It was a big surprise to just about all of the roughly 1,700 franchisees, vendors and team members in the room.
Last week at the biennial franchisee conference in Las Vegas, the company formerly known as Focus Brands—the parent to Cinnabon, Auntie Anne’s, Carvel, McAlister’s Deli, Schlotzsky’s, Moe’s Southwest Grill and Jamba—announced it was changing its name to GoTo Foods.
It was the final step in an ongoing rebranding for the global franchise system, which encompasses close to 7,000 mostly franchised restaurants and about $5.7 billion in sales. The new name was designed to reflect a transformation for the multi-brand franchisor from a holding company to a “platform business.”
That transformation is actually a lot more complex than it may seem, and it’s still a work in progress.
Jim Holthouser, CEO of GoTo Foods unveiled the new name and logo on stage at the event. | Photo by Lisa Jennings.
The goal, fundamentally, is to grease the wheels for growth and boost operator profits. But CEO Jim Holthouser is among those who believe operating in today’s environment takes scale.
“In the crowded, highly competitive restaurant industry, you need scale to win. Scale has never been more important that it is today,” he told the crowd at the event last week. “With greater scale, we get more marketplace muscle, more negotiating power, more and better technology, earlier and faster than ever.”
In the darkened Las Vegas conference room, the packed audience—clutching paddles representing their brands to wave at every opportunity—looked at each other with surprise as the new company logo lit up behind Holthouser.
Over the next two days, Holthouser and other leaders would dive into the benefits of operating as a platform business, as opposed to a collection of seven individual brands.
But what would it really mean for the operators?
That’s yet to be determined, many said. But most liked what they heard.
“I’m hopeful,” said Luis San Miguel of Fresh Dining Concepts in Miami, an operator of more than 200 Auntie Anne’s, Cinnabon, Jamba and Carvel units and one of the platform’s largest franchisees. “But I want to see the proof in the pudding.”
Carvel has more than 350 units and celebrates its 90th anniversary this year. | Photo courtesy of Carvel.
Hitting the right note
To explain the strategy behind the name change and transformation, Holthouser walked out on stage and did what few restaurant CEOs could do.
He played the piano.
He opened with Gershwin’s “Rhapsody in Blue,” describing the composer’s “no limits” creativity, which had sparked the theme for the gathering, the No Limits Global Conference. Over the next 30 or so minutes, the accomplished pianist/CEO breezed through Beethoven, Bach and Rachmaninoff, weaving the music into his vision for a “no-limits future” for the seven brands.
Jim Holthouser, GoTo Foods' CEO, has largely orchestrated the rebrand and used his musical skill to illustrate the strategy. | Photo by Lisa Jennings
Holthouser explained that, early on, he had a gift for figuring out tunes by ear, so at first he didn’t see the need to read music. But once he did study and learn how to decipher the notes on a page, it opened up his world. It gave him a foundation on which he could expand, musically, in just about any direction—a metaphor that was not missed by franchisee Edward Armstrong, who has two Auntie Anne’s units in airports in Atlanta.
Armstrong said he loves the new name, but, “I loved the presentation more.
“[Holthouser] came out and got everyone’s attention by playing the piano, and he gave me the Gershwin story and talked about the evolution, and this is what we’re going to do, and this is why we’re changing the name,” he said. “And I was like, you’re really good.”
Holthouser, who joined the company in 2020, has been working on this transformation to a platform business for four years.
One of the first steps when he arrived was to work on the supply chain, which was causing serious headaches following the turbulent pandemic years. The company invested $16 million to bring purchasing in house and create “end-to-end” supply chain visibility.
Chris McNutt, GoTo’s senior vice president of supply chain, said the goal is to reach a more than 99% fill rate on critical items, “meaning that you’ll have what you need to stay open, delight guests and keep operating a profitable business,” he told the franchisees.
And the company is investing another $60 million in technology, with digital platforms replicated across all brands. The brands could use a common architecture for apps and websites, for example, and eventually perhaps loyalty programs.
“They’re almost carbon copies of each other,” said Holthouser. “It’s the same coding. It’s like a house that’s built the same way, but it’s just decorated differently.”
Perhaps the most significant example of the technology efficiency is a new point-of-sale system that will cross all seven brands.
Partnering with the commerce platform Qu, the new POS will expand franchisees’ ability to offer delivery, catering, kiosks, kitchen display systems and digital menu boards, as well as supplying a dashboard of real-time data and analytics. The new system will roll out brand-by-brand this year.
