Mark Parmerlee, a member of the Richardson Chamber board, is the CEO of the parent company of Golden Chick, Jalapeno Tree, Fireside Pies, Texadelphia, JC’s Burger House, Heff’s Burgers, Lola’s Handcrafted Kitchen and State 28 Grill. Golden Chick has more than 180 franchises.
In this episode, Mark talks about the strategies that he and his team have embraced and expectations for the future for his company and the restaurant business after covid.

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Transcript

Welcome everyone. This is Amy Alexander and I do marketing and communications for the Richardson Chamber of Commerce.

I have a treat today. You're going to enjoy hearing Mark Parmalee. He's a member of the Richardson Chamber board. He’s the CEO of the parent company of Golden Chick, Jalapeno Tree, Fireside Pies, Texadelphia, JC’s Burger House, Heff’s Burgers, Lola's Handcrafted Kitchen and State 28 Grill.

Just on its own, Golden Chick has more than 180 franchises.

Just as an overview, I want to clue in our audience what a big deal it is that you are here at Richardson. You're right down the street from us on Arapaho. Two, we want to check in and see how you have navigated the pandemic, and what you see the future looking like.

Why don't you brag on yourself just a little bit. Give us your 20-second commercial.

2
Mark
1:22
Well, I bought Golden in 1989, along with a couple of friends, and it had 60 units back then. We now have 180 plus with new units. We have a very active pipeline right now, so we'll have three a month opening up across the country really as far as the eye can see.

Then along the way, I've had some opportunities to buy some other brands, all of which I like when somebody comes to the table and then can be the operating partner. You know Jalapeno Tree was the first and then all the rest that you mentioned, have come along in some form or fashion.

And, we were very fortunate because we are in the restaurant business but, in particular, banks view us as a different risk level than most restaurants because we're a franchisor. We are a landlord in many cases and then we just happen to be in the restaurant business. We have a very stable growing royalty stream going all the way back to 1989. For Golden Chick we own now about 15% of the system's real estate. And that gives us the base. I call Golden Check the foundational brand that then provides the overhead and cash flow and other resources then to experiment or buy things at the right opportunity or even start new concepts and see where they go.

1
Amy:
3:04
I think I saw somewhere that you keep franchises basically under your umbrella so you can kind of test things out before you go to the regular franchisee market.
2
Mark
3:15
Actually right now there are four we call company store locations that we own and operate. There also is an immigration program called EB5 that allows a foreign investor to put money into a project that creates jobs within this country. And then we manage those and then after a person has gotten their green card, then we buy that investor back out. So we have 15 of those and we operate all of those as well. And then like I said, we build units for certain franchisees and it keeps us up.
1
Amy:
3:56
Let's get into a little bit of what 2020 has done to you because you still are talking growth. How has the pandemic either positively or negatively affected either your plans or what your business planning for the year?
2
Mark
4:11
Well the easy answer is that it's done both. It's different, Amy, for the different brands. Golden Chick has a drive thru and I thank God every day for drive throughs. But even Golden Chick took a hit when the shelter in place was first ordered. I really think there were people who thought that meant you couldn't go outside their house.

But we went from being up on comparable store sales to down overnight. And then, I think people started feeling a little more comfortable and getting out. Then, you know, dining rooms for full-service and casual-themed restaurants. Those dining rooms were closed. So we saw a lot of activity through the drive throughs.

The other brands haven’t been that fortunate. But we've tried even with those, third-party delivery became important, offering to go specials, what we call home-meal replacement, that bundles promotions that offer a family a meal of trying to make it convenient for somebody to say, “Okay, great. I'm going to swing by and buy this” or “I'm going to call one of the third-party services for delivery.”

Initially, I was pretty concerned about, what would the depths of this be? And what would be the length of the chasm?

So, a multi-prong approach. The first thing I did was I took a 50% paycut. And then I have two sons in the business, and I volunteered them.

And then we are a landlord, but in many cases, we're also a tenant. So we asked landlords for some kind of concessions, and, in most cases, it turned out to be deferring some of the rent to a future time.

We had banks call us and say, “Hey, we have a COVID program. Would you like to defer principal payments?” We said sure and that was helpful.

