David Noël-Romas: Welcome to the Manitoba Business Podcast, featuring interviews with business leaders and entrepreneurs based right here in Manitoba. I’m David Noël-Romas.
This episode is brought to you by my small business, Black Chair Consulting. We use social media to help businesses sell more. To find out about Black Chair, visit www.blackchair.net.
Today’s guest is unique in several respects: he runs a publicly traded company (that he founded), his business uses a franchise model very successfully, and although he is from Winnipeg he’s the first guest I’ve had who isn’t currently based here. I found him to be a very interesting character, and I think you will too.
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Now, without further ado, here is Matthew Corrin:
[to Matthew] Well, Matthew, thank you so much for taking the time. You are an interesting guest for the podcast because there are several things that are different about you compared to most of our guests. We typically talk to owners of private companies, we typically talk to people that don’t run a franchise model, which is cool, and we typically talk to people that are located in Manitoba. So, although you’re a Manitoba expat which, is awesome, you’re not from here and so, I want to touch on each of those three things, but before I do that, I want to give you a chance to introduce yourself, what you do, and what Freshii does.
Matthew Corrin: Excellent, well thank you so much for having me. I love anytime I can have a chance to support Manitoba and Winnipeg, which is where I was born and raised and inspired to be an entrepreneur, then I take it. So, thanks for including me in your podcast. You know, my name is Matthew. I’m the founder and CEO of Freshii. Freshii is a healthy fast-food restaurant and we believe and we felt this way since the day I opened the very first restaurant in 2005, that the more convenient and the more affordable we can make healthy eating, the more likely somebody will choose healthy over what’s historically been the path of least resistance, like a burger and fries or a slice of pizza or a poutine, you know, along with those other things or a sub. And so, what we do every day is…and the all decisions we make is laser-focused on this mission of continuing to make healthy eating more convenient, not less, and more affordable not less. And just as an anecdote, I can tell you that Winnipeg is the fastest growing market for us in Canada and one of the fasting growing markets for us in all the world and we operate in 17 countries and growing.
David: Wow, very cool, very cool. I guess you mentioned the inspiration behind it, you wanted to make fast-food convenient and affordable, but what were all the pieces that brought you to actually starting off a restaurant and did you build it off from the get-go as targeting your franchise model or was it initially, you know, you opened one location and then were trying to see if you could get it to work?
Matthew: I was very lucky because… So, I lived in New York City. I actually was…I was so excited to live in New York. I did a summer job with The Late Show with David Letterman and then I did a couple of years with an iconic American fashion designer named Oscar de la Renta. And they were just incredible experiences, but the common thread amongst these two jobs was I ate at the same ma and pop deli every day for lunch for almost three years. And this deli had a fresh food bar and the fresh food bar had long lines, but the service was really lackluster and the branding was really dull. And so, I thought, if you could take this element of this deli that’s ubiquitous in New York, but virtually didn’t exist outside of Manhattan and you could create a great brand and a great culture around it, then maybe you could scale that idea. Not unlike how Starbucks scaled the coffee bean commodity by building a brand around that, that was the idea. And what I really lucked out with is that I had a mom and dad who both live in Winnipeg still, a dentist, a nurse and they were willing to invest in my idea. So, they invested in this idea and sort of, you know, the rest is history. I opened the first location. The first day we ever opened, I was 23 years old, it was the first day I ever worked in the restaurant business, and have you worked in the business?
David: Very little, I mean, I worked for Dairy Queen actually for a few summers when I was younger.
Matthew: Excellent, well, you know, the restaurant industry, it’s a tough business, it’s a thousand…it’s not rocket science stuff, but there’s a thousand little things that have to go right every day. Just imagine…
Matthew: And so, I figured it out. I opened nine of my own restaurants with that first investment from mom and dad and then our cash flow. We were just you know, building great stores and growing sales and growing profits and I was just redeploying those profits back into building new restaurants and in about two years, I had nine locations. Most of them were in Toronto and then one was in Chicago and then at that point, I thought, this could be so much bigger. And I knew I was passionate about health and wellness, but what I realized that I was equally passionate about was the entrepreneurial spirit. And with the exception of maybe being a founder, there are few things more entrepreneurial than being a franchise owner. And so, I started to respond to what became hundreds of emails that I was receiving from our website from people who loved our brand, loved our mission, loved our product, and wanted to be their own boss. And that was really our entry into franchising.
David: Very cool, very cool. By the way, I should mention, your dad is also my dentist. I think I mentioned that to you in the email before the call. So, shout out to Dr. Corrin. I’m very glad that my dentist played a part in the beginning of this awesome Canadian success story.
