Recommended
Recommended
More Related Content
Similar to Finding & Vetting Local Vendors
Similar to Finding & Vetting Local Vendors (20)
More from Foodservice Equipment & Supplies Magazine
More from Foodservice Equipment & Supplies Magazine (16)
Recently uploaded
Recently uploaded (20)
Finding & Vetting Local Vendors
- 1. Finding & Vetting Local Vendors April 29, 2015 These slides are part of a free webcast from rd+d magazine. There is a link to the webcast on Slide 6.
- 2. Today’s Objectives • Discuss growth-chain strategies for finding/vetting reliable vendors/GCs for build-out projects • Discuss franchisee/vendor issues – dictate or guide? • Identify red flags and stumbling blocks • Share recommended best practices • Answer your questions!
- 3. Thanks to Our Sponsor
- 4. We are TriMark, And We Bring It! Learn more at www.TriMarkUSA.com
- 5. Meet Our Panelists John Druse Vice President of Design & Construction Del Taco Steve Henderson Director of Construction Noodles & Co. Bob Witken Director of Construction & Development RAVE Restaurant Group
- 6. TO VIEW THE COMPLETE FREE WEBCAST CLICK HERE: www.rddmag.com/localvendors
- 8. Del Taco – Ramping Up for Fast Expansion • Past development average — 18-20 stores per year • Roughly half company-owned/half franchised • Acquisition by Levy Acquisition Corp. underway • Future development impact — potentially double or triple store count within 24 months • Having vendors in place to support rapid growth, particularly in new markets — but also in existing markets — is critical
- 9. Finding GCs/Vendors • Pull in every available resource • Tap industry connections for leads – i.e., RestaurantPoint • Tap multi-brand franchisees – have they used vendors for other brands/other markets that I don’t know about?
- 10. Del Taco Vetting Strategies • Make sure they’re of a size that makes sense for us – not too big, but not a “mom & pop” • Conduct financial due diligence – AIA A 305 Form/Contractor’s Qualification Statement • Tour their facilities – What are their capabilities? – Do they have enough machines/manpower? – How innovative are they? – Do they work in the most effective way? • Focus on long-term relationship potential vs. lowest price
- 11. Del Taco Vetting Strategies • Use them on a trial basis in a corporate store • Test/determine their problem-solving abilities “Restaurants are hard. There are tons of variables. The kind of vendors we want are the ones that are problem- solvers.”
- 12. Franchisees – Dictate or Guide? • Provide authorized vendor list for computer equipment, kitchen packages, etc. • Encourage use of authorized vendors for signage but will approve others they may have used before • Give a lot of leeway on architects, civil engineers, contractors – we don’t dictate – Leaning toward regional authorized consulting groups “I like to give them some freedom in the things that could give them the most problems, like their GC, architect, civil engineer.”
- 14. Noodles & Company – Aggressive Growth Ahead “Of the 450 or so stores developed in our 20-year history, probably 200 of those restaurants have opened in the past 5 years.”
- 15. Noodles & Company – Aggressive Growth Ahead • 12-14% growth expected for the near future • 50-60 new openings in 2015 • 80% or more will be corporate stores • New markets: – Upstate, NY – Yonkers/White Plains NY, – Oklahoma (Tulsa, OKC and Stillwater), – Phoenix AZ, – Toronto Ontario Canada – first international expansion.
- 16. Finding GCs/Vendors Finding them is relatively easy… • They solicit us • Personal connections • Peers’ referrals • Trades’ referrals • Noodles’ project managers’ insights
- 17. Vetting Strategies …Vetting them is tougher • Always do reference checks – subs, other restaurant brands • Require CPA-audited or reviewed financials. “Compiled” is not enough. • Start looking/vetting w/in 6 months of knowing we’re going into a new market • We use third-party partner for assistance
- 18. Franchisees – Dictate or Guide? • Most are multi-brand operators with own contractors/vendors in place • We provide referrals and resources • They typically bid projects out competitively to existing vendors and referrals but are free to use their own network of contractors -- as long as they’re building to approved plan specs and quality levels
- 20. Pie Five – Fast-Growth Fast Casual • Launched in 2011 • Texas-based • More than 40 locations in 9 states • More than 450 announced franchised and company- owned units under contract in 16 states and the District of Columbia • Key growth markets: Dallas/Fort Worth, Houston, Chicago, Atlanta
- 21. Finding GCs/Vendors • Leverage existing relationships • Tap franchisees • Talk to your facilities managers • Call peers or ex-employees who may have moved to other brands • Join associations and network, i.e., – RestaurantPoint – Restaurant Facility Management Association “We’re all looking for the same results: on time, on budget, no issues.”
