chris Milton: They can visit our web site, which is thetoastedyolk.com. They could call me, my numbers 936-827-4692. And I can certainly, you know, get you some information to make, you know, we have everything laid out for you to kind of let you know a little bit about our program.
Matt Register: Yeah. Wonderful. And by the way guys, it is absolutely delicious. If you have a chance to swing by one, I highly recommend that you do. Thetoastedyolk.com is the web site. We’re going to have it linked right there from Texasbusinessradio.com, if you’re driving and can’t take notes. In the meantime 844-814-8144 is our 24 hour call in line. Get your calls in. We’re going to get the experts on here to answer it. However, we are up on a hard break, Jay. And we got to go pay a couple of our own bills. Right?
Jay Curry: Been good. Let’s do it.
Matt Register: That’s it. We’re talking franchising and we’re talking to some very, very interesting folks in the franchise industry. We’ll be back right on the other side of the break. Don’t go anywhere.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.