One chain's groundwork for growth

John M. Scardapane wants to build Saladworks, which he founded 20 years ago in the food court of the Cherry Hill Mall, into a company with the same kind of reputation as Wawa or Starbucks.

The Pennsauken native recognized several years ago that to have any hope of reaching that goal he had to change the way he runs the chain, which was ahead of the curve with its emphasis on salads in the 1980s.

"A good concept is not enough to have a good franchise system," said Scardapane, 43, during an interview at a Saladworks restaurant in Marlton.

Since 2001, when the chain had 26 restaurants - owned primarily by friends who were supported by family members - Scardapane has been working to build the organizational strength to expand from 75 locations now to more than 200 in five years.

Scardapane said the company has reached $54 million in overall revenue, averaging 4.7 percent comparable-store sales growth annually over the last three years.

Although Saladworks has scaled back growth plans since 2005 because of difficulty finding leases at the right price, the Conshohocken company still plans to open at least 20 restaurants this year, including its first in Charlotte, N.C., and Long Island, N.Y.

It is important to grow fast enough to keep competition from getting ahead, Scardapane said. At the same time, "if you grow too fast, you end up tripping over yourself," he said.

Industry experts said Quizno's, a Denver chain of sandwich shops, and Raving Brands Inc., an Atlanta company with nine restaurant brands, including Moe's Southwest Grill, sold too many franchises without having systems in place to support them.

The ugly result has been lawsuits and closures. Neither company returned calls last week seeking comment.

Sharad Mehta, principal at Tannenbaum & Aalok, a business brokerage in Cherry Hill, said his firm had tried but failed to sell two Quizno's locations. It got $45,000 for another that had cost the original franchisee more than $250,000, Mehta said.

"Look at the difference in how Saladworks does it. They are not overselling them," said Adam Siegelheim, an attorney in the franchise group at Stark & Stark in Lawrenceville, N.J.

Scardapane envisions Saladworks ultimately reaching hundreds of locations, not the thousands so many franchise restaurants aim for.

To beef up support for franchisees, Saladworks has hired executives with vast experience in franchising, adopted a strategic planning process used by Wawa, and started regular, intensive performance reviews of the entire system.

The focus on franchisee services is crucial, said Lane Fisher, a Center City franchise attorney, because prospective franchisees "learn how well you take care of your existing franchisees" by asking questions, such as, "if you had it to do all over again, would you?"

Greg McKain, who owns Saladworks restaurants in Broomall and Center City, said the support has been getting better since he opened a Saladworks in Broomall in 2003.

"They are more heavily involved," said McKain, who used to be a project manager at Peco Energy and a regular customer at Saladworks in Two Commerce Square on Market Street in Center City. Last year, he bought an existing location near Thomas Jefferson University on South 11th Street.

McKain said he was recently asked to join the company's research and development task force, a group of franchisees that advises the company on new products and other issues.

At a meeting of the group last month at a Saladworks in Bensalem, five franchisees got a preview of the seasonal salads under consideration for this year, including a cheeseburger salad.

"Everybody giggles, but when you eat it, it's good," said Joseph S. Mammarella, the company's director of franchise services, who joined Saladworks five years ago after years of experience at Dunkin' Donuts, Manhattan Bagel, and other restaurant chains.

Another proposed salad featured spinach. "Are we ready for a spinach-based salad?" asked franchisee Richard Hopkins, referring to consumer wariness caused by last year's outbreak of E. coli from fresh spinach.

"We don't have to do it if you don't think it's the right time," responded Joseph Giannetti, Saladworks' vice president of franchise services.

Franchisees on the task force said they liked the influence membership brings.

An internal Web site started a year ago to boost services to franchisees is popular, they said, especially the rankings section where they can see how they are doing compared to others in the system.

"It gives you a little push," said Pat Harrison-Quigley, who opened her Saladworks in Delran in April 2004.

To ensure that Saladworks' operations do not deteriorate as the company adds restaurants, each location is subject to a semiannual six-hour review to ensure that standards are met for everything from cleaning windows to paying bills on time. Locations that score below average face more frequent reviews.

If the aggregate score for the chain is less than 85 percent, Saladworks ratchets down growth. That happened last year. "We reduced the number of openings by half," opening only seven restaurants, Scardapane said.

At the corporate level, Scardapane brought in retired executives from companies he admires, including Ed Chambers from Wawa, to help Saladworks develop company culture and long-term strategies through annual three-day retreats.

"Now we're addressing systems and structures at Saladworks," Scardapane said. The result: "We're seeing same-store sales go up."