Dana White Decides to Franchise Paralee Boyd
Guests:
Dana White is founder and CEO of Paralee Boyd hair salons.
Stephanie Stuckey is CEO of Stuckey’s Corporation.
Jay Goltz is founder and CEO of Artists Frame Service and Jayson Home.
Producer:
Jess Thoubboron is founder of Blank Word Productions.
Episode Highlights:
Dana White: “My first goal was to do an In-N-Out model, to have it all company-owned. It’ll take me forever to get there.”
Dana White: “I’m about two weeks into a five-month process. And at the end of this process, I will be the first African-American woman beauty franchisor.”
Jay Goltz: “I won’t be shocked if this thing works great and you become a zillionaire. I won’t be shocked if you call us in a year and go, ‘Oh my God. What did I get myself into?’”
Stephanie Stuckey: “So here’s our dilemma, and I’d love feedback on this: Do we price to our current customer base? Or do we price to the customer base we want?”
Full Episode Transcript:
Loren Feldman:
Welcome Jay, Stephanie, and Dana. I hope you’re all doing well. Thanks so much for being here. What’s going on with you, Dana? Anything new?
Dana White:
Nothing much, Loren Feldman. How’re you doing?
Loren Feldman:
I’m doing okay, but—
Dana White:
Good!
Loren Feldman:
But I’m not convinced. You sure there’s nothing new with you?
Dana White:
Oh, man. Um, there’s a little something new…
Loren Feldman:
Tell us about it.
Dana White:
So, I’ve made the final decision as to what to do with my winnings from Detroit Demo Day.
Loren Feldman:
Interesting.
Dana White:
And it’s been a long back-and-forth journey, and I have decided to franchise.
Jay Goltz:
Wow.
Stephanie Stuckey:
That’s so funny. I’m actually trying to get out of franchising. I’m in the opposite direction.
Loren Feldman:
That’s why I wanted you here today, Stephanie. We’re gonna talk about that. But first, tell us, Dana, what brought you to this decision?
Dana White:
I had decided that it was time to expand, and so I had looked at going to Chicago.
Loren Feldman:
We talked about that. We had an episode.
Dana White:
Absolutely. I was going to Chicago and had a conversation with my operations manager. And she said, “I think Chicago would be an amazing move, but I hope you don’t mind me saying I’d like to talk to you.” And I said, “Sure, what’s going on?” And she said, “You know my background. I’ve worked with Sports Clips franchise, Great Clips franchise, and Lady Jane’s operations.” And I said, “Yep, those are all hair salons.” And she said, “After having worked here for the time that I have, I’ve never seen anything like your business. And if you don’t mind me saying, I think you are perfect for a franchise model.”
And we really went in depth and had a conversation that inspired me to call up the franchise consultant and just have a basic conversation: What is the state of franchising after COVID, during COVID? What’s going on? And we had a very frank conversation. We talked, and he pointed me in the right direction to get the information that I needed. Then after that, I talked to people, read the reports, and called him back and said, “This is what I’m thinking, and this is what I can do.” And he was like, “Okay, I think it’d be a great idea, but you have to think it’s a great idea. So let’s get you comfortable with it.”
My network has stepped up, Ernst & Young has stepped up, Goldman Sachs [10,000 Small Businesses] has stepped up to give me as much information and support that I need to execute this perfectly. With IFranchise Group, I started my process. I’m about two weeks into a five-month process. And at the end of this process, I will be the first African-American woman beauty franchisor, and we’re already starting to talk about subsidiaries in other countries—five other countries.
This is the same franchise team that franchised Drybar, and so they’ve been able to impart their wisdom on what went right with that process, what could have been improved in that process, and what makes Paralee Boyd different. But I am extremely confident, using my resources, the people who I’ve talked to are away from my iFranchise Group family, as I like to call them—I told them, “I mean, of course, you’re going to give me great references. I want to talk to the people who have nothing to do with you, their franchises,” and they said, “Understood.” And that’s why I leaned on Goldman Sachs and Ernst & Young to put me in touch with their clients who either started franchises or have been in franchising for years, and that was it. We’re off and running to the races. It’s been a great process so far.