As I said, even Golden Chick had taken a hit even with the drive throughs. And we were down double digits for a couple weeks in a row. The Payroll Protection (PPP) Loans came out. We filed for those as well as all of our brands. And it was really very helpful, particularly to the brands that didn't have drive throughs.

We're always active in development and construction. For things that were already under construction and had funding, we kept those going: let's say a contract or we owned the land but we hadn't started construction, we froze all of that. And like I said it was just kind of leave no stone unturned. And then maybe any one or two of those things would have been enough to get us through. But we decided, let's lay out a plan that includes five or six or seven steps, just in case we're unsuccessful, or, in case, it becomes even worse than it first looked.
1
Amy:
7:18
Is there something you can group together and say, we're looking forward in these areas for these restaurants, and this is what we think is going to work well in the future? Is it technology or are people going to be eating differently?

2
Mark
7:35
I think the answer is really yes to both but what we first saw were people were very concerned and rightfully so. Then as time went on, I would see it in the mornings. When the shelter in place was first enacted, even at rush hour, it was like a ghost town on 635 and 75. Then as time went on, we began to see people getting, I think more comfortable, and getting out either to work or to eat or whatever they were doing.

I still haven't seen the traffic back to what it was. But we'll get a little more heavy. And then, this last few weeks, you can hardly turn on the TV without hearing about second wave or all of these things. And so, we have noticed that I think people have begun to cut back some. We've seen it hit again, the concepts that don't have drive throughs, we've seen those sales now trickle down. Again. They had been down, we adjusted the business model. We're making progress, and now we're seeing a little bit again.
1
Amy:
8:53
Is it too soon to say how your future look like?

2
Mark
9:09
There are some things that we're doing. We're looking at doing modular buildings to cut our development time. In those, we're actually shrinking the dining room some, because we don't think there's going to be that same level. We think our percentage of business going through the drive thru will increase and, again, the third-party deliveries and some of those things that even when people feel a little more comfortable getting out and about, I think there's going to be a real segment of the population that maybe always are going to be fearful of getting a little too close to someone else. And for, you know, people of certain age and, and health backgrounds. I certainly understand that because I check all those boxes.

1
Amy:
9:59
On third party delivering, who knew that third-party delivery would become so big. Is that anything you're interested in establishing any kind of delivery?

2
Mark
10:13
If there's anyone out there that remembers many, many years ago, we used to do our own delivery at about half of our locations. And they were in these trucks that had ovens and a big giant yellow telephone. So it is very helpful. The pizza business, Chinese, chicken:  they're all foods that are well-suited for delivery.

But then we saw the rise of Uber Eats, Grub Hub, Door Dash and some of the others, and we found that let them make some money. It's very easy for the consumer in dispatching and all of that the things that we were doing that we no longer have to do. The customer pays a little and the restaurant pays a little. When gas went up many, many years ago, we started a delivery charge and oh, people were very upset by that. But now they don't mind paying a third-party delivery charge.

1
Amy:
Is there anything that you all do that's particularly innovative or different and it could be from other restaurant chains or even other businesses that that you found. How are you a trendsetter?

2
Mark
I have the view that hope is not a strategy. As soon as things started happening, we started moving in that direction. I just happened to be in Vietnam and Cambodia when COVID-19 was starting to be big news. We were probably some of the last flights out.

I saw the concern. I saw the steps that people in countries were taking over there. I came home and didn't really think too much of it until it began to really spread.

We're fortunate. We tried to appeal to our strengths. We did not cut marketing. We felt it was important to continue to get the word out. The message changed a little bit: we offer delivery through third parties and we have drive throughs.

The other thing that helps us and other chicken chains is again this idea of home meal replacement. I mean if you get a box of pizza, you just have a box of pizza. But if you can order chicken, whether it be fried or whether it be roasted, you can get side items, you can get salad, you can lay out a meal. And we have seen the chains that offer that. it's a huge plus.

We took that and applied it to our Jalapeno Tree, which are large full-service Mexican restaurants. We did family packs and promoted those.

And the governor did a great thing. He allowed restaurants and bars to sell alcohol to the public, off premise, which had never been done before. We were making gallons of margaritas.

