As a former President of Reiser Group Sonic Management, Paul Reiser owned and managed 38 Sonic Drive-Ins in four different states. In 2021, he and his business partner sold their entire business, allowing Paul to focus more on video content creation, podcasting, and business investing.
Here’s a Glimpse of What You’ll Hear:
- Paul Reiser’s unique career path at Sonic Drive-In
- The key factor that can make restaurants and staff thrive
- Paul’s advice on dealing with the fear of closing in the middle of a pandemic
- How to design a good exit strategy and when to implement it
- Paul’s future plans in business and content creation
In this episode…
In this episode of the SpotOn Series, Chad Franzen welcomes Paul Reiser, video content creator and former President of Reiser Group Sonic Management. They talk about important elements that can turn around restaurant success, complying with pandemic rules while sustaining business profitability, and understanding the fundamentals of an effective exit strategy. In addition, Paul shares why content video creation is a powerful tool for entrepreneurs in the hospitality industry.
Resources mentioned in this episode:
Sponsor for this episode
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Episode Transcript
Intro 0:04
Welcome to the Top Business Leaders Show, powered by Rise 25 Media, we featured top founders, executives and business leaders from all over the world
Chad Franzen 0:20
Chad Franzen here co-host for the show where we feature top restaurant tours, investors and business leaders. This is part of our SpotOn Series. Spot on has the best-in-class payment platform for retail and they have a flagship solution called SpotOn Restaurant, where they combined with their combined marketing software and payments all in one. They serve different ones from larger chains like Dairy Queen and subway to small mom and pop restaurants. To learn more, go to spot on.com This episode is brought to you by Rise 25. We help B2B businesses to get ROI clients referrals and strategic partnerships through done for you podcast. If you have a B2B business and want to build a great relationship with clients, referrals or thought leaders in your space, there’s no better way to do it than through podcasts and content marketing. To learn more, go to rise25.com or email us at support@rise25media.com For the past 20 years. Paul Reiser was President of Research Group Sonic Management Company, which owned and operated 38 Sonic Drive-In restaurants across four states. In 2021. He and his partner has sold the entire business, ending his family’s 45-year run with the iconic restaurant brand. Hey, Paul, thanks so much for joining me today. How are you?
Paul Reiser 1:25
Absolutely. Terrific, how are you?
Chad Franzen 1:27
Good? Thank you. Hey, so you had 38 Sonic Drive-In locations across four states? What were the four states and how many? You know how many locations were in each?
Paul Reiser 1:38
Right? Yeah, so our our home base was basically North Louisiana at 28, North Louisiana, and then spread out just to one into Texas. And we built into South Alabama. So I have eight of them in the Dothan area, South East Alabama, and then one in Florida.
Chad Franzen 1:54
What What attracted you to Sonic?
Paul Reiser 1:57
That was I grew up in literally inside of a Sonic. The way we got into the Sonic business was that great American success story of my dad got into Sonic. So the way we all got into Sonic is actually a family business was dad was very, very poor as a kid number seven of eight kids and always wanted to escape that property. And his plan was I’m gonna start my own business. You know, he was that kid that was selling candy out of his locker between classes. And always, you know, he’s always had a part time job washing dishes since he was 12 years old. And he actually got into the bread business selling bread, buns and so forth. And a lot of bread man in those days, those days back in the 70s realized, you know, you take some bread into a Sonic and the Sonics were saw a lot of hamburgers. So you get a guy who is used to getting up early, being on his feet all day, working hard and he sees here’s an opportunity. So a lot of a lot of breadman got into Sonic. And so actually he got into Sonic, it was it was a long road he got into Sonic moved her whole family to Louisiana and I was the youngest of five we were that family. You know, when you get to a restaurant you see like these little kids working and doing all kinds of illegal things. And OSHA was not that big back then I guess. But yeah, so I grew up in the Sonic work Sonic my whole life. I was car hopping when I was 12 made super good tips because I was a cute kid. And they feel sorry for me, I guess. totally illegal. Totally don’t do it. But yeah, so So I got into it. I don’t even remember the question of how do we get into Sonic? Yes, that early days of the family I grew up always wanted to get out of Sonic. Wanted to. Actually when I finally graduated after a lot of attempts in video production, work in for a short while realized, you know what, I made a lot more money when I was selling hamburgers. So got back into the hamburger business in 1992.
Chad Franzen 3:55
Okay, so you, I was going to ask you what you had been doing prior to getting involved with Sonic but you really you’ve always been involved with Sonic.
