How Mike Hislop uses franchising to make Corner Bakery Cafe thrive Featured

8:00pm EDT July 31, 2012
How Mike Hislop uses franchising to make Corner Bakery Cafe thrive

Having enjoyed steady growth since Mike Hislop took the helm as CEO in 2006, Corner Bakery Cafe is now hitting the accelerator harder. The company has set its sights on doubling its footprint over the next four years. It’s a big undertaking that presents plenty of challenges, but Hislop is setting Corner Bakery on a course to achieve its goals by attacking the obstacles one by one.

“We’re looking to double the size of the brand pretty quickly, and we decided that in order to do that, we would have to get more heavily into franchising,” Hislop says. “We actually started franchising about four years ago, but up to this point, most of our growth has come from opening company-owned stores.”

Corner Bakery has 134 restaurants across the country: 104 are company-owned, the other 30 franchised. The company plans to increase both of those numbers, but the main emphasis will be on franchising, so that when Corner Bakery reaches its ultimate goal of doubling its size, the ratio of franchise locations to company-owned stores will be about 50-50.

But there are many hurdles the company must clear before it gets there. The main challenges, Hislop says, are finding excellent franchise partners while maintaining the company’s culture, and building its internal infrastructure so it can adequately support all of the new locations and all of the new franchise partners’ various needs.

“Getting more heavily into franchising, and into that kind of growth, there are some tough challenges that fall in line with that,” Hislop says. “A big one, obviously, is choosing the right partners to grow with.

“Another big challenge is maintaining our culture,” he says. “When you’ve built a great company like ours, and it’s been built on this culture that has evolved over 20 years, how do you make sure that culture is passed on to your new franchisees? How do you make sure you choose the right ones, and then how do you make sure that they become part of the fabric of what you’re trying to do?

“Then, building the infrastructure to handle the growth is the other big challenge we’re facing. You might think the infrastructure you have is adequate. But then you get into the thick of it and you’ve got design issues, you’ve got real estate, you’ve got construction, you’ve got product and menu development, you’ve got distribution. And you have all these franchisees you’re bringing in, each with different levels of experience and different needs. And as we’ve learned, one size doesn’t fit all.”

Choose partners carefully

So how does a CEO faced with a steep growth curve and the need to quickly bring in a lot of new partners go about doing that? Experience is one of the key requirements to look for.

“To me, and I’ve been in this for over 30 years, you need the right operators in there that have been there and done it,” Hislop says. “You need to make sure you’re choosing people that have worked extensively within your industry and that have been through growth before.

“Choosing the right partners is huge. We have 18 of them now, and it’s really important that they understand who we are, that they understand the culture, that they understand the complexity of what we do. Because Corner Bakery is a little bit different than the other cafes that are out there. A lot of people want to be in that fast casual bakery-cafe segment, but you need to make sure that they understand how to operate a restaurant, how to choose the real estate that’s needed, how much it’s going to cost to build, and that they understand the economic model you have and the type of intensity you need to have with management.”

Early on, selecting franchise partners was a hit-or-miss prospect for Corner Bakery Cafe.

“Going out and choosing the right partners was pretty difficult in the beginning,” Hislop says. “We found that we had to be choosy in making sure that the people we brought in ‘got’ it. One thing we found out the hard way is that, early on, we had a couple partners that we thought would be OK even though it was a little bit shaky, and it just didn’t work out.

“So then you have to make the decisions and learn from your mistakes on the partners that you’re choosing, and make sure they really get who we are and what makes us successful, and that they’re really passionate about doing more than just opening a restaurant. They have to be passionate about being part of the community and building something they can be proud of. Not just to build as many cafes as they can, but really understand what has made the brand successful over the past 20 years.”

Corner Bakery learned through trial and error to be more selective and careful in evaluating the new franchise partners it brings in.

“What we did differently is we made sure we’re taking more time with them, making sure that they’re coming out here and really meeting our entire team,” Hislop says. “We have a discovery day here where they come in and walk around, and they get to meet of VP of marketing, they get to meet of VP of human resources, they see our training material, they get to spend time with our designer, they get to spend time with construction and talk to them, and with financing to go through exactly what the economic model is and how it ends up working.”

Keep culture intact

Bringing in a large number of new partners over a short period of time posed tough challenges for Corner Bakery Cafe in terms of maintaining its company culture.

“For me, that was the toughest thing, because we have a culture that has evolved over 20 years,” Hislop says. “It’s not like this is some new hot concept. This is a great brand that has evolved over a period of time, and people feel really proud about it. And when you have a culture that has been geared to just building company stores, and then you start franchising and bringing in a lot of new people, it takes a lot of work to get them all on the same page.

“A lot of franchise companies open up just franchise stores, and they don’t have skin in the game. I think our franchisees love that we have skin in the game. I’m opening up 10 [company-owned] stores this year; they’re opening up 20 [franchise] stores this year. So we’re developing the prototype with them. We’re right in the middle of it, right next to them.”