The restaurant business is really funny. I've been at it for so long, literally 50 years. Rarely do you see an innovative idea, but you see somebody taking someone else's idea and just making it better.

We've tried to do things like at Fireside Pie. We were offering $10 pies on something that would normally cost $14 or $16, and then did half price on beer and wine. This month we do something different. I think it's 25% off everything. Keep trying and see what works. Sometimes things you think are going to work may not work but you try something else. You think oh, well, let's give it a try. See what happens. And it just happens to click with the public.-

1
Amy:
14:05
You're willing to try something new and see if it works.
2
Mark
14:08
I was telling you about the modular buildings. It happens to be a little bit smaller, and we'll buy enough of them that the cost will be cheaper and the franchisees will benefit from a shorter development time. But we're also looking now at units that are going to be drive thru only, and they'll have a walk-up capacity and then they'll be laid out efficiently and have spaces reserved for the third-party delivery but will have no dining rooms.

Our first one of those is scheduled to be on Ledbetter here in Dallas. What we have found, and we left this as an option to the franchisees. They found that as they focused on drive thru, they became very efficient and sales actually have gone up and labor costs have actually come down as a percentage. They don't have the dining room to contend with. So even though the dining rooms can be open, the vast majority of Golden Chicks are still closed. One down the street from us here in Richardson has always had a very good lunch crowd. So that dining room is open.
1
Amy:
15:17
And my closest fast food restaurant. So let me just tell you, they like me there.

Beyond just the food part, how do you run your company in a way that you feel like it is different than others? I read that you like making sure that employees feel like they're working for a cause. How is that true now, especially during the pandemic?

2
Mark
15:43
You must have read or heard me somewhere saying where I believe that people will work eight hours for a paycheck but 24 hours for a cause.

And if you think about that, I mean, a worthy cause. People work for no pay and literally work around the clock so, of course, we are not a nonprofit with a big cause.

But I guess one of the ways we're different, you know we're not a giant company. We are still family-owned and operated. It's a board of one being me, so there aren't these pressures for increasing profit every quarter.

We're big believers in people first, families first. I think if you take care of your team, they will take care of you. I had mentioned when I took the pay cut, we gathered everyone at the corporate office and said, okay, you’re hearing a lot of things out there. Don't panic, we're good shape. And here are the steps we're taking. So, I'll let you know that me and my two sons are taking a 50% pay cut, and if there is any one of you that can look at their budget and take a 90 day deferral of pay, we would appreciate it. You're not obligated; it's not expected; we'll think no less of you. Amy, we had an amazing response to that. Part of it was is that everyone banded together and said, hey, yeah, I'll make a personal sacrifice if it means one of my teammates doesn't have to be furloughed and so we had zero furloughs.

And then that's just … those kinds of things …  I come back to. There's that old thing about, nice guys finish last. I don't believe that. I think corny things like “honesty is the best policy,” “treat people with respect,” the old “treat like you'd like to be treated,” some of those things. They really come back. I believe in karma, both good and bad.

I'm now 65. I love what I do and who I do it with, and everybody's asking, when you're going to retire? I don't know that I ever will. Again, because I enjoy it and I feel like it's a real family, real family atmosphere and, and our turnover therefore, is really next to nothing at the corporate office and at the general manager level restaurants. Now hourly folks turn over and that happens at all the restaurants I've ever known. But anyway, it's again, “people first, family first” rather than, hey, you got to do this to make quarterly earnings.

1
Amy:
18:30
The first restaurant was started in San Marcus and then you've spread from there. A part of my question to you is why Richardson for your corporate office now?

2
Mark
18:48
We, my wife and I, were here in Texas and the economy had turned. I had an opportunity to go to New York, so I went and played investment banker for three years until somebody offered me the opportunity to invest in Golden and by the operating chief. By reputation, our ISD is known not only DFW but nationally. That was my experience. Even in high school, I knew somebody who wanted to be a teacher. She gave me her short list of where she was looking and one of them was Richardson, and she was in Ohio.