Paul Reiser 4:05
Always except for a short a short period when I was actually managing the Sonic for my dad, right when I got married. And, and we as fathers and sons often do butted heads on some on some key key organizational issues. So I ended up leaving and I said I want to go back to school, went back to school, graduated in video production. Did that for about eight months, realized I was absolutely broke, and the desire to make just like my dad, I was tired of being broke. So I went back to dad and I said Hey Bob, remember you said I’d always be welcome back which that’s a great lesson. Don’t burn bridges. My dad didn’t burn the bridge with me. Thankfully, I didn’t burn the bridge with him. So I said I you know I’m ready to come back and welcome the prodigal son. And to his credit he said fantastic. I just poured a sticky and he put me on the worst Sonic he had was 20 years old, hadn’t hadn’t paid a dividend and a year. And that was kind of my training ground.
Chad Franzen 5:07
What would you say was the kind of your maybe some things you learned, you know, starting to work at a Sonic like you said, at a pretty young age?
Paul Reiser 5:16
Well, just I want to make sure that we’re, we’re bringing value to your to your team here. I mean, your your listeners, because I learned from my dad, he didn’t, it wasn’t the type of deal well, your dad’s this rich restaurant owner. And he was he was struggling, you know, working hard. And when he put me into Sonic, he put me in his worst wanting to work hard. And he came, he came to visit me one day during lunch, Ron. And you know, we time aren’t we time, our ticket averages and my ticket average was that day, two minutes and 50 seconds on a pretty bit, you know, every order went out the average 250 Pretty good. I was proud. Dad looked at it. And he said, you know, slick, that’s pretty good. But you can’t touch every burger. Might. Okay, so main lesson number one. And you know, of course I bucked against it because it was my dad. But you have to do it, you have to learn to delegate, if you’re going to expand, if you’re going to grow, you can’t get bogged down touching every hammer, you have to train people to test the hamburgers for you. And I found that to be the biggest problem with all my managers that I’ve groomed over the years. And other businesses, I see, that owner feels like they’re the only one that can do everything. And that’s the limiting factor. So what I learned early on is you’ve got to train your replacement, if you want to move on to bigger things. So
Chad Franzen 6:33
you you you went to school for video production, you came back your your dad puts you at that, at the worst location, what makes what made that the worst location,
Paul Reiser 6:42
I think it was the furthest away from him, it was kind of in a town isolated by itself. And something he didn’t get too. It was it was he probably had eight Sonics at the time. And it was two hours from his house, he spent a lot more time in the Sonics that were close to his house. And this was just kind of an old beat down store that never had done very well. And, you know, every, my opinion, not every time I’ve found now as I’ve as I’ve gained, but generally what I say is, every bad Sonic is one manager away from being a great Sonic. And it’s the just the dedication of that manager. And he had some he just had had a run of managers that weren’t well trained, or well qualified, and they just let it and all of a sudden you go there and it’s like, this is where I go, I’m waiting to get a better song. So nobody really turned it.
Chad Franzen 7:30
What do you think makes a good, a good manager for a place like that?
Paul Reiser 7:36
The most important thing, again, you have to get in there and train, you just you have to have the vision that this is going to be a great experience for every guest. But it’s also going to be a great experience for all my employees. And the only way an employee is going to have a great experience is if they’re trained, and they’re confident in what they’re doing. And they’re supported. So from day one, I was working a lot, a lot of hours. And but what I would do is you know, I was working my position during the rushes. And then when it wasn’t a rush, I was just pulling people along and training and training.
Chad Franzen 8:09
So you had been the manager there and you said your dad had a three, your family had eight locations. You ended up with 38 locations, can you kind of take me through that growth process not only for your family’s business, but also for you. Right,
Paul Reiser 8:25
so the biggest the biggest benefit I had from growing up in the business was seeing how long it takes. So my dad was super poor. And he married my mom who was also super poor. And together, they were a very poor couple. So but his his determination was to grow the business. And so he got to eight, you know, he didn’t get into his first Sonic until he was 38 years old, which at the time we thought was really old. But now I think what a young opportunity. So I’m the youngest of five. So I had a brother that had a Sonic a brother to brother in laws that were in Sonic, and I was in the Sonic and we thought you know what, how do we grow faster, because I’ve built my own. So after I ran that Sonic for a while I built my own Sonic partnered 50% on my dad. So it was a great opportunity there. But a lot of people don’t get you know, to have an old guy with some money that you can go in 50-50 with early on. But I have half of that Sonic, my other brother in law’s had a half a Sonic and we said, you know we’re moving so slow if we form a management company, and we really run this like a professional organization, how fast could we grow? So that’s when we were able to say Okay, now let’s let’s build some more Sonics. And we kind of delegated that out. I had one brother in law, that was a great partner that he was, here’s an MBA, he was super smart with computers and numbers, and he was our CFO. And I turned into the president and we had a Director of Operations. We’re all in the family. But we could delegate out those issues. And so the ability to If that’s what you need as a team, so we said, you know, let’s go to this area Sonic was excited about us growing, we were able to get larger and larger development agreements. And when we went to Alabama, that was really kind of a testing ground. When we went out two states away, sign a development agreement to build Sonics did you need to build 10 and two years, and I said, we’re built to in 10 years. And we settled on five and five years. And that was kind of when we really started to grow.