- 22. Vetting Strategies • Start with AIA A503 form/GC Qualification Statement • Run credit reports, check references • Visit other projects they’ve done • Talk to their subs • Require site visits and visits to our offices • Review plans together • Set expectations, timelines, deliveries • Trust your gut
- 23. Franchisees – Dictate or Guide? • Franchisees have a choice of which KEC that they want to use • All suppliers/vendors are approved by corporate
- 24. Buy Local?
- 25. Benefits of Local Contractors – Del Taco • Local relationships with subs • Local-market knowledge • Relationships with city/knowledge of local inspection, permitting issues • Local nuances that only local/regional GCs would know – saves time, money
- 26. Benefits of Local – Noodles & Company • Recently expanded contractor base from a few traveling with us nationally to 10-12 regional firms • Better customer service, follow up, representation • Better local market knowledge • Ongoing relationships with local trades – more work gets them better pricing, better long-term support • Easier qualification/vetting process – they have a presence in the market and more at stake locally • No travel expenses
- 27. Benefits of Local Contractors – Pie Five Pizza • We use a mix of local and traveling general contractors • National architect to ensure consistency • Prefer local contractors – Suits our plan to build out each local market – Fast response time when we want to move to the next project in the market – Relationships with local inspectors – Good connections to local subs and unions – Helps build the local economy
- 28. Beware! Red Flags to Watch For in the Vendor Vetting Process
- 29. Druse’s Big Red Flags • Unpaid subs/lien rights • Always looking for more money • Poor response to issues/problems – emerge after a store or two • Unwillingness to “play nice” with other vendor partners – us vs. them attitude
- 30. Henderson’s Big Red Flag • Any contractor who says they always build on time, on budget, with no change orders or punch list – No set of plans is perfect and no project is ever perfectly aligned with the plans!
- 31. Witken’s Big Red Flag • Ask for cost to bond the project. If they have a high bonding cost or are not bondable, that’s a red flag.
- 32. Best Practices – Closing Thoughts • Do your research/due diligence before committing to a contractor • Get and check references – both trade and operator • Develop a clear understanding of the suppliers’ capabilities, strengths and weaknesses • Trust your gut. Walk away if it doesn’t feel right – mistakes are very costly
- 33. Questions?
- 34. Thanks to Our Sponsor
- 35. We are TriMark, And We Bring It! Learn more at www.TriMarkUSA.com
- 36. Future rd+d Webcasts August 26, 2015 Green Building Strategies Comments/suggestions: Contact Dana Tanyeri, dana@zoombagroup.com Webcast Archives available rddmag.com A link to the CEU quiz will be sent when the webcast archive goes live.
- 37. Thanks for Listening! Visit us online www.rddmag.com Follow us on Twitter @rddmag Get bi-monthly rd+d content, project news, restaurant design digest http://rddmag.com/resources/newsletters
Editor's Notes
- TriMark is the country’s largest provider of foodservice equipment, supplies and design services. TriMark offers foodservice operators a new level of service by combining the hands-on support and local market knowledge of a strong regional supplier with the purchasing strength, industry expertise, and delivery capabilities of a national company. We are TriMark, and we bring it! Visit trimarkusa.com to learn more.
- Tanyeri: John, the issue of finding and vettting vendors as you move into new markets is definitely top-of-mind for you right now. Historically, Del Taco, now at about 550 units, has maintained a moderate expansion rate and has been largely regional – mostly focused in the West and Southwest. That’s about to change. Tell us about that.
- John Druse: Past development average rate and regional footprint Background on going public and how that promises to change the development schedule and impact need for new/more vendors in new markets A real estate consulting group is helping to develop or expansion model and where they feel would could be most successful. There’s a lot of the country that Del Taco’s not in right now so there are a bunch of potential new vendors that I need Need arises due to geographical expansion, but also sometimes current vendors in existing markets need to be replaced, or they’re not available for a project, or we need to be sure we have a back-up in place
- John Druse: Industry connections are key Get involved in industry groups like RestaurantPoint – I’m on the board and the networking is tremendously helpful. We may be competitors but we have an open enough relationship that we don’t mind sharing vendors Don’t look at it as “stealing” – we’re just helping each other out and providing references Use your franchisee network. Larger area developers and multi-brand franchisees may have worked with contractors and other key vendors for other brands and in other markets than you’ve built in. They can be great resources for you. I was with CPK when we went public and it changed things tremendously from a store count standpoint, so having the vendors to support that is critical.