Loren Feldman:
Wow. Jay, any questions for Dana?
Jay Goltz:
Wow. A lot to take in. The franchise consultant? I mean, I’ve looked into this a little bit. There are 20 of them. So this one did Drybar. Okay, that’s good. Are you privy to what the numbers are from that whole thing?
Dana White:
What do you mean “the numbers?”
Jay Goltz:
Are they making money? How many lawsuits are coming from the people who bought the franchises?
Dana White:
First question I asked was about lawsuits. I’ve asked not only my iFranchise Group what is the number of their lawsuits, but other franchisors, and the numbers are low. And I said, “Okay, well, why do you have numbers at all?” And they told me why they have numbers at all. And so, are there some lawsuits? Yes. But a lot of it has to do with the franchise consulting firm that you start with.
Jay Goltz:
No question. There’s absolutely no question, and it comes down to being careful who you sell the franchise to. There is no question that franchising is one of the greatest inventions of the 20th century. But with that being said, there’s been lots of failures over the years. And I’m glad that it sounds like you did your homework on it. So, okay. Wow.
Loren Feldman:
Stephanie, how about you? Any questions for Dana?
Stephanie Stuckey:
I’m not so sure if it’s questions as much as some cautionary tales—although this all sounds great. I in no way want to dampen this enthusiasm, and I love that you would be—or will be—the first female African-American franchisor of a beauty salon chain. I’m all for it. I just have a very different experience, and part of it is that I purchased Stuckey’s, and we had a franchise system that had really gone awry after years of neglect. The challenge you have—and you know this—is ensuring consistency and quality and really capturing what’s unique, and making sure your franchisees get that. And in order to have that, you have to have a strong operations program and systems in place.
We lacked that at Stuckey’s. We don’t have consistency, so I’m trying to do a lot of cleanup. I looked at Waffle House as a good example for me. They’re Georgia-based. I know some of their high-up management, and their general counsel in particular has been really helpful to me. Waffle House had—I think I’ve got these numbers right—about 70 percent of their stores were franchised and then they did an about-face. Now I think it’s to about 90 percent corporate-owned, because they were not getting the consistency and the quality in their locations. They just started buying up the locations so they could be in control.
Another example, a brand that I really admire, is In-N-Out Burger, and they have had repeated efforts, investors begging them to franchise, and they never have. They have a cult-like following that’s just rabid. It’s because, in my opinion—I’m reading a book, I’m pretty obsessed with In-N-Out right now—but they really control everything about that program.
So we’ve had a very different experience, and I’m trying to segue to a corporate role model and looking at how Waffle House did it as our guidepost. But you have a very different program and a different product, and there’s a huge opportunity. You’ve got great backers. I can see where it could work for you.
Dana White:
This has been my biggest homework: studying those franchise models, understanding why Subway is the way it is, why Chick-fil-A is the way it is, why In-N-Out is the way it is—even though they’re not a franchise. I was sitting here at home a couple of weeks ago, and I literally got into a cold sweat. Why? Because, Dana, there’s a reason why no African-American hair salons have franchised. Find out what that reason is. And it dawned on me what the reason was. And so I immediately, it’s a Sunday evening—
Loren Feldman:
What’s the reason?
Dana White:
From what I deduced, the reason is because it’s extremely individualistic. Extremely. The only thing that groups people together are the four walls they work in, and that’s it. What the person in the chair is doing next to you has absolutely nothing to do with what you’re doing in your chair. There’s no consistent branding. I jumped on the phone with a franchise consultant. I said, “I will be closed in five years if I don’t find the answer to this.”
It is going to be the culture and the training, and I have been obsessed with it for the past two weeks. The operations we have down—even though it can always be improved, and it will be through this process. I have over 100 years of African-American hair tradition to shift and execute on. And I told him, “If you all don’t understand that, if you all don’t get that, this is never gonna work. It’s not gonna work.”
