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Building Happiness, One Milkshake At A Time

December 07, 2011 Industry News
Industry News

Bob Watson is a cautious man.

Before he built his franchised location of 5 & Diner in Worcester, Massachusetts in 2006 he thought long and hard about whether it was the right thing to do.

“We looked at about 40 different franchises but we liked 5 & Diner a lot for some simple reasons. It’s ‘50s/’60s style. It’s neat and cool and the food takes you back to a time when things weren’t so complicated. We were also very attracted to the fact that it didn’t serve alcohol because we wanted to be in a real family type atmosphere.”

And befitting his cautious nature, Watson is now poised to roll out 5 & Diner nationwide, following five years of watching where the market took the concept.

With a background in food—25 years in corporate feeding—Watson wasn’t coming in fresh, so it was no surprise that the venture took off immediately when he opened his store. In fact, it was tough to keep up with the influx of business, he says.

This was partly due to the fact that Watson took many of the skills he’d learned from the corporate feeding world into retail—but he had to learn new ones, too.

“The basic premise is the same: Good food, good service and good people will get you everywhere in both corporate feeding and retail restaurants. If you’re good at what you do, people will come back. It’s that simple.”

And to back this up, Watson adds, everyone in the company has two functions on their business card—they’re in customer service first, and their other position second. Being CEO is not Watson’s priority. “We learned all that from contract feeding,” he explains.

Corporate feeding to retail restaurants

But he had a whole new market to learn. “In corporate feeding you have a captive audience, but with a retail restaurant you have to work for every sale,” he says.

“We didn’t have that experience. We have done a number of things to work in the retail world: We’ve gone to shows, seminars, etc. to learn more about franchising and such, and we’ve hired as many people as possible from the retail world. Now have an experienced franchise salesman and operating officer.”

Learning about the franchise world has also been challenging, Watson says. “I’ve learned that each franchisee is an individual with their own hopes and wishes. It’s a challenge but not unlike how it is in corporate headquarters where everyone has their own hopes and expectations for a company.”

Before long, Watson realized he loved the retail world and two years after he started in it, he bought the 5 & Diner company. Then two years later, in 2010, he purchased the corporate store in Phoenix.  

At just the time when Watson bought the company, he says, “the market came unglued and everyone’s 401ks took a hit. To improve the situation for his future franchisees, he came up with a new prototype that meant they could get involved in the company with less outlay.

When Watson built his 5 & Diner the outlay was $1.3 million. “We wanted a prototype that would be easy to operate so there’s less for franchisees to worry about, and would cost a lot less to put together.”

The new prototype will cost significantly less—$450,000 to $650,000 and will be smaller—2,800 to 3,000 square feet as opposed to the former stores, which run closer to 4,200. Seating will only drop from 112 to around 92, however, Watson points out. On top of all this, new builds will also be completed much faster.

Working with an outside company, Watson came up with an inline prototype that can go into a mall with construction costs about 40 percent of the former units. He also worked with a second company whose goal was to create a more efficient kitchen since so much square footage was being lost.

Examining demographics

And given this rough economy, he’s being especially careful of where he locates new stores. He’s working with the Buxton Company to focus on the demographics and psychographics of 5 & Diner’s customers.

“They’ve indentified for us primary, secondary and tertiary customers and they’ve pinpointed 600 locations in the U.S. where primary, secondary and tertiary customers are,” Watson says.

The company will first expand down the East Coast then head further afield. Watson hopes the first prototype will open in the next six to eight months, with a total of half a dozen debuting within 18 months. After that, he foresees six in the year following.

“I think we have the structure to do that,” he says. “We have finance, accounting, sales, service support, and marketing.”

Watson is confident about 5 & Diner’s future, largely because he remains committed to the three core objectives that have remained at the forefront of the brand: quality food, value pricing and an atmosphere that takes customers back to a simpler time.

Food, value, ambiance

“Our food is all classic American diner food,” Watson says, “and it’s all made from scratch.” 

The diners are also renowned for their milkshakes, and at the Scottsdale, Arizona restaurant, those drinks constitute 17 percent of business. That location does exceptional sales because the franchisee there runs a weekly competition among his employees to see who can sell the most milkshakes. At every weekly meeting, the winner is given $20.

Value is the second pillar of the 5 & Diner brand. The company hasn’t reduced prices but has reduced portion sizes and bundled foods to provide value to customers in these difficult times. “People are looking for value and we’re looking to give them value,” Watson says.

Despite what he expected, customer demographics at 5 & Diner are varied. It’s not just older customers coming in for a taste of their youth, although they are a strong part of the customer base. But, Watson points out, “you’d be shocked at how many young people are coming in. I think some of it is music. I think some of these younger people are enjoying the serenades of the older songs.”

And it’s this ambiance that’s 5 & Diner’s third essential element.

“The atmosphere takes customers back to a simpler time,” Watson says. “You really step into the ‘50s. It’s a chance to escape, to go back to a time when things were simpler in America—when they were fun and down to earth and uncomplicated.”

5 & Diner also holds special events, such as classic car shows and sock hops in the parking lot. “We do all the stuff that makes you go back. We do think life’s a little too complicated these days. This is a place where you can come in, have some laughs and some great food. We’re not trying to build stress levels, we’re trying to build happiness.”

By Amanda Baltazar

News and information presented in this release has not been corroborated by FSR, Food News Media, or Journalistic, Inc.