Is selling your pizza chain to a bank bad business?

April 19, 2010 | by Jason Rummer
Pizza chain founders, owners and senior partners: Are you on a boat floating in the Gulf?  At the 17th hole perfecting your putt?  Or maybe just relaxing, counting the money that an investment/equity firm or New York bank paid you for your company? I hope so, you earned it. But I have a couple of fears about the situation, too.
In the past couple of weeks, we've seen several pizza companies purchased by banks. Not purchased by the employees, a restaurant chain entrepreneur or even a visionary. Just a bank, and this time it included Papa Murphy's International, and it was the second time they were acquired.
Second time -- interesting, should we be asking questions?
With all the sales and acquisitions of companies to investment and equity firms in what is becoming a fractured restaurant world, where are Ray Kroc, Dave Thomas, Colonel Sanders, Tom Monaghan, Terry Collins and Frank Carney when we need them? You know, owners of companies with passion and drive to lead and exceed. The kind of leaders that young people will follow and truly become more than they are?  Maybe Antonio Swad, founder and CEO of Pizza Patron is one of those types of leaders or maybe John Schnatter of Papa John's? Who knows, only time will tell.
I worked for Papa Murphy's once when they were much smaller than today: 400 stores then, 1,000-plus now. Most of the team I worked with then is gone now, replaced with MBAs and people who have never run a store themselves, but now give direction like it is a natural kind of thing for them to do.
Don't get me wrong about the current staff that is running that company, they are professional, mindful of the investment and probably passionate about doing their jobs, but that is what I am concerned about. Passion. Is it just enough to "perform your job" in this corporate pizza world, or should it be more?  Should the "sauce run through your veins" so to speak?  I think so.
I worked for another company once that was owned by an investment/equity firm. I hated working for the investment group. There I was, the operations, new store development and marketing guy, but what they had me doing the most was creating and recreating budgets, over and over again. 
Why all those budgets? They needed them so that "new" money could be borrowed. "New" money is a funny term -- you know, money that has not been tarnished with failed results.
So what is wrong with borrowing money? Nothing at all. What is wrong, though, is having your operations, new store development and marketing manager spending all their available work (and non-work) time for budget creation.  Really, what time is left in the day for the important stuff like operations, new store development, and marketing?  Or do those functions really not matter if the numbers "created" are useless and unobtainable?  Makes you wonder.
One year, for the company I speak of above, I created 11 different budgets for the next year. Each one was rejected until I got to the revenue, growth and return number that had been expected and promised to the investors. Reality, I found out, was not important; getting the money was. I hope Papa Murphy's is not going to be led that way and put through the torture. Franchisees, be sure to ask your company operations folks how much time they spend on budgets; it is a spirit killer.
I know that selling your restaurant chain to a big capital investment firm is something of an inevitable dream these days, but it has consequences. Perhaps there's a third way.
Back to heroes, leaders, motivators, innovators.  Where are you, and what is the next step for us?
Jason Rummer is a 30-year restaurant chain executive with experience in development, operations, and marketing with two national and three regional pizza chains, and has also provided consultation to a number of small companies. To find out which ones, visit him on LinkedIn.

Topics: Business Strategy and Profitability , Operations Management , Papa Murphy's Take 'N' Bake Pizza

Jason Rummer / Jason Rummer is a 30-year restaurant chain executive with experience in development, operations and marketing with two national and three regional pizza chains, including Papa Murphy's.
View Jason Rummer's profile on LinkedIn

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