It was really easy. We had decided that we wanted our children, both of whom were very young at the time, to go through Richardson schools. Now, I have found I've enjoyed being part of the chamber. I've enjoyed doing business here. And the Golden Chick in Richardson has been here a very long time. I tell anybody who will listen to come look at Richardson. It's this neat blend of a vibrant suburb that feels like a small town. You'll see a lot of the same people; you'll see a lot of the same spirit. It's just a great town. When it came time to move our headquarters, I asked some brokers to look and I was able to purchase that. I enjoy being in Richardson down the street from the Rec Center, down the street from City Hall and the chamber and it's been a great, great home for us. We have outside tenants and enjoyed working with those folks as well.

1
Amy:
20:39
You had mentioned the small town feel? Do you target more small towns or large? What do you constitute a good place for you to put a restaurant?

2
Mark
20:50
When I first bought Golden back in 1989, I would say probably 75% of our locations were in towns of less than 10,000 people, and I'm including suburban cities in that as well. The Dallas Morning News after an interview called of us the Walmart of chicken.

I was getting on a plane to go to Mexico, and I see a story with my ugly mug on it talking about Walmart and chicken. Just by coincidence, I got bumped to the second story because the first story was the death of Sam Walton of Walmart. So I had a Walmart story and then the Walmart of chicken.

It really was the same kind of approach as Walmart. You don't need as much marketing presence in smaller markets or in suburban communities and, just like Walmart, they went to small towns. They build up their business, their name, their cash flow and then begin to acquire in a more costly urban locations.

And we have followed the same path. I would say a majority of our locations now are not in those small towns. And the number of stores in the DFW TV area has gone from, say 20 to 120. It allows us to be on TV. It allows us to be a sponsor at the Ranger stadium, although that doesn't do as much good right now, but and get involved in things like the Dallas regional Spelling Bee and be sponsors and get involved.
1
Amy:
22:32
Well, I always go to the State Fair and then I'm like, oh, I really shouldn't get Golden Chick. I mean, seriously, it’s on my block during work.

2
Mark
22:45
We know that the fair is closed, and it's too early to make an announcement. But I think when you hear, you're going to smile because we're attempting to team up with somebody at our stores that is fair food. So last year, we did the funnel cake during the fair time, we'll do that again. But we have a special treat that we're working on.
1
Amy:
23:11
Well, good. I will look forward to that. Now you had mentioned that your sons are in business with you. You hired someone to train them to take care of the business. Everybody has to be pretty understanding. What skills do you want them to learn? And/or what are you looking forward to with them? Or how did how does that working relationship work?

2
Mark
23:38
The very first thing I have always tried to instill in them is that old corny line that “honesty is the best policy.” I want them, I want everybody here at the office to never feel like they're in a position where they have to bend the truth. Maybe people don't always like your answer, but over time they will understand that you're never going to lie to them. And that earns respect. I think people understand that when you deal fairly, you end up getting to see some opportunities, because somebody says, “Well, you know, this person, you did a deal with them, they spoke highly of the way it went. So I'm here.”

That's a big deal. Now also for the boys who are both in their 30s. I never want them to feel like they're competing, or I don't want money or position to come between them. And so, for us, it's working out really well.

My son, Michael, who is involved with Leadership Richardson for several years. He is an attorney who went to UTD and then UT Law in Austin. I'm working with him to learn what I've learned through the years on real estate. It’s involving contracts and other legal matters.

Our other son, Matt, is going to go into Leadership Richardson this year. He's a Mason with the lodge not far from here and, and so they have both been involved in community.

I've encouraged them to learn as much as possible, and I didn't push them to come into the business. I wanted them to do that on their own. After they graduated, both of them went a different direction. Now they're here, and it's really great.

I hired a new president for Golden Chick, because I wanted them to have a mentor other than me. We have a bit of a horizon, and I get to be able to what I call a long goodbye.

1
Amy:
25:51
I think this has been a great conversation. Is there anything we haven't talked about that you'd like to share with businesspeople in Richardson?

2
Mark
26:01
I think Richardson's a great community. There are people out there who are successful. The neat thing is that they're willing to share, and they're willing to help. It's a passionate group that leads the chamber of commerce. And there are resources. I was very surprised to find out, when we first were getting into the EB5, that there was an international division of the chamber. Translation resources and referrals were really very helpful. I've preached to anyone who will listen what a good home Richardson is for their family and for their business.
I am passionate about my business. I am passionate about the chamber as well and the city.