- Tanyeri: So you, as I’m sure Steve and Bob do, as well, pull leads from a variety of references and resources. What then? What’s your general approach to vetting vendors, particularly on the contractor side? John Druse: Discussion/explanation of details of vetting strategies – size, financial due diligence steps, personal verification of capabilities/innovation/operational effectiveness/ability to deliver I always say I’m not a very smart guy but I keep very smart people around me and that makes me look smarter. My vendor philosophy is mostly relationship-built rather than being built on just trying to get the lowest price no matter what. There here has to be a longer relationship with your architects and engineers, etc., because it takes them a while to learn your building than, say, the guys making tables and chairs from a set of drawings.
- John Druse: I usually put them on a trial basis, preferably in a corporate store, unless it’s maybe a vendor that the franchisee has let me know about. So you find them by hook or by crook and then you give them an honest shot. I was a contractor once, so I can look at it from that side and know there are no perfect contractors no matter what they do. And it’s not necessarily how good you are; it’s how quickly you react to problems that come up. That’s really the kind of vendors that we want as the ones that are problem solvers.
- Tanyeri: How to franchisees factor in to the vendor selection process? Does Del Taco dictate who they can use? John Druse: Highlights of company’s approach.
- Tanyeri: Steve, give us a sense of Noodle’s & Company’s development targets.
- Steve Henderson: discuss recent growth and expansion, impact of going public on development and construction schedules
- Steve Henderson: Overview/discussion of Noodles’ expansion into new markets, necessitating addition of new vendors/contractors.
- Tanyeri: Obviously, lots of new vendors required to support such growth. Where do you find them? Steve Henderson: Discuss your approach/best practices for finding new vendors/contractors. Include reference to personal experience, i.e., with other companies/Chipotle prior to joining Noodles; Noodle’s infrastructure – four project managers who are good sources of referrals via their in-the-field work with trades, etc.
- Steve Henderson: Discuss your general approach/best practices for vetting new vendors/contractors. You personally vet most of the contractors. Include details on the types of reference checks you do – subs and restaurant clients – the types/thoroughness of the financial documentation you require (i.e., emphasis on CPA-audited), site visits, vetting timelines when moving into new markets. Brief highlights of the use of outsourced services/Syberus.
- Tanyeri: Noodles is primarily company-owned, but you do have some franchisees in the system. Steve, what’s their role in selecting and vetting vendors/contractors? Steve Henderson: Highlights of company’s approach
- Tanyeri: Bob, let’s hear a bit about Rave Restaurant Group’s new Pie Five development. You’ve also been growing rapidly – and are poised for even faster, more significant growth, which will keep you and your vendors very busy in the near future.
- Bob Witken: Discuss Rave/Pie Five expansion highlights to date and development future plans, including target markets and speed of build outs in those markets – i.e. rapid development of Chicago market.
- Bob Witken: Discuss general approaches to finding vendors/contractors for new markets. Include relevant tie-ins with Pizza Inn contractors – shared? Talk to facilities managers – They know the subs and the contractors who do restaurants, some under extreme conditions like night projects and working without shutting down the restaurant.,
- Bob Witken: Our vetting process is the same for company units and franchised units. Start with their AIA A503 general contractors qualification statement. Does their work fit your concept? We are in the fast-casual segment. You don’t want a contractor who does full service and has never done fast casual. Timelines are totally different – 6 weeks of construction compared to 17 or 18 weeks. With the tight schedules, there is no room for time lost for poor scheduling or performance. Call references. Run a credit report. If you don’t feel comfortable with the GC, there’s a reason and you need to walk away. Visit other projects they have completed or that are in progress. Talk to their subs – do they pay on a timely basis? How do they treat them on job sites? Look for quality and finish details. We make the potential GCs travel to our office and visit our locations. We sit and review the plans with them, page by page, to set expectations, timelines and deliveries.
- Tanyeri: Bob, what’s Rave’s approach when it comes to franchisee selection of vendors? Bob Witken: Highlights of company’s approach
- Tanyeri: Great. So, you’re all growing fast, expanding into new territories and having to do a lot of finding and vetting of new vendors right now – more than ever, it seems, in all of your concepts’ histories. What’s your take on the case for going with tried-and true vendors/contractors who know your brand, your expectations, etc., and could travel to your new sites vs. working with local companies instead?