Jay Goltz:
Listen, I feel better that you have your operations manager. I feel good that this franchise consultant did Drybar, and they have experience with that. But this is no slam dunk. I don’t know what the odds are, but I won’t be shocked if this thing works great and you become a zillionaire. I won’t be shocked if you call us in a year and go, “Oh my God. What did I get myself into?” The best franchises are turnkey, like hard to screw up. This is not too hard to screw up. Get somebody with a personality problem. Get somebody who can’t manage it. This is very personal, so I don’t think it’s the ideal franchise, as far as being easy, but I could see you could pull it off. But there are a lot of moving parts to this. That’s for sure.
Loren Feldman:
There’s one aspect of Dana’s business that maybe we should repeat for people who haven’t heard her talk about it before. And that’s that she built her systems on the principles of Lean manufacturing. I’m guessing that’s what the franchise people liked and what your operations manager liked, in terms of thinking about you as a franchisor—the fact that you have these very strict principles about how everything happens in your business. You did that to make it operate as efficiently as possible, but I assume that converts pretty easily to a franchise explanation of what a franchisee is supposed to do.
Dana White:
Yes. And I think, to Jay’s point, I think it’s a matter of who you hire. We’re hiring skilled labor, and you have to have a license. We can’t hire a 16-year-old to come in and just do the hair. The people who we hire are already coming in with a skill-set that is primed and ready to work in this industry. Now, all we have to do is say, “This is how we do it here. I would be a lot more nervous if there had never been a salon that had franchised before. There are tons, dozens.
Jay Goltz:
I like the fact that Drybar already is out there. And if it is successful—which I presume you’ve got a number—okay, they already did it. Okay, I think that’s fair enough.
Loren Feldman:
Dana, you said the consultants talked to you about what worked and what didn’t work for Drybar. Can you give us a sense of that?
Dana White:
Most everything worked, but from what I understand, it did become about the numbers at some point.
Loren Feldman:
What do you mean by that?
Dana White:
From what I understand, it became, “Okay, we’re selling these things like hotcakes. Let’s sell these things like hotcakes.” And there was a team of people involved in the process versus a team of interest. You’ve got somebody who’s interested in the quality, somebody who’s interested in the operation, somebody who’s interested in the money, and then some of those voices were louder than other voices.
Whereas in my situation, it’s all Dana. And I’ve made it very clear to everybody I’ve worked with: We can award two franchises after my first year. Fine with me. I can’t be driven by: How many units did you award this year? I’ve made it very clear to the franchise consultants and the people who are helping me outside of that, that my focus is on culture and training. That is it. You can sit in front of me with $20 million. If you are not in line with this mission and vision, if you’re a hairstylist who wants to come from behind the chair but cannot become a business woman who can run and operate this salon, this is not the franchise for you at all. I’m not going to be awarding them because you come to the table with a lot of money. You have to be impassioned about solving the problem that we are solving for, the change that we are making. You have to get it, and a lot of people don’t.
Stephanie Stuckey:
I was gonna ask if you considered the ownership model. You can have multiple locations and you own all the locations, and then you can totally control the standards, the quality, consistency—although I do love the idea of you’re creating wealth. But you do have more control, and if you’ve got investors who are willing to support your model…
Dana White:
I don’t have investors.
Jay Goltz:
No, no, here’s the difference. This is the reason why franchising, when it works, it works. It’s the difference between having someone owning it and running it, or having some rich guy who’s on the golf course putting money into it. The franchise model works because these people own it, and they’re working it. And in this case, they’re financing it, so it’s their money. It works when it works.
Stephanie Stuckey:
Well, and the corporate-owned model works when it works. I mean, it all comes down to execution. That’s true of any operation.
Dana White:
It comes down to execution and money. My first goal was to do an In-N-Out model, to have it all company-owned. It’ll take me forever to get there.
Stephanie Stuckey:
It does take longer, absolutely.
Jay Goltz:
When you look at companies that have been around for 50 years, they’ve got lots of options. And in her case, she doesn’t want to wait 50 years, because she’ll be an old lady. So you know, that’s the difference.