Chad Franzen 10:30
As the so you eventually became kind of your title was President, what did you kind of do? You know, you said you were the manager. And your the key to your success was training at that specific location. As the as kind of the leader of the president of the company, what did you do to kind of set the tone still, in terms of your leadership and for all those locations?
Paul Reiser 10:51
Well, we spent a lot of time especially growing locations, and a lot of the folks that we had early on were people that my dad had trained that had been with him for years and years. So we have this. The the company culture was a sign in every single Sonic that said, the answer is yes. What’s the question? So when a guest has a question, we’ll face that you have nachos, if we don’t have nachos, you can’t lie about it. But you said you help them solve their problem, whatever it is, so we had that sign. So what I had to do as the President is absolutely live that vision. And no matter what the situation was, if there was a guest with an issue, I would demonstrate No, this is how we handle a guest. This is how we do it every single time no matter how hard they were to deal with. belligerent, I would have guessed, and I could always cheer him up, you know, a guy came in and slammed his shoulder on the table one time and everybody’s like, Oh, you know, heck no. And I’m like, what’s wrong? Sorry, said I said no vehicles, others pickles all you know, he was so irate. And I just, I’m so sorry, I understand. Let me get you another burger, got another burger gave him a gift card for free meal. And he left. And the people were astonished. Like, how did you? How did you not get upset, but I had to, because if I had told that guy, what for? Then every person in that room was said, Oh, I know how to handle the problem, the guest. So anyway, so I think that’s what it was, as, as the President, I have to go around. I was I had my hand and hiring every manager early on. But also the answer is yes. What’s the question? That’s got to be our philosophy?
Chad Franzen 12:26
Did you were you ever, you know, as you kind of were growing and you had kind of now a management company? Were you ever tempted to branch out? Or what what was it about Sonic that just made you wanted to keep wanting to keep on adding to your collection of Sonics?
Paul Reiser 12:42
Well, because we were very flat organization with a central hub. So eat Sonic. Because I ran my own Sonic for a few years, I didn’t want a big corporate structure, I like running my own Sonic. So the way we would set them up is we put a manager in that Sonic, we recently raised them up from the organization we had, at one point, we had 27 managers and all 27 of them, it started out as a cooker carhop. So they knew our culture, and this is your Sonic, it needs to reflect you that you need to be so active in your in your neighborhood, so active in your community. And we just owned the churches and the schools and the Chamber of Commerce in all our little towns, our average town is probably 3000 people. And yet our average unit volume was over a million and a half for years and years and actually just write that to me. And when we sold,
Chad Franzen 13:30
what were some of the keys to success that is as the owner of 38 locations, that’s quite a bit.
Paul Reiser 13:36
Well, the biggest key to success is is training other people is bringing people along, showing people that there’s room to grow. And the only way you can do that is to get out of the way. And so we created a really good bonus program early on, paid a very small salary our managers made $32,000 in salary, but they could bonus up to 25% of the profit every month. So this is your Sonic. And we had five criteria, and half of them pushed sales and half of them push profit. And you could make up to 25% of the bottom line 5% per goal or zero the bottom line. And if you’re not making a bonus, I can’t afford to keep you anyway. So it really really drove people to focus on what we thought was important to grow their business and to grow their profits.
Chad Franzen 14:28
did how did COVID affect operations that your Sonic locations maybe it’s different? Because you guys are more of a drive in a driving operation, but tell me how it affected you guys.