Matthew: Dr. Corrin is also my dentist and the only dentist I’ve ever seen and it only costs me a $400 plane ride to get my dental work done, but he gives me discounts on the actual work itself so I get a lot done. It’s offset modestly by his friends and family discount.
David: Fair enough, cool. So, you said you started off with nine locations and were they all in one city or were they all, right off the hop, like, multiple cities?
Matthew: Well, we had Toronto and then Chicago and then we started to franchise and then it started to go really fast and today, we operate in like 80 cities, 15 countries. This year, we’re gonna open between 150 and 160 restaurants. We have many stores in Winnipeg. I actually think we opened two locations last week in Winnipeg. And so, we’re really seeing this concurrent development, which points to a few things. I think what’s fueling our growth, and I should just note, Freshii’s one of the fastest growing restaurant brands in history. We opened our first 200 restaurants faster than McDonald’s, faster than Subway, faster than Starbucks, faster than Domino’s Pizza. And what’s fueling that growth is that we are at the intersection of three accelerating and global market forces. One is health and wellness, the second is the millennial generation, and I can tell by your voice that you’re a millennial and I’m a millennial too and hopefully, many of your listeners are millennials.
And then thirdly, what we call affordable entrepreneurship, that desire to be your own boss, and not go and merely be, you know, a dentist or a nurse or a doctor like my parent’s generation was. And so, a lot of my peers are jumping into entrepreneurship. And those three market forces come together and we find ourselves squarely at the middle of them and in the center of them and I think those are reasons why we’ve achieved, you know, such great scale and we’re really proud of that.
David: Very cool, very cool. So, you started off with a few locations that you owned yourself, you know as well people that wanted to start franchises, how long did it take? What was the sort of the timeline there between starting out your own locations and, you know, opening the doors to franchisees?
Matthew: Well, we started franchising…so, we opened the first location in 2005 and we started franchising in late 2007. So, just a couple of years, almost three years, and then once you start, you know, then you realize…I think it’s difficult to do one or the other and so, we decided what we were great at is creating a brand, creating marketing playbooks, creating amazing menu innovation, creating tools to lead a great culture. And then that’s the playbook that we ultimately now provide and continuously innovate for our franchise operators around the world.
David: Of course. Does the head company operate any of its own locations right now as a, you know, as a place to test out new products?
Matthew: You are precisely right. We operate our own company restaurants in Toronto and they are our testing ground. We like one of our guiding principles is launch fast, build fast, and iterate faster. And we used those stores to test a variety of things whether it’s, you know, new team uniforms to training tools to menu development to music to store design and everything in between, technology. Only once we’ve established that we found the perfect formula for this brand, do we ask our partners to then spend their own money to roll it out in their respective locations.
David: Right, right, right. What are the nuts and bolts of codifying a process like that? Because as you said yourself, with a restaurant, there’s so many things that need to go right for it to work and your franchisees want to have the entire recipe, right? So, what does that actually look like from your perspective in terms of, you know, how did you lay out all the requirements that were needed when first setting up a location, what are the processes for the employees, etc.? What does that look like in terms of the system that you guys have in place to make that happen?
Matthew: Well, I think what’s important is it’s a work in progress. So, you’re actually never done. I actually think companies who you know, think they created a playbook and then print it and it never changes are those companies that quickly go out of business. And so, we view our world as it’s perpetual work in progress. And one of our sayings at Freshii is to never peak. And so, even though we’ve you know, reached some really exciting success to date, we know that the best is ahead of us and as long as we stay very focused on continuous innovation and evolution, then we should be able to, you know, do some great things.
David: How are those changes operationally communicated to your partners? Like let’s say you want to distribute a menu innovation that you alluded to earlier? Is it someone who is calling up each of these partners, are you shipping out new versions of playbook or is it a little bit more sophisticated than that?
Matthew: Yeah, no. So, we use a great portal that we call Communitii with two I’s at the end of it not to be surprising where…we love those two I’s here. And so, we use Communitii which is our form of communication to our entire system and we see collaboration not only from Freshii corporate to our franchise partners but amongst franchise partners, amongst regions. And it’s really collaboration and a place where we can see the hot topics of the day, of the week and that’s actually how we guide our business, they’re our customer. Actually, if you think about it, we’re in business because of our franchise partners and for our franchise partners. And so, when we see them focusing on certain aspects of the business, that’s where we know we need to go deeper on to further support.
David: Cool. A lot of people listening are the types of people that would be interested in, you know, now or at some point in the future opening up a franchise of some sort, opening up a franchised location, maybe a Freshii location. What kind of stuff are you looking for in your franchisees and what does the process look like for them as they get set up with a Freshii location?