- Tanyeri: John, let’s start with you. Why go with local instead of bringing contractors you may already be working with into new markets with you? John Druse: Local market knowledge is key, and they may have relationships with a certain city that, from an inspection /permitting standpoint can be very helpful. Once you start building that can be a big issue. So if a contractor is going through it in a certain city with one brand, he knows what to expect and that will help you when it comes time to do your scheduling and your length of the project. – you know if it’s going to take three weeks to get your final inspections rather than three or four days in Dallas, for example. There are just little nuances that maybe only a local GC /vendor would know. There really are few contractors who are truly national builders – most are regional at best. I used a certain contractor but I wouldn’t drag them out to California. I have done it – for example, I did use a contractor from California for a job in Oklahoma City. Would I do it again? No, because he didn’t do a very good job there. But he does a great job here in California. So it’s all about knowing your subcontractor base and that usually is best with fairly regional contractors who have used those subs over and over and over on other jobs. There also can be pretty big swings in pricing, so it’s best to bid it out to both existing contractors and local/regional companies.
- Tanyeri: Steve, how about you? What’s been your experience with local vs. “national” vendors/contractors at Noodles? Steve Henderson: Discussion of benefits of going with more regional contractors – spread things out and the theory being better customer service, better follow up and representation. I’m not a fan of so-called national contractors. I’m a bigger fan of more regional building. Companies that are local will get better long-term customer support from their sub contractors than someone calling from 20 states away. They’re knowledgeable about the local market and have ongoing relationships with the local trades, which in turn gets them better service and pricing. The contractor who hires the local plumber to do 20 jobs a year is going to get better service than the guy who calls him once every three years. Pricing has remained the same or dropped slightly by creating more competition in the marketplace. And by going with more regional/local firms we pay less travel expense for the GCs to travel. We don’t have to pay that overhead expense. If it’s a level playing field, we can afford to pay a local more sometimes because we don’t have to pay travel expenses, which on a $300,000 project can add up to 5% of the job. It also can be easier to check local contractors’ references through local subs and people that do a higher volume of work with them than a contractor who did a one project in a market. They have a presence in the market and more at stake locally.
- Tanyeri: Bob, what’s the approach to local contractors/vendors at Pie Five? Bob Witken: Discussion of preference for working with local contractors. We have a mix of local and traveling GCs. If you ask a GC if they build in a new market, most of the time they say yes. Next thing you know your plans are out in a plan room and you’re getting hone calls from a multitude of sub contractors, sign companies, etc. We do use a national architect to keep everything consistent and make sure the details are correct. Turnaround time for drawings is three weeks. It makes a difference when the architect and engineers are in the same office – stops the finger pointing on who made the miss-coordination in the plans. I prefer local because our build out plan of building out each market. I now have someone that is based in the market to build multiple locations, and fast response times when we want to move to the next project. The also know the local inspectors, they have better connections to subs and unions – and we help to build the local communities that we’re going to be doing business in.
- Tanyeri: John, you made the point earlier that restaurants are hard and these relationships and projects are complicated. Everyone wants to pick the right partners. From your experience, what are some of the biggest red flags to look for as you’re vetting new vendors?
- John Druse: Brief explanation of above
- Tanyeri: Steve, how about you. What’s your biggest red flag when vetting vendors? Steve Henderson: Brief explanation of above
- Tanyeri: Bob, what raises your eyebrows – and doubts – immediately when considering new vendors? Bob Witken: Explanation of above.
- Tanyeri: You’ve all provided some great input. I think if we were to sum up some best practices for people to take away from your insights and experiences they’d include some basic but critical steps:….
- Tanyeri I will start with a question. Steve, you mentioned when we talked prior to the webcast that you’ll often invite existing vendors to bid on projects in new markets against local vendors in those markets. What’s the rationale and how has that worked for you? (Steve’s comment about including existing GCs, maybe even from out of town, to look at initial plans and get involved if they want to on bidding. You have a relationship with them and they know the expectations. Also helps to keep the numbers honest.)
- TriMark is the country’s largest provider of foodservice equipment, supplies and design services. TriMark offers foodservice operators a new level of service by combining the hands-on support and local market knowledge of a strong regional supplier with the purchasing strength, industry expertise, and delivery capabilities of a national company. Visit trimarkusa.com to learn more.
- If you’re not already a subscriber, take a minute to visit rddmag.com to sign up for restaurant design digest, our bi-monthly electronic newsletter. Thanks again.