GPS Hospitality: Happy Journey to a Billion
Hitting nearly 150% sales growth in the restaurant business is usually a rounding error or the work of a very small company. GPS Hospitality is neither, with 233 Burger King and Popeyes restaurants and sales north of $229 million at the end of 2015.
According to data from the Monitor 200, GPS grew sales by 146% in 2015 as it added 86 Burger Kings and has since acquired several Popeyes restaurants in the Atlanta area with another two under construction.
CEO Tom Garrett said since the founding of GPS in 2012, the company has been focused on building the groundwork to absorb such explosive growth.
“Ultimately it really starts with having great systems in place, a great platform for growth so you have a way of managing the business. Whether it's how do you manage growth in the business, cost controls, incentive plans, it's about having all those things in place,” said Garrett. “Then, as you bring people on you already have a natural way of doing things.”
Stable, agile capital from a pair of family offices helps as well. He said they’re part of the team, ready to pull the trigger on investments where Garrett and the team see opportunities, generally acquisitions.
“I had really wanted to be in a mature industry in a brand that has 100% awareness where there are improvements,” said Garrett. “We basically look for opportunities where other people have overlooked them.”
That’s what brought GPS to Burger King and now Popeyes. He doesn’t want to build the brand; he wants to hone the operations via smart systems and efficiencies of scale, update locations via sweeping remodels for the 10%+ sales lift it brings and develop people—that’s what the P stands for in GPS.
“Oftentimes groups we’ve looked at, it’s mature, a lot of it is franchisees that haven’t been developing, hasn’t been developing people,” said Garrett.
He said GPS training is rigorous and getting people to buy in to the new standards and culture doesn’t always work, but when it does, the benefits snowball.
“You find one third of the people that jump on board immediately, then you’ve got a bottom third that look at the changes that opt out,” said Garrett, who obviously prefers the eager third. “That’s the part that’s most rewarding, and it’s fun, you take people that weren’t winning with the group before and they adopt and embrace our culture and that’s a lot of fun.”
Last year, Garrett had a goal—the G in GPS—of $600 million by 2018, but now he’s hoping to find enough of those opportunities out there for a bigger goal.
“One of the things that we’ve been talking about is what we call the journey to a billion, one of our goals is to get to that billion dollars in revenue in our first 10 years,” said Garrett. “There aren’t a lot of franchisees that are at that billion-dollar sales level. If we were to hit that, I think we would be the fastest to get there.”
It’s a lofty goal to be sure, and Garrett said initially even he was apprehensive. But with a projected $300 million this year, he said they’re well on the way.
The dominant growth vehicle will be acquisitions, one of the few paths to meaningful growth in mature systems that Garrett prefers. He expects to see another brand or two as well in the scant six years he has to the $1 billion 2022. But don’t expect any changes in the culture as GPS scales.
“People that don’t treat people right, people that don’t share the rewards, you know, you may get one transaction, you may get two transactions, but if people don’t feel good about doing business with you, they’re going to go somewhere else, said Garrett. “We want that other person to be GPS, we want our banks happy, our landlords happy, our people happy.”
As for the impending “restaurant recession,” Garrett said no matter what happens, having a good system in place can only help.
“There’s some things you certainly try to mitigate, you try to prevent everything you possibly can, but you can’t prevent everything,” said Garrett. “Having good systems, good people and a great reputation certainly mitigate against risk.”