QSR May 2022

FRANCHI SE PERSPECT IVES

nine states. At this stage, the company had the quick-service presence it desired, but it was still outside two major sub-seg ments—burgers and pizza. That is until NPC, a franchisee of more than 1,200 Pizza Hut and 390 Wendy’s restaurants, entered the fray. Hampered by COVID and steady declines in its Pizza Hut business, the franchisee declared bankruptcy in July 2020 and looked to facilitate a sale. “We had to get comfortable that Pizza Hut as a brand was in a good place, going in a good direction, and we got very com fortable with that,” Flynn says. “All brands have good times and bad times in our experience, and Pizza Hut had a few really rough years. It’s one of the things that created the opportunity for us to buy NPC.” Before the sale agreement, NPC shut down its worst 300 units, which Flynn calls “every restaurateur’s dream.” The 390 Wendy’s units were divided among Flynn Restaurant Group and a collection of Wendy’s franchisees. The transaction closed March 2021. On a trailing 12-month basis, Flynn says both divisions have experienced record years. “The portfolio that we bought was pristine,” Flynn says. “I mean there were almost no losers in it. The question was, was it going to stay that strong after COVID was over or once it sub sided a little bit. Our view was that strength was actually going to continue. And we’ve seen it continue for the subsequent year after that transaction. Both are going to perform at about the same level, or a little bit better, post-COVID than they per formed in ’20, which is to say very strong and right to our plan.” DRIVING DEVELOPMENT Flynn compares the makeup of Flynn Restaurant Group to a federal/state system. The “states” are clusters of 20–50 restaurants run by “gov ernors,” or market presidents. The geography is tight enough for these executives to frequently visit restaurants and famil iarize themselves with guests, vendors, and other assets. That puts them in the best position to make informed decisions, Flynn says. The “federal” port ion is the myriad resources Flynn Restaurant Group provides these clusters, like accounting, administration, f inance, human resources, I.T., purchasing, training, and real estate—almost as if it were a franchisor. Similar to how Flynn and Pettinger approached Krebsbach in the early days, market presidents have equity in the business and power to make key decisions. “That part of our structure and our philosophy has mapped very well from our origins in full-service dining into our entry in quick service and fast casual,” Flynn says. The fact Flynn Restaurant Group is the largest franchisee— or close to it—in all of its systems is deliberate, Flynn says. This is not only because of the beneficial scale economics, but also

the meaningful seat at the table with franchi sors. The objective is to serve as the best, most collaborative operator in each system. The relationship is mutually benef icial.

Q FLYNN RESTAURANT GROUP STAYS AT THE INNOVATION FOREFRONT WITH THE BRANDS IT OPERATES.

FLYNN RESTAURANT GROUP (4)

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MAY 2022 | QSR | www.qsrmagazine.com