Communication and recognition are key aspects of maintaining the company culture in the midst of the fast franchise-driven growth.

“We are constantly communicating and recognizing our key contributors, and that includes our new franchisees,” Hislop says. “We have a weekly newsletter, and every VP has regular awards that they give out. That’s a big part of the culture of what we do. And we make sure our franchisees are eligible to win those awards as much as anyone else.

“We have quarterly ‘get it’ meetings to keep everybody on the same page and keep everybody aligned as our culture continues to evolve. And we’ve created an advisory board that is made up of all the franchisees, to make sure that they’re in the middle of what we’re doing. We do a lot of product and menu development, and they want to be part of it, so we have them sit in with our culinary meetings, and we have them testing new dinner items.”

Build up support systems

Building the infrastructure to adequately support the primarily franchise-driven growth has also posed some tough challenges for Corner Bakery Cafe.

“You know, we thought we were ready,” Hislop says. “Then all of a sudden you sign up 10 franchisees in a year, and each one may be looking at four to five potential sites, and you might eventually be choosing one, maybe two of those sites. But at the same time you have to be doing plans and doing the schematics and all of the design for all of those.

“To tell you the truth, initially we were understaffed. We were sort of new at it, and I thought we had staffed up properly. But coming out of that recession, where you were not overly staffed at all, to where you just started to grow in building the infrastructure, when it came to design, we started to get a little backed up. And believe me, our franchisees let us know about it.”

Corner Bakery had to do some quick staffing and building up, and not just in the area of restaurant design, but also other areas of support for its franchisees like real estate, construction, information technology, human resources, marketing and distribution.

“Obviously, there’s a lot to it,” Hislop says. “We knew it would be difficult, but once you get right into the middle of it and find out that different groups, although all great and all having our same passion and ideals, need different support, you’ve got to be ready to do that — whether it be training, whether it be HR, whether it be real estate, distribution, etc. — all of the different challenges that we had to meet in order to be a first-class franchisor.

“Everything depends on the partners that you’re bringing in and on what they’re going to need in terms of support,” Hislop says.

Turning the corner

All the hard work is starting to pay off for Corner Bakery Cafe. Employee turnover rates are low. Corner Bakery is opening new locations this year at the rate of about one cafe every two weeks, and the company is establishing itself in new markets across the United States.

“Our turnover is probably the lowest in the industry,” Hislop says. “We’re floating at around 15 percent at the management level, and below 41 percent for hourly. For the segment we’re in, those are some of the best turnover ratios you’ll see. That shows that we do believe that the environment we create is important, and our franchisees love the fact that they’re not franchising with a brand that just started — they’re franchising with a brand that has evolved. There’s a lot of integrity in the brand, and I think they love seeing that we’ve gone through the tough times, we’ve gone through a recession, and we’ve been able to maintain the kind of value we have within the brand.

“The other thing about this brand right now is that when people look at it, it’s highly successful in California, it’s highly successful in the mid-Atlantic, it’s highly successful in the middle of the country, in Texas, in Chicago, etc. It’s a unique brand with a great economic model. We have a strong management team. We’ve been able to prove that this economic model works in many different parts of the country. And we’re here with the systems and the processes that will make that easier for our partners.”

HOW TO REACH: Corner Bakery Cafe, (972) 619-4100, www.cornerbakerycafe.com

THE HISLOP FILE

Name: Mike Hislop

Title: CEO

Company: Corner Bakery Cafe

Born: Boston

Education: Bachelor’s degree in hotel and restaurant management from the University of Massachusetts

What was your first job, and what business lessons did you learn from it?

My first job within the restaurant industry was with TGI Friday’s. They had a very strong economic model at that time, and I learned a lot about the systems needed to run a company. At the same time, they understood how important the culture was, and the people. Everybody there loved working for the brand. It was a unique brand, and what really drove the guests in and why they came back so often was the food. It was great food. That’s the same thing I do with the brands I have now. It starts with the food and the people, and making sure that everybody understands what you’re trying to do and feels good about what you’re doing.

Do you have an overriding business philosophy that you use to guide you?

Throughout my career I’ve surrounded myself with bright people that are passionate about what they do. I don’t mind them being a little bit competitive, because I think some of the best operators out there are competitive. But they have to love working with people and pleasing people. If they do, they’re going to be successful in this business. Today, walking into a restaurant and seeing people happy and seeing the restaurant execute the way it should, I still get fired up about that. I’ve been doing this for 35, 40 years, and that’s still what drives me today.

What traits do you think are the most important for a CEO to have in order to be a successful leader?

Passion and conviction in what you’re doing, and the ability to make sure you can get the entire team aligned around that.

How do you define success in business?

Being able to grow a company and offer great career paths for everybody, so they can have a good balance at work and at home. And being able to make money at the store level while creating a fun, challenging environment for people to work in.