Stephanie Stuckey:
It depends absolutely on what your business model is. If you want to grow slowly and organically—look, Stuckey’s has been around since 1937. Hopefully, we’re not going anywhere. I think the corporate-owned model makes sense for us. That doesn’t mean it makes sense for everyone, and I certainly have been studying the different franchise models.
Chick-fil-A is a fascinating one. Dana, you brought up that model. It’s really not a franchise, as you know. Because those owners, they call them operators. They’re not owners. There’s no equity in the business. Chick-fil-A owns the real estate, they own the business, and they’re simply operators. You’re only allowed to own one or operate one store, and then you go wherever Chick-fil-A sends you. Having said that, that model works for them. It’s hugely successful. There are many models out there.
Jay Goltz:
In the Small Giants model, though, it also gets down to: What’s the definition of working? One could argue—and I do argue this—Would you rather own six salons, make $800,000 a year, live in a nice house, and have a nice life? Or franchise 300, make—I don’t know—$3 million a year, but have people calling you screaming at you at once a week and have a lawyer on staff? It’s a different animal. It’s just different. One’s not right, one’s not wrong. It’s what your goals are.
Stephanie Stuckey:
Those are two extremes, obviously. You can have a franchise that’s a small, manageable number. You’re still a franchise operation.
Jay Goltz:
I think the math is hard to work in a quote-unquote small franchise thing. I think there’s a critical mass you need to work.
Stephanie Stuckey:
Absolutely. It’s a volume business. A franchise is a volume business. I am not interested in a volume business for Stuckey’s.
Jay Goltz:
No, I think that makes sense.
Stephanie Stuckey:
And my partner, too. It’s a shared vision of what we see, of creating a unique brand with a rabid, loyal following. That’s what we want.
Loren Feldman:
Dana, can you talk to us a little bit about the finances of this? You started this by telling us that you’ve decided how to use the money from Detroit Demo Day. I believe you won $200,000. You have told us previously that you’ve put $50,000 toward marketing. Are you spending the rest on the franchise consultant?
Dana White:
I am. Well, not just the franchise consultant, but everything that goes with the franchise consultant. There’s legal, there’s marketing, and PR, once you get up and running. They set everything up for you, and then you use your remaining dollars to execute on the setup of the marketing.
Loren Feldman:
Have you figured out what the package is going to look like, what somebody has to pay you, and what you are going to demand they invest in building their location?
Dana White:
Yes. We don’t have a hard number right now, but we believe, just by my competitors—what they’re deeming are my competitors, which are other blow dry salons—the franchise fee is anywhere between $35,000 to $45,000 to start, just for the franchise fee. And then we’re thinking that you’re going to need probably anywhere between $500,000 to maybe $1 million to $1.1 million to open one, depending on where you are, what you decide to do, all in. They’re very happy with that number because it’s significantly cheaper than other blow-dry hair salons.
Loren Feldman:
Jay, you like starting businesses. Are you interested?
Jay Goltz:
Not in the slightest.
Dana White:
Not at all. Jay cannot be a franchisee. No way.
Stephanie Stuckey:
I had a question about whether there’s going to be a monthly percentage of sales fee assessed in addition to that and an allocation towards marketing?
Dana White:
Absolutely. There are royalties every month. We’re really early, so we don’t know what that royalty will be per month.
Jay Goltz:
I’m surprised that $200,000 is going to get this boat floated. I’m surprised that after you pay the consultants and the lawyers and the accountants and the marketing materials and the blah, blah, blah, that $200,000 is enough money to prime the pumps on this to where you start getting cash in from people to do this.
Dana White:
Two hundred thousand dollars is enough to get the ball going so they can give us everything we need to use the rest of the money to market and market digitally. It’s not like we’re going out and buying national television ads to market. Digital marketing I have found has made it more effective and significantly cheaper to get leads when it comes to that.
Jay Goltz:
I have looked into franchising. My frame business was growing like crazy, and I thought, “Oh, gee, I should…” I did talk to some franchise consultants, and it seems to me that they would always tell you, “You need to have two or three successful locations to use as a prototype.” How’s that work?
