Business

Rise finds success with unique approach to franchising

Patrons, like Ross Mize, 2, of Chapel Hill, gets his first taste of a Rise donut who lined up around the building in light rain for their first tastes of donuts at a free giveaway at Rise-Carrboro on Tuesday, February 23, 2016 from 12-2pm.
Patrons, like Ross Mize, 2, of Chapel Hill, gets his first taste of a Rise donut who lined up around the building in light rain for their first tastes of donuts at a free giveaway at Rise-Carrboro on Tuesday, February 23, 2016 from 12-2pm. clowenst@newsobserver.com

When longtime Durham caterer Tom Ferguson sold his stake in the Only Burger truck, his then 9-year-old daughter broke into tears. She loved the cachet of her father’s food truck.

“Don’t worry about it,” Ferguson told her. “The next thing I’m going to do will make you so cool.”

That concept was Rise, a combination biscuit and doughnut shop that first opened near Durham’s Streets at Southpoint in November 2012. Not only was it a hit with his now 13-year-old daughter, it has been very successful and started franchising.

There are now seven Triangle locations, including recent openings in downtown Durham and Carrboro. (The next Raleigh location, in Brier Creek Commons shopping center, will open in May.) Rise was named among the most recent Fast Casual Top 100 Movers and Shakers, a coveted accolade in this segment of the restaurant business. Ferguson’s company has signed agreements for 21 more franchises in North Carolina, Florida and Texas.

Rise was named among the most recent Fast Casual Top 100 Movers and Shakers, a coveted accolade in this segment of the restaurant business.

“It’s very exciting to see a local business franchise. It’s not common in North Carolina,” said Ted Zoller, director of the center for entrepreneurial studies at UNC’s Kenan-Flagler Business School. “You know why I think it works? It’s a very new concept that uses a small amount of square footage and is a comfort product.”

Franchises are seen as attractive investments because they are a proven business model and perceived to be less risky. Investors have a team of people to help them open the location, continued access to expert advice and a proven blueprint for running the business.

Rise sets itself apart from other franchise opportunities by doing things a little bit differently.

There’s not only a set menu at each location but each store can offer monthly specials that its own chef creates. That’s a smart move, said Ryan McDevitt, an assistant professor at Duke University’s Fuqua School of Business. “If everything is the same, you lose that local flavor,” McDevitt said. “It’s the best of both worlds.”

Ferguson also often helps franchise owners hire experienced chefs. Some of the Triangle’s Rise chefs have owned restaurants in Durham, Chapel Hill and Napa, Calif.

For these chefs, Rise is attractive for a number of reasons. The pay is good. If Ferguson helps find a chef, franchise owners have to agree to pay a $50,000 annual salary plus 10 percent of the profit. At one of Ferguson’s two corporate shops in Durham that can mean about $90,000.

The hours can also be better. The stores are only open from 7 a.m to 2 p.m. That means chefs who are used to working evenings now have a more family-friendly schedule. Plus, these chefs can still be creative in the kitchen, creating up to two new biscuit specials and five new doughnuts a month.

Tim Youngblood, 44, of Carrboro, is the chef and manager at the Rise shop in Cameron Village.

Youngblood spent the last 25 years working in kitchens in Durham and Chapel Hill. He helped Sara Foster open Foster’s Market, a cafe and retail shop in Durham. He rose to chef de cuisine at Nana’s, a fine-dining Italian restaurant in Durham. He spent time in the kitchens of such upscale stalwarts as La Residence, Magnolia Grill, Elaine’s on Franklin and Lantern.

As Youngblood explained, it can take a long time working in restaurants to find an established chef or owner willing to give you a stake. Rise franchise owners are often successful business people without restaurant experience who need someone to not only manage the business but to train the service and the kitchen staff and bring their creative culinary skills.

“If I can’t be creative, it doesn’t interest me,” he said.

Youngblood’s biggest hit so far among the monthly specials: a Cajun fried chicken biscuit with lettuce, Ashe County habanero cheddar and a low-country remoulade sauce. It was so popular that it broke sales records for monthly specials among all Rise locations.

There is a downside, Youngblood said. It is a lot of hard work. It can be hard to find and retain good staff. When the doughnut-maker calls off, he has to go in at 2 a.m. But that’s more palatable when you are a part owner. “It means a lot more,” he said. “There is more incentive to take ownership.”

‘I’m doing both’

Ferguson, 51, grew up in Texas, was an Army airborne ranger and graduated from the Culinary Institute of America. He worked in California and Texas before settling here and opening Durham Catering Co. in 2000. By the end of that decade, he launched Only Burger.

