What is in this article?:
CEO Mike Rotondo discusses the quick-service operator's aggressive growth plans.
What's up next
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What have you had to do differently now that growth has accelerated to an average of one opening per week?
We’ve added resources on the real estate and construction side of the business. So much of the game is the follow-up on the opening checklist. We need a lot of individuals now to help with blocking and tackling and keeping franchisees on pace. We’ve also added more franchise business consultants and will be adding more operations support people next year. … As we’re climbing the hill, we’re adding resources and people, and we’re not waiting until we get to the top, because we still don’t know what the top is.
What new markets are up next for Tropical Smoothie Café?
The Carolinas are really just exploding right now. Long Island [N.Y.] started the year with 12 stores and will have 18 by year-end. In Michigan, we already have stores in Detroit, and the secondary and tertiary markets will add stores this year. This brand has worked everywhere. We just opened successfully in North Dakota. But some of our strongest average unit volume growth is coming out of the state of Florida, where we’ve been since the beginning and where we have 120 stores.
What’s the biggest pressure, either on the food cost or labor cost side, that you have to manage through right now, even with sales and unit growth?
We’re in the same boat as everybody on the labor side of the business. It’s a potential landmine for us moving forward. On the controllable side, we’re doing a good but not great job. It’s a big focus for us this year, and we’re investing a lot of time and effort into systems for franchisees to better control labor and food cost. We have a program launching the next 30 days that is an inventory program to help franchisees get closer to their theoretical food cost.
But we don’t see anything on the horizon that portends big increases in cost of goods sold. We sell a lot of chicken, and half our business is in smoothies, where there aren’t any big issues with fruit. Overall, we have about three to four points in improvement in profit margin that we’re going after. The flow-through on a 6.4-percent increase in sales last year was positive, and if we see the same flow-through if we’re up 9 percent this year, that will continue to fuel our growth.
Contact Mark Brandau at email@example.com.
Follow him on Twitter: @Mark_from_NRN