Dana White:
COVID. I had two locations, and they’ve seen my numbers and have said, “Okay, you’re doing better than most hair chain salons.” And I didn’t realize that. I thought I was doing meager, sad numbers. No. They said, “There are salon hair chains that don’t break $20,000 a month, and you do—even in a pandemic.”
Stephanie Stuckey:
And you are offering something very unique in your marketplace, which I think is a strong selling point.
Dana White:
There isn’t one out there.
Stephanie Stuckey:
Exactly.
Dana White:
And when I was on the phone with Goldman, the other people—the women who are in my market—screamed! She said, “I work at Goldman Sachs”—this is yesterday’s call—”I work 12 hours a day. Do you mean to tell me at seven o’clock in the morning, I could go get my hair done and still be at my desk by 9 a.m.?” I said, “Yes.” “Or I could come after work, and I could just walk in after I get off of a conference call at six o’clock, meeting you by seven, and be done by 8:30?” “Yes.” She’s like, “I don’t think you realize what Dana’s business is doing.”
Jay Goltz:
That’s why I think there’s a very good chance this is going to be a home run. I do think the market is going to recognize that, and I don’t think you have a choice to grow it organically, because I think someone will just jump on it and get some investor money and beat you. They see your three locations are working well. Why wouldn’t somebody with money just go ahead and come up with a different name and do the exact same thing? I think franchising will allow you to get out there faster.
Dana White:
And the hiccup for that, I was told by the consulting group is, you have to be taught how to manage a walk-in-only salon with volume. That’s something you have to teach, or put the systems in place. That takes time. You have to put the systems and the operations in place in order to do it, manage it, and do it successfully for eight years.
If it were a burger joint, “Okay, here you go.” If it’s a coffee shop, “Here you go.” But with thick and curly hair, and an operating environment of walk-in-only… On Easter Saturday, we had 13 women lined up outside. All of those women were in and out in under two hours from the time they started. For those who did have a wait, because we just didn’t have the staff volume to get them all in at the same time, we make it easier for them, and they don’t mind. But the busiest hair day ever for black women is Easter Saturday. And the fact that all of our metrics had everybody in and out in a certain amount of time, the model is solid. My hair-traffic controllers do a great job, and now it’s time to have a team help me make this something that we can duplicate nationwide, if not worldwide. That’s it.
Stephanie Stuckey:
That’s it. That’s exciting. No, I think you can do this, Dana. I really do. It all depends on what your business model is and what your goals are. And this aligns with the direction in which you want to go. I think it’s exciting and you’re offering something incredibly special.
Dana White:
Thank you.
Loren Feldman:
Dana, I think we understand why you decided to do this. Obviously, there are no guarantees with any decision, but I think it makes sense to all three of us. What aspect of this are you most concerned about?
Dana White:
I’m most concerned about the culture. Will I be able to impart a culture of Paralee Boyd in an industry for a market that hasn’t changed in over 100 years? I think what gives me hope is the fact that I won’t be doing it alone, and then there are people out there who do get it.
For example, on the phone with the franchise consultant group, they get it immediately. Everything is just clicking on so many cylinders. I got emotional, because I felt like that puppet in that GE commercial where everybody’s yelling at it and throwing food at it. “Get out of here!” And then he went to the one company that said, “You know what, come here.” They cleaned them up, put them on stage, and it’s beautiful. That’s how it feels.
Jay Goltz:
And you’re gonna get sued eventually, and that’s okay. No, I mean it.
Dana White:
It’s okay.
Jay Goltz:
It won’t happen a lot, and you’ll settle it and move on and sell to someone else and fix it. But you know, that’s probably gonna happen.
Dana White:
I asked iFranchise Group: Why are your litigations so low? They said, “It’s all in how we set up the operations. If you are a franchise owner who wants to sell them and walk away, we probably won’t even take you on.”
