FOCUS Brands CEO has influence — but not control

CEOs don’t often tell me that their job lacks power.

But that’s exactly how Russ Umphenour sees it – even though he leads six different fast-food chains as head of Atlanta-based FOCUS Brands.

Russ Umphenour

Russ Umphenour

That’s because the chains – from Moe’s, Schlotzsky’s and Cinnabon to Carvel, Auntie Anne’s Pretzels and Seattle’s Best Coffee – rely heavily on franchising for their $1.4 billion in annual revenue.

“Managing franchises is totally different than managing employees,” Umphenour, 67, said. “It’s more about influence. You can’t dictate. … You need to lead and demonstrate. Most franchisees will follow what works.”

Umphenour said he learned what works the old-fashioned way – by starting out as young part-timer at an Arby’s store and then building his company into the chain’s largest franchise operation. When he sold out in 2005, he had hit nearly $900 million in annual sales, with 775 stores in 22 states.

It was a long climb from 1973, when he and his wife had to personally guarantee a $330,000 loan to buy 10 Arby’s in Atlanta and Birmingham.

“It wasn’t a smart business move,” he said, referring to the personal guarantee. “I was young and stupid.” Failure would have meant financial ruin in an industry known for failure.

But Umphenour, a Nebraska native who didn’t finish college, said he employed the basics to build his restaurant business. He looked to buy under-performing franchises that were neglecting the essentials – good food, a clean place and hospitable employees – believing he could turn them around.

He paid particular attention to keeping operating costs low and developing effective managers. He also carefully evaluated a store’s location.

“Real estate is critical in this business,” he said.

Umphenour learned that his strength – lots of practical experience – came with a key weakness – not enough formal education. So he compensated by reading incessantly about business and leadership.

“What I’ve evolved to is a better leader than a manager,” he said. “Leadership is about creating an environment where people motivate themselves to achieve mutually beneficial goals. Management is about … processes, not people.”

To motivate people, he said, a leader needs to offer more than money and recognition.

“People want to feel valued, part of a team, treated well and able to make a difference,” he said.

Since becoming CEO of FOCUS Brands three years ago, he said he tries to be more like a coach to the six heads of the diverse chains.

“My role is to help the brand presidents drive growth,” Umphenour said.

One way is by experimenting. FOCUS is starting to put as many as three brands under a single retail roof – Schlotzsky’s, Carvel and Cinnabon – even though the industry has had limited success in the past with such moves.

A difference this time, he said, is that it won’t combine two different brands of main meals (chicken and hamburgers, for example). Instead, there will be one main-meal brand, with one or two dessert brands, such as Moe’s with a Carvel soft-serve machine.

“Everyone in our business is trying stuff,” he said. “Our job is to continue to grow these brands.”

- Henry Unger, The Biz Beat

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