Paul Reiser 14:39
Man COVID was the scariest thing that has ever happened and changed the world and it was it was crazy. You know, we just didn’t You didn’t know what was gonna happen. I mean it now we’re so used to it, but just try to take yourself back a couple of years. What is going to happen they started closing the world around us and when they started Close they close to California. First I called a friend of mine that had some Sonics in California. And I’m like, man, what? How are you? Okay, what’s going on? What do you do when you Oh, you know, these Sonics costs a million and a half dollars each to build, so you owe millions of dollars. And all of a sudden, you’re in danger of actually being closed. So what do you do? Um, but I called my buddy in California, he said, No, man, I’m essential, we have to stay open. So that was encouraging. But the fear was, you know, our employees, because we have a lot of young folks and their moms and dads don’t want to come and work and because not only are you in a small building with a lot of people, that was terrifying, you’re also going out dealing with with the public constantly. So the biggest challenge is keeping everybody calm. The first month, we lost 5% in sales. And we’re like, well, we can live with that. Because we initially got out taken out a big loan, how to communicate. The biggest thing, I think, also in leadership is communicating with your folks, we had 1300 employees. And you have to, you have to really communicate with your top with your top people and your second line of people and then really encourage them to communicate all the way down. But we’re like, Look, we’re not going to close. If we do close, we’ve taken out a half a million dollar loan, we’re gonna pay all our managers, we’re gonna make sure you get your salaries, your assistants are gonna, you know, we really had to give everybody confidence to stick in there. And so we’re in this together, we had a, we had a very specific plan. You know, when we get a COVID out and one of our stores, we’re gonna go in there, I’m gonna show up your supervisor gonna show up with bleach in buckets, and we’re gonna clean it. And unfortunately, that happened to it’s really just very early and so 3500 Sonics, we were the 16th. One of my Sonics is the 16th Sonic in the system to have a COVID case. It’s terrifying. So how do you handle it? The good news is, we were built for COVID when everyone else was trying to figure out curbside delivery. That’s all we have done since 1953, when Sonic started is curbside delivery. So we were uniquely poised to work through the situation, we got incredibly busy actually, with less and less people. So it to this day, it is still the stress of the crews, the people that do show up are getting our written work to death. So the biggest challenge is just trying to take care of your folks again, through the through it, you know, and sure try to keep keep putting hope out there. We’re gonna work we’re gonna get through this.
Chad Franzen 17:27
So what made you and your family decide to end your your kind of tenure as Sonic kings
Paul Reiser 17:35
tenure as Sonic king — I’ve never been called that before, and I’ve been called a lot of things. Um, you know, again, when you when you have a business, you’re in it, I’m in law thought is you got to get in for the long haul, we’re gonna win this thing. You know, it’s our company. But at the same time, you have to be smart. And you always have to be looking at your exit strategy. Sonic corporate America president and director of operations for Sonic corporate came to see us one time years ago, when we were really building all the Sonics, you’re very popular when you build a lot of restaurants for your franchisee. And they said, what’s your big bus plan? I’m like, What do you mean is that if one of y’all gets hit by a big bus, what’s going to happen to the company? So we’re like, you know, we hadn’t thought about that very well. So let’s really dig in. And basically, we just came up with, you know, one day we’re gonna sell it. So we had to have a very flat organization, it has to be able to exist without us. And so we’ve been in that mode we’ve been, we’re constantly, you constantly have to be value valuating, your company years ago is worth three times earnings. At one point, it was worth as high as five and a half times earnings. Your real estate is always worth something when we look at it, Sonic is a very unique building. So you can only calculate it based on the condition of the building and basically the rent that you bring in a fact of your rent. And we’re watching it and we figure you know, one day we’re gonna have to sell it or get to sell it or our kids will get to sell it. But what happened was because of the world with the stock market through the roof, there’s all of a sudden you have all these people that want to buy Sonics that never wanted to buy Sonics before. In the past, it was only Sonic operators that wanted to buy Sonics like, oh, Jimmy is retiring, let’s buy a Sonic. That’s how we grow. That’s part of how we grew. But now you have these venture capital firms coming in, they don’t they want they want a business they can buy with, they can look back and see consistent long term cash flow over time. And we were a strong franchise and a core market. So we were just poised. Our valuations just went through the roof. So we’re like you know what? I’m the youngest of five and you can see well you can see Chad, your folks Oh, if you want to see the gold the man behind the golden baritone voice chat. You need to come to their what how do you find this thing on YouTube by the way he’s actually on YouTube, you can watch this.