Stephanie Stuckey:
And there’s more of a challenge when you’re looking at a service base versus a product base, and Stuckey’s a bit of both, but primarily product. We can control the products that we supply the franchisees, but the service base gets a whole other level of operation. I find franchising absolutely fascinating.
Loren Feldman:
Well, I love the fact that you and Dana are going in opposite directions, and as we continue this conversation, I suspect you’ll be able to help each other.
Stephanie Stuckey:
Absolutely. It’s all about your goals, and there’s no right solution. It just depends on where you want to take your business and your brand.
Dana White:
I think so.
Loren Feldman:
Obviously, we will be talking a lot about this in the future. I want to hit a couple other things in the time that we have left. Stephanie, I know you’ve had some pricing issues of late. Tell us about that.
Stephanie Stuckey:
Yes, we’ve been dealing with SKU rationalization and pricing. Lots of fun getting down in the weeds issues with Stuckey’s. But we are rolling out, literally—our pecan log roll is rolling off the line. And we will have our packaging done—
Loren Feldman:
This is the pecan log roll that you’re making yourself for the first time in a long time at the factory you recently bought.
Stephanie Stuckey:
That’s right. After decades of outsourcing our product line, we needed to up our candy game. If we’re best known for our pecan log roll, which is what we’re known for, and we’re producing a subpar quality product, then we need to figure that out. So it’s taken me a year and a half to get to this point. I’ve had to get a business partner who knows the manufacturing space. He’s moved to Wrens, Georgia to manage the candy plant.
So here’s our dilemma, and I’d love feedback on this: Do we price to our current customer base? Or do we price to the customer base we want? Because our brand has frankly been cheapened over the years, and we’ve gotten into more of a C-store market where we really want to be more of an upscale, gourmet chocolate, which is where I think we belong, or a gourmet candy, a Southern confection, quality product. The quality is amazing. It is so much better. So we’re making a better product that’s going to cost slightly more. It may very well cost us out of our current customer if we price it where we need to be making the profit margins that we want to hit. How do we go about that?
Do we continue to produce the old product that we’re outsourcing as a stopgap for now so we can keep the profit flowing? And then we’re slowly introducing new markets, and we’re getting into better channels, and we’re getting into more gourmet locations. And as we grow in that more gourmet niche, do we cut off that C-store business? Or do we ask the C-store business, “Okay, we know you’re used to buying a Snickers candy bar for like $1.50. Are you going to pay $2.99 for a pecan log roll that’s the same size but better quality?”
Dana White:
I think the answer is yes, and I think you should jump. I think you should bring them to where you are. I go to Whole Foods, and I’ve spent $4 on a candy bar and I loved every bite of it. If you are increasing your quality, increasing your products that go into that pecan log roll, then they should pay for that. I don’t think having a transition is a bad idea, but I wouldn’t have a long transition.
One of the best decisions we’ve ever made was raising our prices, because we do offer more now. So for you, if you’re offering better quality chocolate, then the customer will pay for it. And you’d be surprised how much they’d be willing to pay. Even your current customers who are paying two bucks or $1.50 will go up—especially if there’s a fair transition.
Stephanie Stuckey:
I think a Whole Foods customer would buy at that price, and we actually do have a product line that could do well in Whole Foods, because we have a whole snack pecan line that’s very healthy and all natural. But would a C-store customer? Will they pull over at a BP gas station on the interstate highway, and they’ve got a Stuckey’s section in the store, will they pay $2.99 for a pecan log roll when right now they’re paying $1.19?
Dana White:
I think so, and I’ll tell you why. Because they already recognize, they already know what they want. Some may not. I’m not saying they all will.
Stephanie Stuckey:
It’s a volume game, right? You can have less customers at a higher price and still hit your marks.
Jay Goltz:
Okay. I’ve been very quiet, waiting.
Stephanie Stuckey:
I’ve been waiting for you, Jay. I’m ready.
