Southern Rock Star: McAlister's Deli's largest franchisee nears 100 units
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Southern Rock Star: McAlister's Deli's largest franchisee nears 100 units

Southern Rock Star: McAlister's Deli's largest franchisee nears 100 units

Name: David Blackburn

Title: CEO

Company: Southern Rock Restaurants

No. of units: 97

Age: 58

Family: Married 37 years, 2 children

Years in franchising: 25

Years in current position: 10

David Blackburn is reaching for 100. 

His Tennessee-based Southern Rock Restaurants operates 97 McAlister’s Deli shops in seven states, including Ohio, Indiana, Tennessee, and Georgia. That makes him the largest franchisee in the system. With more stores already in his pipeline and a 50-unit development agreement in his pocket, his quest for 100 is most likely to turn into 150. Last fall, Blackburn also had the honor of opening the 500th McAlister’s Deli. Pretty good for a kid who started as a busboy at a Bonanza Steakhouse restaurant in 9th grade.

At 58, Blackburn has spent more than four decades in the restaurant industry. He’s been everything from that Bonanza busboy to the CEO at a fine-dining establishment. He worked his way up the management ladder, becoming regional vice president of operations and vice president of business development of O’Charley’s before owning and operating a small upscale Italian restaurant for several years.

“I avoided franchising for 16 years,” he says. “I spent many years at several brands making other people lots of money.” That stopped when he invested in his first McAlister’s in fall 2011. He says he liked the food—and the fact that McAlister’s had a great reputation in his area and was looking to expand there. “McAlister’s sets itself apart from other fast-casual competitors with an expanded menu, table service, and emphasis on guest engagement,” he says. 

Blackburn built his empire through a mixture of acquisitions and new store openings. Though he’s “forging the path” to 150 McAlister’s locations, Blackburn also is excited about the possibility of diversifying his portfolio. “We are exploring multiple pathways to growth if we can find something as compelling and strong as McAlister’s,” he says.

Today he is no longer routinely involved in day-to-day operations. However, he says, “I insert myself into calls and meetings when needed, and I make calls during my travel time.” Blackburn says he plans to organically grow about 10 locations a year and perhaps pick up some existing locations if they fit his geographic strategy.

PERSONAL

First job: I started at Bonanza in 1979 as a busboy.

Formative influences/events: When I was in 9th grade, I had an older brother who was a football star. I played tennis instead, became a top-tier player in Nashville, and was being watched by colleges. I had a friend who was working at Bonanza and encouraged me to apply. The manager, Jimmy Conklin, interviewed me and I started working a couple of days a week, ultimately giving up tennis to work in the restaurant. The tennis coach from Belmont College helped me get a scholarship for academics, and I went to Belmont for a year before dropping out to work in restaurants full-time. I also worked in an accounting firm for 2 years during high school and during that college year. Today, I own my own restaurants and an accounting firm focused on franchise accounting.

Key accomplishments: I have a fantastic family. I have been married for 37 years. My wife and I actually worked at Bonanza together. We have two kids and two grandchildren, and both of our kids are part of the organization. My daughter is the director of HR, and my son is the integration manager for the accounting business. We have 97 successful McAlister’s locations and more coming online, including a 50-unit development agreement.

Biggest current challenge: The biggest current challenge is supply chain: shortages, late trucks, missing product, etc. This makes things hard for our teams to serve our guests. Additionally, manpower is, and always has been, a challenge. Our industry is a people business, and we happen to sell food. Inspiring people to do a great job is job #1. We can trace every problem and obstacle to the lack of the right person in the right spot. Today, this is the hardest it has ever been. We have been shifting since pre-Covid to accommodate a different workforce and maintain our economics with seemingly more success than many of our competitors with all our dining rooms open.

Next big goal: We are posturing to become a portfolio company and want to bring on other brands in the next couple of years.

