Grace Dickinson | March 24, 2023, 11:00 PM CDT
With 50-plus stores, Everytable is on a mission to bring healthy, affordable food to the masses, including within many locations considered food deserts. Its menu offerings, like a salmon adobe bowl with cauliflower rice and spinach, are all priced under $10. And that’s thanks to a business model closely aligned with those of major fast food players, says Everytable executive director Bryce Fluellen.
“The reason McDonald’s is able to sell food at affordable prices is because they’re pre-cooking the food in large central kitchens and shipping it to restaurants that just heat it up, and that creates incredible economies of scale,” says Fluellen. “We said, ‘How can we duplicate this but in a healthier way?’”
Currently, Everytable produces and packages all of its food out of a 40,000-square-foot kitchen in Los Angeles and distributes it with a fleet of company owned trucks. Food costs average just over $3 per meal.
“In our stores, we don’t need kitchens like a typical restaurant, so we can pass on those savings as well,” says Fluellen. “Our sweet spot is an 800-square-foot store, with a build-out [cost] at an average of $300,000.”
One day, Fluellen envisions consumer prices to reach as low as $4 or $5 per meal, a goal that Everytable plans to achieve by continuing to grow and further increasing its economies of scale. The company is on target to add 70 more stores this year. And at least a few of them will be operated by graduates of Everytable’s new Social Equity Franchise program, designed to support entrepreneurs, largely from marginalized communities, on a pathway to business ownership.
“When you look at how many BIPOC and underserved members are in the franchise system, it’s extremely low,” says Fluellen. “So this is about creating pathways for people to create wealth so that they can take care of themselves and their families, and by doing that, Everytable will grow, too.”
Along with critical access to capital, program participants receive leadership and entrepreneurship training. So far, Everytable has raised close to $9 million to invest in the program. We chatted with Fluellen to learn more about how it works and if he sees this as a viable franchise model for other restaurants to adopt.
I’d love to start off learning a little more about the inspiration behind the Social Equity Franchise program.
In 2018, our founder Sam Polk started to look at the franchise industry as a way to grow. But he was looking at it through the lens of our mission of creating a more equitable and just world, specifically around food. There aren’t a lot of entrepreneurs of marginalized communities that own franchises. Why? It takes a significant amount of capital – at the low end, around $50,000, and on the high-end, like with McDonald’s, up to two million.
The program is really a transformative way to invest in entrepreneurs that come from disadvantaged or underserved backgrounds, who have always wanted to own their own business, but just have never been able to get in the game.
Everytable has since raised millions of dollars to put towards this franchising initiative. Tell me about what that has looked like.
We found out about a funding vehicle that foundations have had at their disposal since the 1970s called PRI – program-related investments. A lot of them don’t use it, but basically what it says is that they can invest in a for-profit company, if it's a social enterprise and has a certain tax status. That's what we are – a public benefit corporation and social enterprise. So we started to knock on some doors in the foundation world and look at those who are really working towards food racial equity and economic equity.
We started off with [W.K] Kellogg Foundation in 2018. They made the first PRI investment of $1.5 million in Everytable. Fast forward four years, and we’ve continued to reach out to foundations, like Annenberg Foundation and Dignity Health, who have also made PRI-related investments. In early 2022, we were able to raise almost $9 million in the mix of program-related investments and grants.
How do you determine who’s eligible for the Social Equity Franchise program?
A large majority of our store staff come from marginalized or disadvantaged backgrounds, but not everyone has to come from that background. We provide this program to any of our Everytable store managers. People can either identify early on or along the way that they want to be a franchisee, and then we create a pathway for them to become a manager. So first you train as a manager, and then you have to hit certain metrics, [based on] auditing and performance reviews. We’ll come in [to a manager’s store] and look at everything from their customer service to the store’s cleanliness. Once you hit those metrics, you enter into what we call Everytable University.
And what does “Everytable University” entail?
It’s a leadership and entrepreneurship training program. Classes are once a week during managers’ shifts, and it’s a mix of videos and [classes taught by] facilitators. On average, it’s a 25-week process.
We have classes on entrepreneur mindset, P&L and financial management, civic engagement, local store marketing, and also communication, both within the store and how to communicate as a leader in the community. There are benchmarks participants have to hit along the way, and then they take [a class on] franchise business entity formation and law. Once they understand that, we identify a company owned store for them to take over. The individuals sign on to a franchise agreement over five years. They also sign on to pay back the original build-out cost plus interest that Everytable is able to subsidize through our investments from our philanthropic partners.
So you pair franchisees with stores that are already in existence. Can you tell me a little about what that process looks like?
Every store can potentially be a Social Equity Franchise store. We’re having conversations with participants about where they live, the different communities we have based on our portfolio, and where they think would be a good fit for them.
We also give visibility into the financials of each store and the build-out costs. So it could be a conversation like, “This store had a build-out cost of $315,000, and this one was $340,000, but this store has a patio, so it might bring in more customers.”
They pay 10% for the interest of the loan, a 2% advertising fee, and 8% revenue share, or in industry terms, “royalty”. We utilize that 8% to pay back our foundational investors. Everything else goes back to the owner.
How many people participated in Everytable’s first round of the program?
We started with seven, and five completed. Those five will be our first Social Equity Franchise owners. They haven’t converted to franchisees yet. That should happen in the next six to eight weeks.
We’d like to have at least 60 to 65 Social Equity Franchise locations in the next couple of years. That could be 60 individuals or maybe one individual owns three or four locations, and then we’re really talking about economic mobility and wealth.
What would happen if a particular franchisee location doesn’t perform well?
A couple of things could happen. We could ask if [the franchisee] would like to be placed in a different location that might have more revenue potential. Or maybe that person doesn’t want to be a franchisee anymore but still wants to work at Everytable, and so we figure out a pathway for them to come back as a manager.
If the store is performing well but for whatever reason they want to move on, we can make it company owned again or give it to another franchisee.
Do you have any concerns about being able to pay back your investors, given the substantial amount of money you’ve raised for this program?
We think about that all the time, but we’re committed to making sure we do everything in our power to pay back our investors. This isn’t just a small part of the company. This is a huge part of who we are and how we want to grow. We’re taking internal measures to make sure we recruit the best and brightest entrepreneurs for this opportunity, but then we also provide them with training, and we’re picking the best locations that we can. There are all of these different touchpoints to make sure this is successful, and we steward that money very carefully.
Do you see this as a viable franchise model for other restaurants to adopt?
Absolutely. We all know that, for the most part, people like to see things already in existence before they take part. And showing the viability of this is something we take very seriously because it’ll inspire other companies to do the same. There's a huge opportunity because there’s a huge amount of talent out there that people haven’t tapped. I will say, it does take commitment, and the work is just as hard as anything else. If you want to do it, you have to build the resources, team, and infrastructure to do it right.
Do you have any other advice for operators who might consider the idea?
Always keep front of mind the impact the program will have, and stay committed everyday. What we’re doing is bringing opportunity and hope to individuals who are long on talent but short on resources.
Whatever industry you’re in, you have to make sure you’re making investments in people. But that takes dedication and putting resources on the table, and a commitment to waking up everyday and moving forward on that course. Change doesn’t happen overnight.
About The Author
Grace Dickinson is a staff reporter at Back of House. Prior to joining Back of House, Grace worked as a features and service reporter for the Philadelphia Inquirer.
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