Jay Goltz:
I have one word. I can tell you the answer. You said, “The margins you want.” This has nothing to do with want. This has to do with need. You need a certain margin, and that’s what you’ve got to charge, and that’s the way it goes. Dana was correct: Some will pay it, and some won’t. You just answered it. And the fact of the matter is, I can show you the easy math on this. If you raise your prices 30 percent, and you lose 30 percent of the business, you’re way ahead, because you’re bringing in the same amount of money, basically, except your cost of goods sold is much less.
In this case, my guess is you’re going to raise your prices, and you’re going to lose less than that. It’s going to be hard to lose money on this deal if the product’s better and the packaging looks better. You will absolutely lose some customers. There’s no question, but it’ll be okay. I mean, better to lose a customer for price than lose them because you’ve got bad service, because there’s not a lot of upside to giving bad service. You’re not saving a whole lot on bad service. Whereas at least if you lost them for price, you made it up on the other eight people who did pay the price.
You charge what you have to charge. That’s the moral of the story. I would transition it over. You can play around with it and see how things are going, but you don’t have to make a decision tomorrow. You can start it and see what happens. I’m sure many people will pay more for a better product.
Loren Feldman:
You all know where Stephanie wants to get, where she wants to be eventually.
Stephanie Stuckey:
Yes, how do we get there?
Loren Feldman:
Getting there could result in a significant short-term loss of revenue if those C-stores don’t place orders and she hasn’t lined up her new customers yet. There could be a tough period. How big a problem would that be, Stephanie?
Stephanie Stuckey:
It’d be a problem. And we’re running projections, where we do a 35-percent margin, we do a 40-percent margin, we do a 50-percent margin. We’re running the different margin scenarios to see what we can afford to manage. We’re also looking at shipping direct from the manufacturing facility versus shipping from our distribution facility, which is going to save us a significant amount.
So we’re really looking at how we do business overall to provide the best quality product to customers at as fair a price as possible, and also upping our customer game. Actually, I do have to solve this somewhat, like, tomorrow, because I’m putting together a proposal for a resort hotel chain that wants to put us in their marketplace. It’s a captive audience. It is a thousand beds in a whole resort complex that’s walled. The people going to that marketplace are going to be paying a premium because of the convenience, and they want to put a Stuckey’s section in. We’re deciding that price point, like, now.
Jay Goltz:
I can help you with this. I knew the word that was coming out of your mouth. I saw it coming a mile away. I was waiting for you to use the F word. I was waiting to hear you say, “fair price.” I’m here to tell you: It doesn’t exist. There’s only one thing that exists: “appropriate price.” So if you’re selling a beautiful high-end product that is great quality, and you’re in a resort in the middle of nowhere, the appropriate price—
Stephanie Stuckey:
You’re not getting fair.
Jay Goltz:
There’s no fair in this. It’s appropriate.
Stephanie Stuckey:
You’re getting appropriate for the marketplace.
Jay Goltz:
The appropriate price. I know because I’m in the framing industry. Half the frame shops in the world don’t make any money, and they run around going, “Well I want to be fair.” And I go, “Is it fair that you don’t make a living?” I go, “These people are driving up in expensive cars and laughing to themselves. And you don’t even make a living. Is that fair?” Forget fair. Appropriate.
Stephanie Stuckey:
I love that. If I take anything away from this show—and I will take a lot—but I am going to forever say appropriate, not fair.
Jay Goltz:
It took me 20 years to figure that out.
Stephanie Stuckey:
That is so right. And it is all marketing, right? Because I’m gonna pay more for Nike sneakers because I absolutely love Nike, and I read Shoe Dog, and I think Phil Knight is amazing. And it’s a cool brand, and that brand says something to me on a personal level, even if it costs more.
Jay Goltz:
Right.
Stephanie Stuckey:
Marketing and branding and telling the story of your product is critical to whatever price point you want to set.
Jay Goltz:
The other lesson is, Orville Redenbacher invented gourmet. We’re so used to it now, but he invented gourmet popcorn. And people said, “What? You can buy a two-pound bag for 40 cents. What?” And the answer is, “It’s $3.” And in your case, the pecan roll, it’s $3. No one’s gonna have to mortgage their house to buy a $3… So yeah, it’s $3 instead of $1.50. It’s still $3. That’s kind of the issue. If somebody wants it, they’re gonna pay the $3.
