D O M I N A T O R S
2002 , Wendy ’ s went through a 10-year quiet period as a brand , a period of soulsearching . Then Emil Brolik came along [ as CEO ] and gave it a shot in the arm with facilities , marketing , and product upgrades . He handed it off to Todd Penegor , whose father is a Wendy ’ s franchisee in the Upper Peninsula of western Michigan , so he ’ s been around the brand his whole life .”
What ’ s happening in 2016 with Wendy ’ s “ speaks more to where the brand has always strived to position itself — highest quality in QSR , particularly the hamburger ,” says Schermer . “ Now , we ’ re into chicken products and the salad line , all healthy , high quality , fresh .” And , as a fitness buff , he regularly enjoys the salad offerings .
When Schermer began by acquiring 22 Wendy ’ s restaurants in western Michigan , it made sense . There were about 79 McDonald ’ s in the same market , and he saw the growth opportunity . First , he renovated the 22 restaurants and then started building new ones . For five years Meritage built a new Wendy ’ s every eight weeks in western Michigan . The company now operates Wendy ’ s in Michigan , North and South Carolina , Ohio , Oklahoma , Georgia , Florida , and Virginia .
To those who caution against growing too rapidly , Schermer points to what he ’ s seeing today . “ Going back 18 years , it took 12 months between identifying the site , dealing with entitlements , building the restaurant , and serving the first burger . Today , because of regulatory creep , that can take 24 to 36 months . Our market had development opportunities , so we got into the flow of opening new restaurants . We built a deep pipeline of real estate because of the time required today compared to 18 years ago .”
Schermer says it ’ s an interesting period for franchising . “ A lot of franchisors are pursuing asset-light models . They want high-margin cash flow , royalty and rental income — and from their perspective , it makes sense ,” he says . “ On the flip side , guys like us , multi-unit franchisees , are building a base for more sophisticated operations , and we ’ re investing in our operations while they do products and marketing .”
The ongoing shift to larger , more sophisticated multi-unit operators , he says , makes it more important than ever for franchisees to hold up their end of the franchise model . “ This means having an HR department ( at Meritage , we have an organizational development department , which encompasses more than HR ), a real estate department , in-house legal for real estate , an IT department offering 24 / 7 services , POS in all restaurants , as well as operating and accounting platforms . These are things that smaller franchisees may not have or be able to afford .”
Schermer says he ’ s also seeing more people coming out of major brands such as Wendy ’ s , McDonald ’ s , and Burger King and getting into the franchisee side . “ They ’ ve seen things at a higher level with more sophistication and they understand the moving parts involved .” Also , he says , the first generation of Wendy ’ s franchisees is approaching retirement age . “ They ’ re either keeping their restaurants in the family , giving them to the next generation , or selling them and making sure their people are taken care of .”
Business and regulatory trends aside , it all comes down to retaining what he calls “ Dave Thomas values ,” says Schermer . “ I remember meeting him years ago and he wore his heart on his sleeve . There was nothing fake about him . We are in the people business and put a lot of resources into and emphasis on people . We say we have two types of people : those who serve guests and those who serve those who serve guests . We live by those values .” It ’ s no accident that Meritage ’ s corporate office is called the Restaurant Service Center .
Though he ’ ll be focused on growing Wendy ’ s through 2021 , Schermer enjoys the best of both worlds with what he calls his “ recreational sidebar ”: the four original casual dining brands he keeps close to home in Michigan .
First job : Corporate fi nance in the securities industry .
Formative influences / events : A true turning point in my career was when I joined the company nearly 20 years ago . The transition from corporate fi nance to full-time franchisee was a challenge . However , my previous work experience gave me the competitive edge to succeed in this environment .
Key accomplishments : I see our continued growth as a key accomplishment . When I joined the company in 1998 , our sales were $ 27 million and last year they reached $ 228 million . That is a 744 percent growth rate .
Next big goal : 300 restaurants by 2021 . Best business decision : Always hire people smarter than myself .
Hardest lesson learned : Staying focused on long-term goals and not deviating from the set plan .
Work week : Whatever ’ s required ! The restaurant industry never shuts down .
Exercise / workout : Health and fi tness are very important to me . I work out each morning at 4:30 a . m .
Best advice you ever got : To have a successful company , you must drive value for all stakeholders involved . I try to make every decision with that in mind .
What ’ s your passion in business ? Creating opportunities for people . I ’ ve always said the sky is the limit .
PERSONAL
How do you balance life and work ? When you love what you do it ’ s rarely considered work .
Guilty pleasure : Who can resist a Dave ’ s Single with a large fry and a Frosty ?
Favorite book : Scaling Up by Verne Harnish . The perspectives and resources shared in the book have helped Meritage drive and manage our exponential growth .
Favorite movie : Honestly , I am a very active person and can rarely sit through an entire movie .
What do most people not know about you ? I love sailing and spending time on the water .
Pet peeve : Governmental regulations and red tape .
What did you want to be when you grew up ? An investment banker .
Last vacation : Earlier this year , I spent a relaxing week with friends and family in Florida .
Person I ’ d most like to have lunch with : Dave Thomas , founder of Wendy ’ s . I met him years ago when I just started in the franchise business , and his passion for this company was extraordinary . Although the Wendy ’ s brand continues to grow and develop , Dave ’ s values are still at the heart of all we do .
32 MULTI-UNIT FRANCHISEE ISSUE IV , 2016
D OM I N A T O R S
2002, Wendy’s went through a 10-year
quiet period as a brand, a period of soulsearching. Then Emil Brolik came along
[as CEO] and gave it a shot in the arm
with facilities, marketing, and product upgrades. He handed it off to Todd Penegor,
whose father is a Wendy’s franchisee in the
Upper Peninsula of western Michigan, so
he’s been around the brand his whole life.”
What’s happening in 2016 with Wendy’s
“speaks more to where the brand has always
strived to position itself—highest quality in QSR, particularly the hamburger,”
says Schermer. “Now, we’re into chicken
products and the salad line, all healthy,
high quality, fresh.” And, as a fitness buff,
he regularly enjoys the salad offerings.
When Schermer began by acquiring
22 Wendy’s restaurants in western Michigan, it made sense. There were about 79
McDonald’s in the same market, and he
saw the growth opportunity. First, he
renovated the 22 restaurants and then
started building new ones. For five years
Meritage built a new Wendy’s every eight
weeks in western Michigan. The company
now operates Wendy’s in Michigan, North
and South Carolina, Ohio, Oklahoma,
Georgia, Florida, and Virginia.
To those who caution against growing
too rapidly, Schermer points to what he’s
seeing today. “Going back 18 years, it took
12 months between identifying the site,
dealing with entitlements, building the
restaurant, and serving the first burger.
Today, because of regulatory creep, that
can take 24 to 36 months. Our market had
development opportunities, so we got into
the flow of opening new restaurants. We
built a deep pipeline of real estate because
of the time required today compared to
18 years ago.”
Schermer says it’s an interesting period
for franchising. “A lot of franchisors are
pursuing asset-light models. They want
high-margin cash flow, royalty and rental
income—and from their perspective, it
makes sense,” he says. “On the flip side,
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