Fresh-Slicing Franchisor

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Fresh-Slicing Franchisor
Dagwoods founder Spiro Krallis looks forward to sharing his sandwiches with the rest of Canada
By Suzanne Bowness
In the 27 years since he opened his first Dagwoods
restaurant in Montreal, Founder and President Spiro
Krallis has grown his sandwich and salad shop into
a familiar Quebec brand. But he’s not stopping there –
now this regional success has expanded into Ottawa,
and Krallis has big plans to tackle Toronto and expand
his Dagwoods brand across the rest of the country.
While he started his restaurant as an independent
operator, Krallis always knew he would eventually aim
at franchising. “At the time, it was 1989, and franchising
was just really getting going. I wanted to set up a business
that I could eventually franchise,” he recalls.
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EMERGING SYSTEM
“I need people who aren’t afraid to
work long hours, enjoy what they do,
and interact with customers and staff.
We need lively, energetic franchisees.”
Even in his first days working in restaurants, he was
always on the lookout for best practices and ideas for
franchising. “I was travelling all over the States,” says
Krallis, describing his quest. “My sisters live in Atlanta,
and I would drive down and stop in different cities and
look at different concepts. I zeroed in on sandwiches and
the sandwich concept. I took the best of everything and
combined it.”
Building a unique concept and strong culture
Krallis says he got his inspiration for Dagwoods’ standout
feature, on-site sliced deli meats, from convenience
stores in Vermont, where he used to vacation. When he
observed how strong the customer demand was for the
fresh approach, he knew it would be a hit in a restaurant
setting. “I saw that concept and said, ‘Let’s eliminate the
whole convenience store, but just slice cold cuts fresh in
front of customers.’” His travels also inspired him to come
up with Dagwoods’ signature sauce, which he even mixed
himself in small batches for his first 10 restaurants.
Ever the researcher, before he even started Dagwoods,
Krallis sought to educate himself in the ways of
other restaurants, with roles at Burger King, Giorgio’s,
and even as a partner in a Pizza Pizza franchise. But it
was as he started opening more of his own restaurants
that he realized that he wanted to build not only a restaurant,
but an employee culture. “I opened my first location
and it did well, then opened up a second and a third and
realized I was having fun doing this with my employees,
and I had created a good culture,” recalls Krallis.
By the time he reached 20 locations in 2006, he decided
to take that culture and make it the heart of his operation.
He sold his first five franchises to his own employees,
whom he financed to buy existing locations. “The guys
jumped in there wholeheartedly,” recalls Krallis. “They
had been working at Dagwoods for five or six years.”
While a couple of those early franchisees are still
with the chain, Krallis even takes pride in the success
of those who have moved on. “Of those first five franchisees
that came on, two of them started as franchisees at
age 22 and 23, and at 27 and 28, paid off their stores and
sold them for $300,000,” he says. Today, Dagwoods is 100
per cent franchised.
Now Krallis has taken that culture and formalized it
in his stores, with regular staff events and outings, and
motivational programs that award the top stores with a
bonus and staff party. “We try to do at least one big bash
a year for all of the employees. We go out to a hockey
game or dinner. We spend a lot of time in our stores, and
we’re very close with our franchisees. Our franchisees
know each other and talk amongst each other, and it’s
good for morale.”
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EMERGING SYSTEM
As far as an ideal franchisee, Krallis says he’s looking
for those who are willing to be hands-on and involved. “I
need people who aren’t afraid to work long hours, enjoy
what they do, and interact with customers and staff. We
need lively, energetic franchisees. They don’t necessarily
have to be young people; we have 50- and 60-yearold
franchisees, as well as those in their 20s and 30s.”
He adds that restaurant or business experience is not
necessary, as long as franchisees are entrepreneurial
minded. “We rely on our franchisees and what they’re
learning and experiencing in their locations to come up
with ideas.”
Dagwoods’ six-week training program takes place
right in store, so any questions about how to run a restaurant
are quickly answered. The first three to four
weeks of training take place in an existing store, and
then franchisees work in their own stores with assistance
for two to three weeks. After that, Krallis says he
and the other management staff are available personally
for follow-up support, a grassroots approach that
he hopes to keep up even as the franchise expands.
“When we take somebody’s franchisee money and set
them up in a business, it, to me, becomes personal.
That’s one of the things that drives me and my team
to make sure we’re doing a good job, because it’s their
livelihood.”
Tackling new markets
In terms of his expansion plan, Krallis says he still aims
to open stores in Montreal, but is looking to Ottawa
Gatineau as his first substantial outside market, where
he sees the potential for 10 stores. He says he chose the
area both for its proximity to Montreal and for the similarity
of its neighbourhoods in size and character to the
Montreal suburbs where Dagwoods is most successful.
“Anywhere in Ottawa is very much like our West Island
neighbourhoods, with the same mix of industrial and
commercial and residential,” says Krallis.
He adds that he has also identified around 25 neighbourhoods
in Toronto with those similar characteristics,
and expects to begin expanding there in 2017. “In Canada,
now, I see us becoming the alternative to Subway.
They’ve reached a saturation point and I see us being
able to come into the market, in other markets across
Canada, and present ourselves like we’ve done in Montreal
for so many years.”
While Dagwoods has seen success in Montreal, Krallis
says it isn’t always easy, with challenges arising on
several fronts, from the economy, to excessive government
regulations, to the fact that Montreal has too many
tasty food options. “There are more restaurants opening,
which means more competition. I don’t want to knock
Montreal; if anything, the demand for quality of food is
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EMERGING SYSTEM
very high,” says Krallis, noting that those expectations
motivate him to boost his own standards, ensuring that
Dagwoods serves the highest quality meats. The franchise
also competes by trying out new promotions, like
a new loyalty mobile app, or new food concepts, such
as the recently launched “Salada Dag” option that offers
any sandwich in a lettuce wrap instead of bread. That
dedication has been paying off – Dagwoods was recently
voted the best sandwich in Montreal by local media outlet
Cult MTL for the second year in a row.
From someone who clearly knows the challenges
of his business and region and had the nerve to forge
ahead anyway, it’s not surprising to hear continued
optimism. “We’re very proud of what we’ve accomplished
in almost 27 years. There are a lot of chains that
have come and gone, and we’ve survived. When we provide
a future for someone, I feel responsible, and I feel
now that we have a really solid system. When I speak
with other people in the industry in Quebec, they look
at us and say, ‘No, you guys be happy. Be proud of what
you’ve done.’”
DAGWOODS STATS
Franchise units in Canada: 20
Corporate units in Canada: 1
Franchise fee: $30K
Investment required: $225K-$250K
Start-up capital required: $100K
In business since: 1989
CFA member since: 2015
Dagwoods is a solid Canadian franchise with enormous growth potential
and a strong support network. If you’re looking for an exciting and unique
business opportunity, contact George Moraitis at 514 697-1309 or at
franchise@dagwoods.ca.
www.dagwoods.ca
Canadian Franchise Association www.cfa.ca | www.LookforaFranchise.ca