First turning point in your career: My first big break was when my GM asked me to stop bussing tables and become the dishwasher. The bus tubs were heavy, and I wanted to out-bus my fellow busboys. I am competitive at everything I do. This new position was exciting and I loved doing it. I was so excited that I went to Kmart and bought my own squeegee so I could clean the stainless in the area between racks. I have a great respect for dishwashers. A second turning point was deciding not to go to college and choosing to put all my energy into the restaurant industry. Additionally, becoming a GM and later a multi-unit supervisor were huge turning points. But the real break to elevate my opportunity was learning to develop multi-unit talent. Establishing a successful pattern of management and leadership has been incredibly important.

Best business decision: Investing in McAlister’s Deli. I avoided franchising for 16 years and stayed in my role at O’Charley’s for too long. I spent many years at several brands making other people lots of money. I wish I had understood franchising sooner. I could have grown faster.

Hardest lesson learned: People in the organization do not always react the same way that I do. My posture to start with was that what I do is successful, so I’ll make other people do it the same way. And I learned that didn’t work. I started to understand the path was less of a straight line and more of a guardrail. People have unique skills—some have stronger people skills, some have stronger business skills. However, they all have great skills to move our business forward. So I keep guardrails in place to do just that, to use those individual strengths to benefit our goals and protect the weaknesses. Forward is good. That is an important word in our business.

Work week: I work seven days a week. I hardly ever take a full day off. I am always connected. I am on the tip of the spear for many initiatives from a growth and development perspective. I am constantly looking at store data and metrics so I can ask the right questions. It’s a passion. I am totally consumed by the restaurant business and what we do. I find this business so much fun and rewarding. I do it because I want to, never because I have to.

Exercise/workout: I walk 3.5 miles every morning, even when I travel. I like to do it in the evening as well.

Best advice you ever got: I was truly a product of trial and error and spent time watching people fail as well as succeed, learning from them both. I worked with Phil Hickey, former NRA president, and he noticed that I took lots of notes on scratch paper. He gave me a Day-Timer to make sure I was keeping my notes organized and insisted I show him how I was using it for months. This really taught me the power of organization. I used a Day-Timer for 35 years till my smartphone caught up with me. That Day-Timer still sits on my desk as a reminder. Steve Hislop, who was my president at O’Charley’s, helped me understand that not everyone will behave like I do, and to find the strength in each person and protect the rest. This is how I developed the idea of the guardrails.

What’s your passion in business? I love to win and love to compete. I like when people say something can’t happen and I have the chance to prove them wrong. I like the challenge of turning a store around and driving impressive profits. If someone says I can’t, I like to prove that I can. Competition is what helps drive me.

How do you balance life and work? I have a good partnership with my wife. She supports my busy schedule and helps keep our family close and involved. She watches our grandkids and brings them to the office in the afternoon. Additionally, “Have Fun No Regrets” is one of our mottos—to have more fun while working. This is actually part of the mission of Southern Rock Restaurants. All work trips should have fun. Our work family is a blast and a joy to be around.

Guilty pleasure: I like to golf when I can, and maybe a casino or two from time to time.

Favorite book: The One Minute Manager by Ken Blanchard.

Favorite movie: Any action movie with Bruce Willis, Mel Gibson, or Tom Cruise.

What do most people not know about you? I was born with lots of severe allergies, no dairy, no citric acid, no chocolate or bananas. I spent years being squeamish. I probably would have been voted the least likely person to be in the restaurant industry through my formative years.

Pet peeve: Lack of organization and self-discipline.

What did you want to be when you grew up? At first a popsicle man... mmm, all those free popsicles. Then work in a pizza parlor… all that free pizza. By the time I was a teenager it was hot rod cars and a desire to have my own business. I have lots of side hustle stories if you’re interested.

Last vacation: Destin, Florida is my happy place.

Person I’d most like to have lunch with: Dolly Parton. She has done so much for her community and for children and is so much fun. It would be a blast.

