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Patient leadership grows Charley’s Grilled Subs Featured

1:25pm EDT March 1, 2011
Charley Shin, founder, president and CEO, Charley's Grilled Subs Charley Shin, founder, president and CEO, Charley's Grilled Subs

Charley Shin did have a moment when he wondered if Charley’s Grilled Subs was going to make it. It was actually a very long moment, one that lasted about 10 years, as he recalls.

“I underestimated the time and the cost of the growth that would take place,” Shin says. “I started out with a business plan that we would break even when we had about 20 stores. When we hit the 20 stores, we were still losing money.”

Shin kept revising his goal to finally become profitable for 30 stores, then 50 stores and then 70 stores. At each step, he was still losing money.

“It wasn’t until we had about 100 stores that we were breaking even and making some money,” Shin says. “It was over about a 10-year period. It was a very intense, grueling, excruciating 10 years.”

There was also the fact that his mother had let him borrow from her life savings to start this business. That only added to the stress Shin was feeling about his business.

“I wanted to give up,” Shin says. “I really did want to quit. But I come from a Christian background. I just knew this was something I have to do even though I wanted to quit.”

It’s that kind of persistence and commitment that helped Shin stick with it through the tough times and enabled him to finally reap the fruits of all his labor. Today, Charley’s has more than 400 units in 44 states and 15 countries around the world.

Shin says the key to getting through tough times, whether you’re just starting a business or trying to manage an established company through a challenge, is your mindset and the way you present yourself to your people.

“I don’t think I ever gave an indication that I was going to quit,” says Shin, the 5,500-employee company’s founder, president and CEO. “Think about the reason why you’re doing it. Each person may have a different reason.”

Shin’s reason was to build a successful business that provided a great product to customers and provided a great and fulfilling place to work for employees.

“We have people who are investing their life savings believing in us and believing that this concept will do well,” Shin says. “In order to fulfill our promise, we just have to continually invest within our infrastructure and with our personnel and increase our expertise. It was a really trying and difficult 10 years. But looking back, I don’t believe I’d be where I am without those 10 precious years that put us through the fire and gave us a ton of experience.”

Charley’s, which is legally known as GOSH Enterprises Inc., took in $220 million in 2009 revenue. That’s a long way from his take at that very first store on the campus of The Ohio State University back in 1986. As he has grown the company, Shin has learned how to find the right people and how to help them get through that inevitable first hurdle.

Find the right people

Shin has interviewed a lot of people over the years to assess their ability to lead one of his franchise locations. He’s learned that you can learn a lot about the attributes and personality traits of an individual from your first impression.

“Most people do not come in with a disguise,” Shin says. “Even someone who comes in with that intent, after a while, it all becomes disclosed.”

In other words, don’t make an interview harder than it needs to be.

“Our interview usually lasts a whole hour,” Shin says. “As we sit in the room, we tend to have a pretty good gauge on what type of person that is. We’ll just ask questions as to their background. What you have done before? Tell me about your background and your family. Why are you here? How do you like to spend your time? Through asking those questions, we get a fairly good read on the person, and we can tell if they’re just looking for a get-rich-quick scheme or they are genuine and really a hardworking person.”

If the person is more interested in the financials than your values and philosophies in leading a business, that should definitely be a red flag.

But it’s not only this person’s skills and personality that you’re measuring. You should also be thinking about how this person would fit in your company and how he or she would handle leading one of your business units.

This becomes particularly important for Shin when he’s assessing someone’s ability to be a franchisee in his company.

“It’s their business, but they are not in business for themselves,” Shin says. “They are in business with our brand. They are an extension of our brand and they have to represent us. We have a fairly clear expectation of what it is that they need to do.”

When you have that expectation in mind at the start and know what a good candidate looks like, you’ll have a lot more success judging whether someone is right for your business.

“Don’t get blinded by money,” Shin says. “Don’t focus on growth at all. I really do believe the business will grow out of healthiness rather than growth per se. Pick the right people because the people are going to be 80 percent of what’s going to bring you success.”

So what if you get into a situation where you just can’t seem to find the right person to fill the position? Shin says resist the urge to just plug anyone in and wait it out.

“I would really focus on picking the right people even though there may be fewer of them,” says the man who waited 10 years for his business to really take off like he wanted it to. “I don’t want to be a leader where I look at everyone and say, ‘This is the way to go. Let’s go together.’ Each of them has their own job to do or their assignment to accomplish and that’s how we’re going to grow.”

You need someone who offers examples of projects they’ve led from the start and talks about how they overcame challenges to make that project a success. Otherwise, you’ll constantly have to be holding their hand.

“Our franchisee has to be a person who is committed to serve people,” Shin says. “They have to be outgoing and have a good nature about themselves. A very critical success criteria is people who are courageous and bold and who will step out of their comfort zone. If I believe the person has that quality of wanting to serve and is a bold and courageous type, that is really my person of choice.”