Though the Qu system is described by franchise operators as “expensive,” they were thrilled to have what they hope will be a better POS coming.
San Miguel of Fresh Dining Concepts, for example, said some of his stores participated in the test of the Qu system.
“This is meaningfully, meaningfully better than what we have,” he said. “We wholeheartedly support that change. Our existing POS has not been getting it done for us and I think that GoTo Foods would admit they made a mistake in going for the system we had. That was a change made about six or seven years ago.”
San Miguel is looking forward to exploring the use of kiosks with the Qu system, though that move could be problematic for the many snack brands within the portfolio operating in malls, where leases might limit the flexibility to use such technology.
“Those are the kinds of nuances we need to work through,” said San Miguel. “But our intent is, where we can go with self-order kiosks, we absolutely intend to roll them out.”
Adding to the family
A growing number of multi-brand restaurant companies are moving to a platform model, including Inspire Brands, the parent of Dunkin', Arby's, Baskin-Robbins, Buffalo Wild Wings, Jimmy John's and Sonic. Both Inspire and GoTo Foods are owned by private-equity firm Roark Capital Group, which has also agreed to acquire Subway in a still-pending deal.
Holthouser said sister-brand Inspire is also headed in the direction of being a platform business, breaking down silos and becoming more centralized.
"I think they would agree we're probably a little further along the curve than they are, simply because those are much bigger battleships to turn," he said.
With a shared behind-the-scenes infrastructure, Holthouser believes the platform will be better positioned for growth.
It will make it easier for existing franchisees to co-brand or co-locate, for example, which GoTo Foods has been encouraging. Already roughly 1,100 units are co-branded or co-located, some with up to three brands with various combinations of Carvel/Cinnabon/Auntie Anne’s/Jamba.
The platform will also make it easier for GoTo Foods to acquire new brands to add to the family.
Auntie Anne's is the largest within the platform by unit count with more than 2,000 outlets. | Photo courtesy of Auntie Anne's.
Holthouser is hungry for acquisition, and he hopes to round out the portfolio with new flavors in the franchise mix—a burger or chicken brand, perhaps, or even pizza, salad or Mediterranean.
He’s looking at chains with more than 150 units but less than 900, for example, that might have legs internationally or lend themselves to licensing and CPG opportunities.
It has to make strategic sense, of course, he said. But whatever brand might get pulled under the GoTo umbrella could be easily plugged in to give franchisees new avenues for expansion.
For the snack brands, GoTo hopes to see some of that growth move from malls to streetside locations, for example. But that’s a shift some franchise operators said might be a tough sell.
The idea reflects “a complete disconnect” between reality and the vision of leadership, said franchisee Steve Bradshaw of Prezalter LLC, who operates about 17 Cinnabon and Auntie Anne’s in the Seattle area.
Cinnabon has more than 1,900 units and is prolific with licensing partnerships. | Photo courtesy of Cinnabon.
“We’re bakers. It’s about the smell, and you don’t get that off the street,” he said. “There’s a reason why there are not thousands of streetside locations.”
Individual challenges
Though many franchisees agreed the brands had more power together under one platform, some said they hoped to be recognized for certain individual needs.
Alexander Johnson of Pretzel Power Inc., based in San Francisco, operates 10 Cinnabon and Auntie Anne’s in California, where the fast-food minimum wage is jumping to $20 per hour in April. Labor costs and higher construction costs have put huge pressure on margins, he said.
In addition, he said landlords in California are back to “trying to get their pound of flesh,” after giving retailers a break during Covid.
“There’s no more deal making,” he said. “They’re back to asking for 20-22% occupancy, which doesn’t really work with our business model.”
What Johnson would like to see is recognition by the franchisor that operators are facing different pressures. “It’s not the same for everybody,” he said.
The transformation to GoTo Foods is an ongoing journey, but, at the end of the day, Holthouser told the franchisees, “Our biggest brand engine is you.”
During his presentation, he played a recorded piece of music for the audience that was computer generated. It sounded flat, dull, tinny—without personality or soul.
Then he turned to the piano and played the same piece with conviction. It was like night and day.
“The only difference was the level of passion and heart behind it,” Holthouser said. “If we can play GoTo Foods with that same heart and conviction, I promise you we will build a business without boundaries or borders; no limits for you; no limits for our brands.”
By the end of the conference, DMarc Taylor of KP&D Brands LLC, an operator of three Auntie Anne’s, was still not sure how he felt about the portfolio shift. “To be determined,” he said.
But, he added, “I’m excited to see the willingness to come in and do different things, or to try new things to improve our business.”