MANAGEMENT

Business philosophy: I appreciate analogies and use mottos to help deliver our messages. One important motto is: “Must be present to win.” Leaders need to be there to challenge, uphold, and manage the stores. If they aren’t doing this, it will reveal a gradual slide into mediocrity. Leadership must be present to win. I also like to look through the lens of “effective and efficient.” We put everything through this filter to grow our business at an accelerated rate: Effective at all the standards that will protect and grow our future business, then how efficient can we be at being effective. This varies by store.

Management method or style: We have an inclusive environment. This doesn’t mean it is a democracy. We must make hard decisions and I am the one who does that. However, I have trusted advisors on the executive team and other leaders in the company who drive the best results.

Greatest challenge: Like all restaurants, we struggle with applicant flow, people who don’t show up, or who don’t really want the job. This is an exercise in futility and is wasted energy for our management’s time.

How do others describe you? They probably would say fun. I try to be fun, engaging, and motivating in all things I do. This rubs off on the team. I strive to be respectful and thoughtful of people and their time and what they have to give.

One thing I’m looking to do better: From a business perspective, continuing to attract even more great talent to ensure a successful next decade. Personally, I want to find a little more balance in work and personal life.

How I give my team room to innovate and experiment: In a franchised organization, there is not a ton of innovation opportunity, since it is delivered at the franchisor level. We focus on what we do versus how we do innovation. We have protocols for how we open/close a restaurant and we use our skills to focus on the “how” more so than the “what.” We strive to advise the brand and constantly innovate in partnership with the leadership team at Focus Brands.

How close are you to operations? I turned over day-to-day operations to AJ Baird about 3 years ago. He has been in the McAlister’s system for 23 years. He runs operations and manages weekly calls with our area directors. I visit stores regularly. When a new store opens, I spend 3 or 4 days in the restaurant every time. New openings are so much fun and a great investment, not only for the location but also for our leadership and training teams.

What are the two most important things you rely on from your franchisor? Supply chain and product innovation, as well as digital/media support.

What I need from vendors: Reliability and commitment. We don’t always feel appreciated as a customer.

Have you changed your marketing strategy in response to the economy? How? Not really. We have already shifted toward social platforms. Digital rewards are working quite well. We are spending more with these methods than ever and are getting more return on the efforts.

How is social media affecting your business? Usually, quite positively. Facebook is a great way to reach out to guests. We highlight products and the rewards of online ordering functions. In fact, we get about 35% of hires through Facebook. That said, it can work against you if you aren’t paying close attention.

How do you hire and fire? We use several hiring sites, like Indeed and Facebook, and now manage the flow with a product called Paradox. Our in-store managers decide on the proper fit for their individual needs, as well as discipline, and terminate employees who can’t meet the expectations of our business.

How do you train and retain? We have both an online training module and in-store training with our Certified Training Rock Stars. The fun environment with the proper standards balanced with meeting the financial needs of the employees has always been the best outcome for our retention.

How do you deal with problem employees? Lots and lots of coaching.

Fastest way into my doghouse: Being disrespectful to a guest or fellow team member.

COVID-19

How has Covid-19 affected your business? This scared us to death. Did the end come and we didn’t even see it coming? The response from our government was overwhelming and daunting: shutting down dining rooms, having to lay off staff, and figuring out how to respond.

How have you responded? We had to make changes in our operations and hope that the overall plan would be productive in the future. We are proud to see how our business recovered. Where we are today is a testament to how our teams worked to do more with less and honor the brand promise.

What changes do you think will be permanent? I think every restaurant will have heightened awareness toward sanitation and cleanliness. We will have easy access to hand sanitizer forever and will be more assertive in monitoring symptoms of employees to make sure everyone who is working is healthy.

BOTTOM LINE

Annual revenue: We are eclipsing the $2 million per location mark in revenue.

2022 goals: To finally breach $200 million in revenue and attain a 12% EBITDA.

