Capital Access: Charlie and Judy Divita Have a Second Career in Franchising

Charlie and Judy Divita operate six Firehouse Subs in the greater Columbia, S.C., area, including one nestled in the heart of the USC campus.

The couple is now knee-deep into their second career and is making the most of it. Charlie, 69, is a former university full professor and consultant, and Judy, 65, boasts a corporate background of organizational development, training, and human relations. Instead of relaxing into the world of retirement, the couple launched Divita Concepts Group in 2003, eager to put their skills to work as business owners in a way that would offer them more control of their future.

With projected 2012 revenue of $4.5 million, Judy and Charlie always look for novel ways to build business. “The franchise gives you the basic things to put you in business pretty quickly,” says Charlie. “What we found is that you have to take it beyond that and be creative to come up with new and novel ways of doing things that are particular to your company and your community.”

The Divitas say they are a team with complementary strengths. Charlie, who served three years on the Firehouse Subs national marketing board of directors, focuses on business development, marketing, and customer relations. Judy pays attention to managing costs and human relations.

“I can’t see the trees through the forest and Judy can’t see the forest for the trees,” says Charlie. “She is much more detail-specific, mind-down, and much deeper into the details of something than I am. I think that I have a bigger picture vision of things.”

The couple is on target to hit $4.5 million in revenue this year. They planned to open one additional location and grow sales in current locations by at least 8 percent over 2011.

“We measure it (growth) on the bottom-line performance. We are always asking two questions: Are we growing sales—opening new stores or growing revenues in existing stores? Are we controlling costs well enough to run an ever more profitable company?” says Charlie.

How has the most recent economic cycle affected you, your employees, and your customers?
Ironically, from our business point of view, it has been good for all parties mentioned above. We have heightened our attention to financial management and vastly improved operations; we better train and invest in our employees; and we’ve increased our expenditure of marketing dollars. Our customer gets a better experience and expects more of the Firehouse brand because of our improvements and because of headquarters’ commitment to growing our brand.

Are you experiencing economic growth/recovery in your market?
Yes, to the tune of 18 percent positive comp sales over 2011, up 7 percent from 2010 and 3 percent over 2009.

What did you change or do differently in this economy that you plan to continue doing?
Don’t throw coupons at customers or rely on discounting to build the business. Instead, we will build customer loyalty by improving service and operations, thereby continuing to increase the value of dollars customers spend in our restaurants.

How do you forecast for your business in this economy?
We know the ins-and-outs of every line item of each store’s P&L. We build a comprehensive budget based on all of these factors. The biggest and most difficult variable to forecast is sales. This year we worked with each GM to set sales targets based on our goals for each individual store.

Where do you find capital for expansion?
We’ve developed an open, mutually respectful, and long-term relationship with our bank. They have partnered with us to pursue a sound, incremental development plan for expansion in the Columbia market.

Is capital getting easier to access? Why/why not?
Capital acquisition is easier than two years ago, but still somewhat difficult. The amounts loaned and terms are somewhat better, but considerably more documentation, analysis, and evaluation are required to secure necessary capital. A proven track record of performance that the bank knows firsthand is invaluable. The additional scrutiny is not unwelcome. It is an inevitable consequence of changes in bank regulations that, in the long run, may prove to best for all of us.

Have you used private equity, local/national banks, or other institutions? Why/why not?
We have only used local banks. Our investigation of other sources has typically found them to be too cumbersome. We like working with local people who know us and who know our business at a personal level.

What kind of exit strategy do you have in place?
It’s an evolving one. We’re presently putting an infrastructure in place that can support the management of key business functions. We’re grooming several key employees to assume ever-increasing responsibilities for growing and running the business as we move toward full retirement. We want our business to continue on sound footing, with a bright future after we’ve departed. We anticipate our increasing disengagement unfolding over the next few years.