After Only Burger, Ferguson had a number of restaurant concepts on his to-do list: chicken, pasta and biscuits. The latter was first so he traveled to Portland, Ore. to try Pine State Biscuits. While there, he also stopped at Voodoo Doughnuts. One bite and Ferguson decided: “I’m doing both.”

A year and a half after opening the first Rise, Fransmart approached Ferguson about franchising. Ferguson and his partners, operations manager and chef Brian Wiles and finance manager Andy Seamans, went to a two-hour meeting with executives from Fransmart, an Alexandria, Va.-based company whose previous successes include Five Guys Burgers & Fries and Qdoba Mexican Grill.

Fransmart’s Mark Treptow, a senior director of franchise development, said in an email that the company was looking for a concept in what has become a competitive doughnut market.

“We thought we need to find a concept that breaks from tradition in this already crowded space,” Treptow said. “While there are a lot of doughnut concepts out there, not to mention other biscuit concepts, no one else has successfully combined the two.”

A visit to the original Durham location convinced Tretow: “When I saw the line out the door and to the curb on my first visit, I knew we had found a winner.”

When I saw the line out the door and to the curb on my first visit, I knew we had found a winner.

Mark Treptow of Fransmart

Fransmart executives told Ferguson and his partners that they needed a 25 percent profit margin to make franchising viable. At the time, they were operating at about 17 percent, Ferguson said. Fransmart executives suggested some ways to streamline their staffing, to change from daily to monthly specials and how to tweak the menu board. Ferguson and his team made those changes and raised prices for the first time since they opened. The next month, they hit the target.

These days, Ferguson and his partners manage the two stores they own in Durham, help open franchises and court owners at “discovery days.” A “discovery day” is when a prospective owner comes to the original location for a tour and a chance to ask all their questions.

Discovery Days

On a Saturday morning in February, Ferguson, Wiles and Seamans met with three groups of prospective investors: a Raleigh couple who were considering opening Rise locations in Blacksburg, Va., where they had gone to college; some relatives of the North Raleigh location’s owners who wanted to open some locations in Miami; plus, Eva and Jay Melamed of Raleigh who were looking into a Fort Lauderdale, Fla., franchise to help a relative start their own business.

Jay Melamed raved about the fried chicken biscuit and creme brulee doughnut. He joked: “I could never own these close to home because I would die of a heart attack.”

Wiles, the chief operating officer, gave them a tour of the kitchen. He answered their questions: The goal is to sell out of doughnuts each day. They can sell up to 1,400 doughnuts on a Saturday or Sunday. The average order is between $9 and $12. Eleven employees work in the kitchen on weekends. He will train each franchise’s managers and the doughnut-maker and both he and Ferguson will work the store’s openings.

After tasting doughnuts, Seamans, the company’s chief financial officer, answered the investors’ money questions: Fifty percent of the business happens on the weekend. Twenty percent of sales are beverages and the rest are split evenly between doughnuts and biscuits. It can cost between $250,000 to $500,000 to open a location depending upon the space. The franchise fee costs 6 percent. The marketing fee costs 2 percent and the money is pooled to help market the stores regionally.

The answers were enough to convince the Melameds. They have signed a three-location deal for Fort Lauderdale and hope to open their first store by the end of this year.

Andrea Weigl: 919-829-4848, @andreaweigl

More Information

Here are the Rise Biscuits and Donuts locations:

Raleigh: 530 E. Daniels St. at Cameron Village and 6325 Falls of Neuse Road at Sutton Square. Note: A Brier Creek location in North Raleigh will open in May.

Morrisville: 1100 Market Center Dr. at Park West Village.

Carrboro: 310 E. Main St. at East Main Square.

Durham: 8200 Renaissance Parkway near The Streets at Southpoint and 401 Foster St. in former Daisy Cakes location.

Hours: 7 a.m.-2 p.m. daily.

Info: risebiscuitsdonuts.com

Upcoming Rise Event

Rise is hosting The Big Biscuit Brew Ha-Ha from 6 to 9 p.m. April 7 at The Rickhouse in downtown Durham. The event is a competition featuring six teams made of a Rise chef and a special guest chef making unique biscuits and doughnuts. Each teams’ creations are paired with a local beer. The public will taste and judge the biscuits. Guest chefs include Raleigh’s Ashley Christensen and Jason Smith.

Tickets cost $35. Proceeds benefit Leukemia and Lymphoma Society of North Carolina. Info: bigbiscuitbrewhaha.com.

  Comments