Growth meter: How do you measure your growth? We hope to grow guest counts annually as well as have the appropriate menu price increases for inflation. To be effective we have always judged that as growing sales at an accelerated rate, not just inflation rates.

Vision meter: Where do you want to be in 5 years? 10 years? I think in 5 years Southern Rock Restaurants will have 250 locations or more and be wondering how to get to 500. If we can do that while maintaining our culture and having fun, wouldn’t that be awesome!

Do you have brands in different segments? Why/why not? Not at this time but we desire to use our operating platform and great operators to leverage into other brands in the future.

How is the economy in your regions affecting you, your employees, your customers? Are you experiencing economic growth in your market? We are experiencing exceptional guest count increases, as well as inflationary ones. We have been able to pay our team members 20% more than in 2019. It’s hard not to feel the impact of food inflation, not only at every restaurant brand, but at the grocery store as well.

How do changes in the economy affect the way you do business? Our industry has always been nimble and continues to pivot and find ways to survive, if not excel.

How do you forecast for your business? We listen to a lot of guidance from our brand, our lenders, and the industry. I stay included in many industry conversations and even participate on guidance to many of them including the Governor of Tennessee. With that information and a healthy, inclusive operations team for feedback, we are able to use many great forecasting tools like our deFacto budgeting tool, our Power BI financial tool, a labor hour management chart, theoretical variance waste tools, and a 52-week cash flow tool.

What are the best sources for capital expansion? First and foremost, we reinvest all the free cash flow we can create, then use a strategic development line of credit.

Experience with private equity, local banks, national banks, other institutions? Why/why not? There are several ways to finance your operations and growth. All these resources can be beneficial depending on how aggressive your appetite is. You must align your appetite with an institution that shares your vision. For Southern Rock Restaurants, most of our growth has been with private equity–style debt, but the institutional banks can play an important role.

What are you doing to take care of your employees? Listen, listen, and listen. Let’s make sure we meet the financial needs of each person, not only with total compensation, but also with enough hours. We offer vacation pay, insurance, even 401(k), but nothing is more important than a flexible work schedule to help our team balance their needs with family, childcare, and school.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? Labor inflation began to be way above average in 2018 and accelerated even more in 2021. We have kept up with rising wage demands in each community and implemented sign-on bonuses for many of our locations. When you find a good formula that works for your location, you must advertise and spend enough to get to the front page for the exposure you need. Many job seekers will not spend the energy to search pages of ads. Get to the first page and make sure your offer is compelling.

What laws and regulations are affecting your business and how are you dealing with them? The restaurant industry has always been highly regulated. I think as an industry we are used to the scrutiny. The unknown is how will the industry accommodate more requirements for vaccinating or testing. The logistics alone are mind-boggling, much less the cost. One thing is certain: Once the landscape is clearly defined, there is no industry more determined to figure things out and pivot than the restaurant industry.

How do you reward/recognize top-performing employees? Southern Rock Restaurants has a robust quarterly bonus plan. We use quarterly operations meetings to discuss our business strategy and to recognize top performers. Once a year, we give out autographed guitars to our best store-level and above-store operators. They are “rock stars” and we want to treat them like one. We also use a plaque called the “Have Fun No Regrets” award, using the tag line of our logo to help recognize anyone—employees, office support, managers, or leadership—who has gone above and beyond to serve our team. “If you’re not serving a guest, serve someone who is.” I am thankful to have so many in our organization who really live this credo.

What kind of exit strategy do you have in place? Well, since they are cracking down on the Grand Caymans and South Dakota, I will continue to invest in our leadership so they can take more and more of the reins and continue to invest in our business and my trust, so that when I do step aside someday the great work will continue. I look forward to hearing reports of Southern Rock Restaurants’ growth and dominance in the industry 20 years from now. Maybe I will ask for a royalty. That would be great!

Published: March 25th, 2022

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