Fuel might be more expensive, food too, but the rising cost of running 138 YUM! concepts hasn’t dampened Palo Alto Inc. CEO Linda Alvarado’s enthusiasm for the industry she joined 25 years ago. Where others might see challenges, she sees an opportunity to tighten her operations and trim the fat as she grows her holding company into one of the strongest quick-service systems in the country—while running one of the largest Hispanic-owned construction companies in the U.S.
QSR sat down with the YUM! franchisee to talk about the “opportunities,” as Alvarado sees them.
Your background is in construction and development. How did you get involved in quick-service? I was developing a retail center in Denver, and I needed an anchor. I thought ideally, as in many retail centers, a restaurant would be a great idea. But it was an area of town that was being redeveloped, and I needed a national name brand to satisfy the bank. And, as I looked at it, I thought, “Well, maybe I should look at becoming an operator.” Since it was connected to a site that I owned, I felt that there was some connectivity.
So I took a trip to California and tried to explain to Taco Bell why this was a great site. They said, “You know, we will look at it. It may have some potential.”
Then I said, “It would be a great opportunity, and I would like to consider becoming a franchisee.”
They said, “That might be a good idea, except this is a corporate market, and so it is not possible.”
So I took another trip again to Taco Bell headquarters to talk not just about the location but [also] about the area. It was about a block from my office, and I personally committed to being a very hands-on, focused operator. I told them and provided them with proof that I had the financial ability and the start-up capital to launch the restaurant. And we put together a dedicated restaurant focus team to manage it. Ultimately they said yes, which was good.
Out of all the concepts I looked at and we approached, it really came down to Taco Bell because it was a proven quick-service concept that already had brand awareness and had a profitable business model. I felt, from an operational point of view, it would provide the kind of support we would need to make a successful, not just venture, but profitable business. And as it turned out, the business was very, very successful because there was nobody else in the market. It provided the kind of value and location and convenience that restaurants need.
Were you familiar with Taco Bell as a consumer or solely as an entrepreneur looking at various brands? I was a consumer. They had Taco Bell restaurants in New Mexico where I grew up and in California. But in this area I am talking about, there was not one.
When I met with Taco Bell, I better understood that it was not just assistance in helping to prepare the product, but [also working with] new franchisees to plan and make sure the stats are correct; [instill]operational training support programs not just during the launch, but thereafter; and guidance on staffing, product preparation … So this was a very disciplined, focused brand—a growing brand. It turned out to be the right decision.
What was it you said that convinced Taco Bell to allow you to come in as a franchisee in this corporate market? I am not sure. I was passionate about the commitment. I really did believe that there was a name brand and a system that I would be proud to be part of, and more than that, I was committed to the long term, not just a single restaurant. As it turns out, we developed increasingly more, not just in our restaurant developments, but in leases, round-ups, all kinds of things in four states now.