It’s a level of patience to find this type of person that has helped Shin successfully grow his business.

“I’m really upfront with them,” Shin says. “I tell them, ‘I think we have a great concept and we’re going to be successful. I don’t know that 100 percent, but we have a very good chance and God willing, we will be successful and we’ll all reap the benefit.’ That’s the underlying premise.”

Don’t focus on the details

When Shin is working with a new franchisee, the first thing he teaches them is not how to make a Philly Cheesesteak, an order of Cheddar, Ranch & Bacon Fries or a kiwi lemonade.

“That will come, but that is not the most important thing,” Shin says. “We want to teach them about why you are in business. I think a story works better than anything else. We just share how we do our daily business or our daily life. We tell them how we operate and how we work.”

You should be working with the leaders of your business units to develop their skills managing the people they’ll be hiring to lead.

If you’re worrying about whether the person can handle some aspect of what your business does, whether it’s making a sandwich or producing a part in the machine shop, you probably haven’t chosen the right person.

“What I need to do is start training the basics of my philosophy,” Shin says. “Why is it important to serve people? Why is it important to bring your employees in as part of the family? We just start teaching from there.”

You need to make sure this person can handle problems on his or her team. You also need to have confidence that this team will be led in a way similar to how you would do it if you were there running things on your own. It’s why you focus so much on the person and his or her personality in the interview process.

“That’s where the expectation really needs to come,” Shin says. “Without a clear set of guidelines of what it is they need to do and ... the jobs they need to perform, just the feeling of love and family doesn’t cut it.”

A leader’s skills at managing people are just as important, if not more important than his or her skill at whatever it is your company does.

“Facing a problem is just one of those things that makes a leader a leader,” Shin says.

Make sure you’ve communicated your expectations to the individual about all the job entails and given him or her an opportunity to express concerns or ask questions. If you’re having trouble with a leader at this stage, it’s probably another sign you made a bad choice.

“I don’t believe we can change a person,” Shin says. “They come as they are. I think I could have a great impact changing people, but I don’t want to fool myself. If they have certain traits, that’s the way they are going to be.”

Expect a few problems

Shin likes the leadership training program he has developed over the years for Charley’s. He takes the approach that training gradually is the best way to go.

“If we’re trying to download a lot of information in a short period of time, the brain only has so much capability for what it can absorb,” Shin says. “It will absorb a certain amount of data and the rest will just stray.”

Perhaps that explains why even great leaders typically have a few hiccups along the road to that greatness.

“Real expertise will not really come until they are fully spending lots of time at the store,” Shin says. “Then they start to get a better grasp. … People forget what they are taught in the training time. It’s not rare to see our team go into a franchise store to give them a shot in the arm.”

You’re fighting human nature and that’s a pretty tough opponent to defeat. Most people, especially the ones with the leadership gene, like to believe that they can do it on their own. It doesn’t really matter what the “it” is.

“Struggling franchisees typically think they can do something better than they are taught,” Shin says. “They are trying to find their way of solving the problem or they start to deviate from the protocol. When the systems are not fully utilized, a problem starts to crop up. I think it’s just human nature by some people.”

So how do you work through the problem quickly? Start out by sharing examples of how doing things the way they were taught lead to successful outcomes.

“They just have to see the standards and how much better the standard is,” Shin says.

And you just have to remain patient.

“I am here not for my own good only, but I’m here for the good of the person in front of me,” Shin says. “That has to be conveyed.”

How to reach: Charley’s Grilled Subs, (800) 437-8325 or www.charleys.com

The Shin file

Charley Shin

founder, president and CEO

Charley's Grilled Subs

Born: Seoul, South Korea.

Education: Business degree, The Ohio State University

What was your first job?

Washing dishes at a Japanese steakhouse when I was 14. It was good, but when I quit that job, I knew I didn’t want to be a dishwasher for the rest of my life. I didn’t want people to tell me what to do all day.

Whom do you admire most in business?

Truett Cathy, the founder of Chick-fil-A. He is a phenomenal businessman and such a strong, principle-driven man. I admire him a lot.

What’s the best advice anyone has ever given you?

Keep your books straight. There will be a lot of temptation because you deal with cash. Keep your books straight and just pay your taxes and everything will be OK.

How Charley’s Grilled Subs came to be: Charley was taking a family vacation when a missed exit brought him to South Philadelphia. His first encounter with a local delicacy, a Philly Cheesesteak, was love at first bite. Totally hooked, he brought his findings back home to Columbus and began testing recipes on his college buddies.

After perfecting the recipe, Charley’s fortune took another turn for the best. His mother let him borrow from her life savings to open the first Charley’s on The Ohio State University campus. The 450-square-foot, 16-seat restaurant featuring Philly steak subs, gourmet fries and natural lemonade was an instant hit.

To keep up with customer demand, Charley began franchising in 1991. Locations began popping up all over the world, including mall food courts, strip centers, airports, and even Army and Air Force bases. The company now has more than 400 locations around the world.