Matthew: The key for us is you need to be a tremendous ambassador of our brand and you need to be a great leader of hourly team members. And one of the things that I think I did personally quite well in the earliest days, was I was a great leader of a team of hourly employees. And those team members worked incredibly hard to drive our growth and to drive our mission. And what I even loved more about that is some of those team members are now franchise owners and some of those team members now work for Freshii Corporate and some of those team members, you know, have multiple restaurants in our system. And I think that’s the ultimate sign of, “Are you a good leader?” is have you empowered them to actually reach their goals and I think in that case I did really nicely.
David: Totally, when you’re selecting potential franchisees, what are you looking for to assess that in the end?
Matthew: You know, we do behavioral testing. So, we actually have our franchise partners do a behavioral test and then we score them against our very best and our very worst partners in the system.
Matthew: There’s obviously a necessary financial component, you have to have a certain amount of money to be able to do it. They get interviewed by several of our existing operators, we interview them, they interview us, and so, it’s really a collaboration. And we don’t rush it because, you know, you want to make sure…our job is to pick the very best partners and if we do that, we will more than reach our business goals in the future years and decades to come.
David: What does the financial arrangement look, like in broad strokes obviously, with your partners? I know that for example, Subway operates on a royalty model, a lot of the other franchisers do that as well, is that basically what you guys do as well?
Matthew: Yeah. Franchising is very vanilla. We get paid an upfront franchise fee and then we get paid a royalty every week and it’s very similar to other brands. Maybe, the difference is, and I’ll just use the comparison you gave, Subway. Subway’s royalty is 8% and ours is 6% as an example. So, you know, I think ours is a little bit more competitive, but everybody gets their own way for their own business model.
David: Sure. Another thing that I want to sort of touch on, you guys recently IPOed, congratulations on that by the way.
Matthew: Thank you.
David: What was that process like? I mean, you know, I come from the tech world and so we have all sorts of stories about tech startups IPOing. But I’m curious on what it looked like for you guys, what the process was getting ready for it, how it impacted culture at corporate if, you know, if there were a lot of people that had stock options or whatnot, that sort of thing?
Matthew: So, a couple of things that were important, one was the IPO allowed me to give a return to my earliest shareholders, i.e. mom and dad. And so, philosophically, what’s important to me is we’re a for-profit company and so, you know, providing a return to investors who invested in your idea, that felt really good. So, I like to think that they were very, very happy with their investment. But you know, you can ask your doctor the next time you’re in the dental chair and he can tell you for himself, maybe that just one man’s opinion. But also, now, I work alongside about 60 colleagues at Freshii HQ that are also my business partners and shareholders. And many of our franchise partners are shareholders and several of our customers, our guests are shareholders. So, those are all, Chris, tremendous outcomes of going public, but what was so important to me is for everybody to know that the IPO for us was not a finish line, it really is the starting line of a next stage of growth for us and this is the only job that I’ll ever have. So, I’m in this for the long run. You know, now I’m doing it as a public company CEO versus a private company CEO, but nothing changes. We are making smart investment decisions for the future, for long-term growth, for long-term sustainability, for long-term innovation, and if we do all the right things, then you know, we’re going to hopefully have a lot of shareholders that are really proud of their investment, not unlike you know, mom and dad back in 2005.
David: Sure, does stock movements affect your decisions now?
Matthew: I don’t look at the share price. I literally have no idea what the share price is today. So, just the short answer is no and the reason is you just can’t control…when you’re building something for the long-term, like week to week, quarter to quarter doesn’t actually matter. You know, for every year, I expect that we will continue to execute on our mission and the share price will then move accordingly to that mission and that execution, but you can’t control what happens day to day and week to week, and so, then there’s no point in focusing on it. In fact, I think it’s dangerous to focus on it.
David: Sure, fair enough. Cool. The other thing I wanted to touch on, you’re obviously a Manitoba expat. Manitoba notoriously has, in the business community here a bit of a inferiority complex about a Manitoba as a location to do business. And there is obviously legitimate advantages and disadvantages. Was any of that an influence when you decided to start out in a different location? If you were to meet, you know, young restaurateurs that wanted to be opening up to franchises, would you encourage them also to look at different locations? I’m just curious on your thoughts on that.
