Four Foods Group: Delicious Growth

Four Foods Group (www.fourfoodsgroup.com) is based in American Fork, UT.  Four Foods Group is management company growing the fast-casual restaurant brands (think tech incubator applied to restaurants) and was recently named #143 on the Inc. 500. CEO and Founder Andrew Smith sat down to talk to Ascent Advisor (@AscentAdvisor).

 

Ascent Advisor – Peter Wride: You have had a string of successes as an entrepreneur – AxisPointe, MoneyWizard, and CaptureQuest.  What led you to found Four Foods Group?

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Andrew Smith – CEO and Founder

Andrew Smith: For the past 15 years of my career I could always see an opportunity, whether it was in technology for advertising/marketing or the finance or construction industry.  I found a way to address the problem, and if the product or service addressed the problem well, I could get enough people to say, “Yeah, I would pay for something like that.”  This concept was something I was immediately passionate about.

Ascent Advisor: In the video on your website you mention that for one of your anniversary dinners, your wife could choose anything in the world she wanted to eat, and she chose Kneaders.

Andrew: Kneaders is a beloved Utah brand; it has a cult-like following of people that currently go to or previously went to BYU.  Gary and Colleen Worthington started it in 1997 and are both still very much involved.  I saw Kneaders as an opportunity because it is a business that has been growing very slowly and organically. I know there is a market for fresh food, served fast – they have a drive thru concept that nobody else has, and the bakery café as well – they are neither fine dining nor fast-food. That type of market thrives in both good and bad times.  I approached the family in 2008 and said, “Listen, I want to blow your brand out in the Western United States, I know how to do it.” They said they were in the middle of a financial meltdown. I told them, “There is a way to do it, even in a financial crisis we are in.  It’s all about being creative with how to finance.” We negotiated that relationship and are moving forward.

Ascent Advisor: What is the vision for your company today? What is your BHAG?

Andrew: We want 40-45 stores by 2015, so we need to build a lot of stores very quickly.  We are really focused on Arizona, Colorado and Nevada.  Aside from the stores we are currently building, there won’t be any more Utah stores.

Ascent Advisor: Right now you are only working with Kneaders.  Is there a thought of expanding this to other chains?

Andrew: The thought is there: we are currently consulting a couple of different brands in different verticals. We have advised them in hopes that they will get to a point as a company where they will be a brand of interest to take on.  These two brands are fairly new but are also beloved Utah brands in the locations they serve and they have retained our management company to help them with financial controls.  To date, we have blown out one other brand and helped them to see that what we bring to the table works. Since then, we have departed from that brand to allow them flexibility in their future growth opportunities.  Four Foods Group is actually very different from what people see from the outside.  They think we simply own several Kneaders stores but the way we structure things is very different.  Kneaders focuses on having the management at the store do what they do best: operating the store, training the employees and taking care of the customer’s experience. Each of us is good at different things, so we partner with them to get things done.  It is less financially burdensome to partner up.

Ascent Advisor: One of your stated goals on your website is to employ 2,000 people by 2014 (from 700 in 2012).  What do you do to attract, engage and retain great employees?  How do you get them to “buy in” to the vision?

Andrew:  It starts in the interview process.  We have about 50-55 employees per store; some even have 70 people on site.  We employ a lot of people from the local community of each store and typically pay better than the average income for that area.  When we post on the major hiring sites for a new store we get 400-600 applications, so we have a hiring day where we have them all come in and go through three levels of hiring. Typically in the food and beverage industry, you pick whoever looks okay and train them, but we think that if you really put them through the strainer in interviewing you not only get the best ones, but the ones that are also there for the right reasons. We look for the attributes and qualities of young adults, but we have employees anywhere from 16 to 60 years old.  The food and beverage industry typically has about a 200% employee turnover rate each year, but we only have about 60-70%. Most of our turnover is people who leave for college or go on missions, so our employees do not typically leave because they want to be there.  We keep some employees for years on end.  They enjoy the environment we have created and it starts when each of them buys into what we want.

Ascent Advisor: In looking over your executive team, I could only find one person with restaurant experience, the rest come from technology, operations, finance, etc. It sounds like you are bringing over a lot of the skill sets from other industries to make this work.

Andrew: We need experience in operations, finance and technology here [at headquarters in American Fork] because that is really the central nervous system for the stuff that we do at HQ.  Nate Duvall comes from a Bajio/Subway background here in Utah, and he is out in the field working with our other restaurateurs to help blow out all those stores.  He is our silver bullet in the restaurant industry.  We also have an Executive Baker, Executive Pastry Chef and store opening trainers that work here at corporate.Logo

Ascent Advisor: You have experienced tremendous growth since starting the company in 2008, but really seemed to hit your stride in 2010.  What happened at that point to turn good growth into great growth?

Andrew: I think that the brand equity of Kneaders has helped a lot; because of that each store opening has been absolutely successful without putting a dollar into grand opening marketing.  I think we are the dominant bakery café player in the Utah market.  Now that we are going into Arizona and Colorado, we are going into Paradise and Panera territory -the two big players out there- and we are finding success because we have a good product.

Our first stores outside of Utah will be in Gilbert, Arizona and Chandler, Arizona.

Ascent Advisor: Four Foods Group is growing very quickly – #143 on Inc with 2,283% growth- and listed as the 4th fastest growing company in Food/Restaurant industry according to Inc. What is the biggest challenge you are facing with this growth?

Andrew: We were announced on the Inc. Hire Power Award list as well just recently for adding more jobs in Utah than any other company. This is what our main focus is here at Four Foods Group. Creating permanent jobs in the markets we serve.

I think that the hardest thing has been the systems behind it.  I believe in having a very tight pyramid that is bottom-heavy; in other words having a lot more employees with fewer people at the top trying to dictate.  The growth was hard for the systems because we had so few people.  We are trying to keep a small operation team here to keep the cost low so we can have as much profit as possible. However, we have needed to hire additional people here to support it; we’ve added 400 employees over 16 months.

Ascent Advisor: You have said you want to see this company grow for decades – what is the next big hurdle or challenge you see on the horizon?

Andrew: The Four Foods Group – because we’ve had this model and creative structure to grow a brand like Kneaders- can play with any brand to help it grow. We’ve had dozens of brands approach us to say, “Can you do what you are doing with Kneaders for us?” I think the real dilemma is choosing which brands we want to be a Four Foods Group brand in the future.  They need to be a beloved brand, they need to have the history, and of course they need access to capital. This is the hardest thing for any food and beverage company because banks don’t like them when they are unproven and young.  We have a war chest of money we’ve been able to create over time, but where we invest those funds for another long-term play is going to be key for us.  If we deploy what we’ve earned into poor concepts, we are starting from scratch. It’s really taking what we’ve learned with our internal operations and financial systems and implementing them on a new brand in the future.

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