Chad Franzen 20:02
Yeah, you just kind of SpotOn series podcasts
Paul Reiser 20:05
on stories podcast on the YouTube and you can see this guy. But um, you can see me and realize that if I’m the youngest guy in our company, we got an old company. And we felt like it was a good opportunity to exit at the valuations were really high at that time, concerned about the political change at the time, it was before the President race. So we’re like, Biden might win this thing. If he wins, look at his tax plan, he wants to double capital gains taxes. So there was a lot of, there was just a lot of reasons to sell at that time. So our family is very democratic. We go to the table with that, here’s the valuations is everybody want to do it? And there’s five of us voting members. So luckily, there’s never a tie. So we voted to move forward and use a broker and we’re able to get a good price.
Chad Franzen 20:56
Okay, great. So what are you? What are you kind of planning to do moving forward?
Paul Reiser 21:02
Well, I gotta tell you, Chad, I am taking a gap year, I have been, I’ve been drinking a lot of coffee on the patio to tell you the truth. First, first time, I’ve been unemployed since I was like 11. So it’s been it’s been pretty nice. I am, I’m doing a little bit of real estate. But I what I’m gonna lean into is this YouTube channel. I don’t, we didn’t even talk about that. So I had a YouTube channel when I was when I was in the Sonics. And I would go to the Sonic and Sonic wasn’t super comfortable with it. But as long as I stayed outside, we would try the food and it was fun. It’s called The Sonic Guy. But I’m going to change that to BusinessReal because what I really want to lean into is giving some of this, some of this experience back to folks. But I also love finding out about all kinds of businesses. So I’m going to I’m going to be visiting other businesses, finding out their secret sauce, getting their behind the scenes information and sharing that with people through my YouTube channel. And I will probably get back into speaking and that sort of fun stuff.
Chad Franzen 22:03
Do you have the YouTube channel setup complete? Can you tell people where to find it?
Paul Reiser 22:08
No, no, it’s awesome. So right now you can go to The Sonic Guy, just YouTube, The Sonic Guy. It’ll be changing to BusinessReal very soon. But if you’re subscribed to The Sonic Guy, or just carry right through, it’s a lot of fun. I think it’s got some good information. I would love for people to go check it out and give me your Give me your ideas on what you want me to do next.
Chad Franzen 22:30
Okay, sounds good. Final question for you. What, what advice do you have for people who are thinking of becoming franchisees?
Paul Reiser 22:39
I will tell you that I love franchises, franchises as a business. Because it’s basically it’s a it’s an already proven system. And it is a system, something you can copy. I would say if you’re interested in it, one, go work and want to go work in it. Tell them say, Hey, I’m trying to pay off some debt, can I work in your pizza place? Or can I work in your Sonic and anybody would be glad to have you. So go do physical hands on, I was able to work as a kid my whole life and a Sonic so I kind of knew what I was getting into. But if you don’t want to go work, and I would say work in it, but work a few nights. Because if you don’t like working all day, and all night, you’re not gonna like working in a restaurant. Sure, because that’s how it is. Again, it goes back to the long journey. My dad was 38 when he got in it. And it you know, it’s years and years. And the journey is great. There was some wins along the way. But a person and sometimes I listen to a 30 minute podcast and hear a 30 year journey. And they it feels really fast, but it’s it’s long. So I would recommend getting in there getting into one and working it and see if you’d like it. It is pretty energizing. Then if you reach out to the to the franchise, and you got to get they used to be called a uniform, uniform franchise offering circular and it’s basically just a six inch thick binder with all the information about the business including all of the franchisees and they I think they changed the name because everybody just call it a you FOC which, which was just too fun to say I guess so they changed it to FTD. But you get that book and you get to go and meet the franchise. They’ll give you this book and then the bank has got the numbers of every franchise in it every franchisee call them and say How do you like working with this franchise? Are you making money? How are they to work with? Do they support you? Would you recommend this franchise? So franchising system is fantastic. Not all franchises are great. So do your homework, but it’s great. It’s a great way to it’s a great way to get into business. Okay, great also, they’re much more they’re much more marketable in the back aside, because people are from there, they’re more willing to buy something that they’re familiar with that has a longer track record. And if you just start your own, you know, Paul’s dandy burgers probably wouldn’t have sold for quite what 38 songs?
Chad Franzen 25:12
For sure. Sure, of course. Hey, Paul, it’s been great to talk to you. Thank you so much for all your insights and for your time today. I really appreciate it.
Paul Reiser 25:19
Aw, man, Thanks, Chad. Thanks for reaching out. I enjoyed the heck out of it.
Chad Franzen 25:23
Okay, thank you. So long, everybody.
Outro 25:25
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