Matthew: No, not necessarily, I mean, I think, I think…I’m trying to think why I started in Toronto and not Winnipeg. I mean I guess I started in Toronto because 12 years ago, I didn’t think healthy eating would resonate at that time as well in Winnipeg as it would have in Toronto. And I think, you know that saying that’s in the tech…back in the tech era when there were so many tech busts? It wasn’t that they were bad ideas, they were so many of them were ahead of their time, right? You know that from being in the tech business. So, I think back in ’05, Freshii in Winnipeg would have been ahead of its time. But no doubt, I mean if you look at today by virtue of it being the fastest growing market and one of our top performing markets, it’s clearly now come into its own and it’s a great time to be an entrepreneur within health and wellness space within Winnipeg. So, timing and everything and I would encourage the young entrepreneur to think about that when making a decision in terms of you know, go-to-market strategy.
David: Sure. Interesting. Cool. A couple sort of more generic questions, what people did you look up to as you were starting out? Either people that you knew personally or people that you sort of observed from afar who influenced to your approach to building a business?
Matthew: So, I was inspired by a couple particular brands that I use you know, daily and just really resonate with. So, I was always inspired by the leader of Starbucks, Howard Schultz, and what he created. And I was always inspired by Phil Knight, the leader and founder of Nike and what he created. And so, I would say those are two brands that I use every day. You know, I wake up, I sip on my Starbucks, and I immediately perk up for the day. And then, I eat Freshii for lunch and I, after a few bites, immediately feel energized through the afternoon. And then I get home and I lace up my Nikes and I start running on the treadmill and after a mile, I immediately feel you know, sweaty and better from an energy perspective and rejuvenated. So, I’d say, my three favorite brands today are Starbucks, Freshii, and Nike.
David: Cool. When you were starting out, what were you looking for in your sort of initial team? Who did you gather around you and why?
Matthew: You know, I probably did too much in the early days so it’s actually hard to answer back then. I probably under hired, understaffed. But, what I have today and I’ll just share it. Like we have an incredible team, a team that comes from brands that we admire, a team that brings a decade plus of experience, individuals who very much are the CEOs of their own departments. And so, when you put those people together and you execute on a mission of common mission, common culture, amazing things can happen. So that’s what I’m inspired by, which is…you know, we created a lot with nothing and now we have a lot of capable people and we can just see that acceleration and how that drives our brand forward.
David: Cool. What do you think are the toughest parts of opening up new locations, breaking into the new market?
Matthew: Oh, that’s a good question. I mean there’s so many. I think it just depends on the industry and the business, but there’s so many. In our business, it’s hard you know, to open something without brand goodwill. So, people don’t know you. So, they don’t know what you are. So, it’s gonna take time to introduce people to what you are, to convince them. For example, in the restaurant business, you know, before Freshii shows up, people still managed to eat their three meals a day, seven days a week. So, there’s no shortage of food, so what’s gonna change somebody’s purchasing behavior, to suddenly decide, “Okay, today I’m gonna do something other than, you know, fill in the blank and I’m gonna try this new place called Freshii.” So, we have a bunch of techniques and tools that allow us to generate what we call trial of our product. We believe once we get somebody in the door our food takes care of itself and speaks for itself. People leave feeling energized. Right?
David: What do you to generate those trials?
Matthew: We have a whole marketing playbook and it’s a little bit of our secret sauce, but it’s thoughtful and it’s not overly salesy and it is creative and it works.
David: Interesting. What would you say are the biggest challenges facing Freshii today and also conversely, what are the biggest opportunities, what are you most excited about, and what are you sort of keeping your eye on the most in terms of threats in the next little while.
Matthew: I think when you a reach a level of scale and some level of brand strengths, the most important thing is to learn how to prioritize you know, what feels like hundreds of opportunities that present themselves every single year to the brand. And so, I think one of my jobs as the leader is to help my team rank the most important things all the way to the least important things. And make sure that we’re prioritizing and not focusing on…they’re all good, but they’re not all created equal right? Some are better than others. So, how do you think about the cadence of rolling out opportunities that are all tremendous and creative to the brand, how do you do it thoughtfully so you’re ranking the right way?
David: Interesting. That’s a good answer. One last question for you, I know we’re getting close to time here. I don’t know if you’re a reader, but if you are? What kind of books would you recommend to the audience?
Matthew: Well, I’m gonna stay on my themes of the brands that I admire most. So, right before we opened the very first Freshii in 2005, I read Howard Schultz’s Pour Your Heart into It, which is the Starbucks story of how they got started. And then, right before we went public over the Christmas break, I read Shoe Dog by Phil Knight, the Nike Founder, and their story ends with their IPO. So, timing is quite funny that way, but two brands that I tremendously admire and I read both of those, I would say those are required reading.
David: Very cool. Well, Matthew thank you so much for your time. It’s really been a pleasure and I appreciate you carving it out of your, what is no doubt, very busy schedule.
Matthew: Outstanding. It’s a pleasure to be on your podcast so thank you so much.