Stephanie Stuckey:
We have had a raging debate at Stuckey’s about this, by the way, just so you know. We’re getting the, “But if I see a Stuckey’s pecan log roll right next to a Snickers bar…” Yeah, Snickers are cheaper. I’m like, We’re not competing with Snickers.
We are a Southern confection recipe passed down from my grandmother since 1937 with pecans that are grown in Georgia and are the freshest, most delicious pecans you’re gonna find anywhere in the world. You can’t find that anywhere else.
Jay Goltz:
My, my newest Jayism is, “Everyone who speaks in absolutes is always wrong.” So the person who goes, “I wouldn’t spend that.” Okay, I accept that. But would you? A hundred people walk in. A hundred people aren’t going to go, “I would never spend…” It’s not a black-and-white thing. Some people will pay it. Some people won’t.
Stephanie Stuckey:
I don’t need a thousand customers. I just need 100 of the right ones to go into that convenience store and buy them.
Loren Feldman:
Okay, so you guys have been way too interesting today. We’re running long. I’ve got one more topic that I’ve got to cover before I let you go. I think we can do this fairly quickly. Jay, last time you were on the show, I think a couple of weeks ago, you were all excited about the new business you were starting selling art online. Can you tell us, have you made any progress with that?
Jay Goltz:
That’s an old idea.
Loren Feldman:
It was two weeks ago!
Jay Goltz:
I’m opening a cafe for my home store.
Loren Feldman:
Wait, wait. What happened to the online art store?
Jay Goltz:
Two things. I was having a really good day that day, and then the next day, I started to see what I’ve been talking about for months. There are some people who are on the edge of this year-long COVID thing, and people are stressed out. I had a tense week, and I had to take care of that stuff.
But also, in the meanwhile, because we’re opening up again, and because there’s nowhere to go out to eat right around my place. I’ve got this beautiful, big 6,000-foot lot between my home store and the frame business, and I’ve got plants out there. I’m working now on we’re trying to put together a little Jayson Cafe thing where they can come in and hang out, and so that’s the new idea. I’m putting it on the back burner for the moment.
Dana White:
Jay, make sure you use furniture from Jayson Home.
Jay Goltz:
Yeah, absolutely. That’s all part of the magic. They come into the store, and they go, “Oh, I love this store. I wish I could live here.” I’m telling you, they say that regularly. So we’re gonna let them live there for a couple hours. And I found the guru of coffee in the city of Chicago. He’s extremely into this. I found the guru of pastries. These are really well-known people. So we’re putting together a plan there, and I’m going to do that, probably.
Loren Feldman:
Jay, when you told us two weeks ago about your idea of opening the art store online, you told a little story about talking to an accountant, I believe, who told you about the tremendous percentage of entrepreneurs who make the same mistake. They make a lot of money in their business—
Jay Goltz:
That was a banker.
Loren Feldman:
—and then they decide they just have to open a restaurant.
Jay Goltz:
This isn’t a restaurant. Back to my five things. Maybe I’ll put 30 grand into it or something. This is not a $300,000 venture, and there’s no leases. It’s a small thing. It’s kind of celebrating the end of COVID. We want to celebrate for our customers, and I believe it’s going to be a big hit. And there’s not a whole lot of downside. There just isn’t.
Loren Feldman:
How quickly do you think you can have this up?
Jay Goltz:
It’s not easy. I’m working on it. We’re trying to do it in five or six weeks, but I’m not sure I can pull it off. I’ve got some consultants we’re interviewing. You’ve gotta get permits. It’s a little trickier than it appears, as usual. So I’m working on it.
Loren Feldman:
So in two weeks, you might tell us you’ve changed your mind.
Jay Goltz:
I should absolutely have some better input in two weeks, yeah.
Loren Feldman:
My thanks to Jay Goltz, Stephanie Stuckey, and Dana White. This was great, guys, as always. Thank you for sharing.
