May 19, 2024

Conversation: Franchisee Challenges a Restaurant Chain, to the Benefit of Both

He had been a serial entrepreneur since the 1980s, starting and selling a small commercial printing company and then a share of a drug-testing business. After buying and selling real estate for a few years, he decided to try franchising. Although he feared the role might be constraining, Mr. Tankel had heard that Applebee’s was an entrepreneurial restaurant chain, and he went to its headquarters in suburban Kansas City, Kan., to meet with its chief executive.

Sixteen years later, Mr. Tankel owns 34 Applebee’s. He has repeatedly challenged the corporation to accept changes to its formula — from its uniforms to its menus. His first restaurant on Staten Island took in $3.5 million the year it opened, 1995 — a time when the average Applebee’s was taking in $2.2 million.

Today, his Times Square location has the highest annual revenue, about $13.5 million, of any Applebee’s in the world. His 34 locations average $4.25 million in revenue, double Applebee’s nationwide average. (The numbers were confirmed by Applebee’s.) The following is a condensed version of a recent conversation.

Q. You have said you loved building companies. Why did you buy a franchise?

A. I saw an opportunity. I went to visit the company’s headquarters in Kansas and felt there was the opportunity to bring entrepreneurship to franchising, marrying the best of both worlds.

Q. You bought the right to start a store whose concept was created by someone else, with a set of protocols already in place. Is that entrepreneurship?

A. Maybe this kind of thing isn’t for the average franchisee but we pushed the envelope right from the start, took those protocols to the next level, and I think that’s entrepreneurship. We changed the uniforms for instance, got rid of the baggy shirts and ties. If you’re sitting at a bar, you want the woman behind it to look good, not buttoned up.

I remember when we started karaoke nights in Staten Island. We had a huge line outside, but the franchisor didn’t permit karaoke and they said we had to stop. I told them, ‘I’m paying you a fee to do business, so unless you want to pay us for the customers we are going to lose, it’s not appropriate for you to ask us to stop.’ They cited us for going against franchise policy. I was known as a troublemaker.

Q. Why did you decide to keep buying locations?

A. Nothing succeeds like success — it’s intoxicating. And it’s still gratifying for me. It’s gratifying now to see us go into underserved neighborhoods in and around New York City and see people on the periphery get a job, get skills and grow. We’ve opened restaurants in low-income neighborhoods like Bedford-Stuyvesant, Jamaica and the South Bronx, and we are usually the only sit-down restaurant in the neighborhood, one of the few places where customers are all treated with respect.

Q. What have you learned about doing business in those neighborhoods?

A. When we open a restaurant and are interviewing, we will have guys show up with their pants hanging below their crotch, their hat on sideways, answering our questions antagonistically. Our recruiters will say to them, ‘If you’re here for a job, go home and get dressed like you’re applying for a job and then come back.’ Many will go home, change and come back.

Q. Do you hire differently than other Applebee’s?

A. In the New York market it’s hard to find people with good attitudes, so we try and hire by personality. We can teach you to cook, to make a drink, to be a server, but we can’t teach you how to be nice.

Q. How do you screen for nice people?

A. You see it in a person’s demeanor and mannerisms; it’s in their smile. Is it sincere? It’s the way you shake my hand, look me in the eye, the way you say hello.

Q. You opened your first Applebee’s in Staten Island, a location Applebee’s insisted did not fit its model. What didn’t they like?

A. It was in a mall that had just completed a big addition, and the restaurant was to be at the rear entrance to the mall. Applebee’s wanted it to be at the front of the mall, so people would see it as they entered.

Q. Why did you open there anyway?

A. We felt comfortable being in the rear because there was a big parking lot and an entrance to the mall there too. Today both entrances are used equally. I felt and I still feel that we know the New York marketplace better than they know it from Kansas.

Q. What else did you do that went against the model?

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