⛫ The Bagel Wars

You can hire accounting, sales, marketing, customer service, or operations pros for 70% less than local hires - in just days.

They work with numerous multi-unit franchisees and franchisors - enabling efficiency that frees up your best people to focus on the highest leverage work.

Since their inception 70+ years ago, only 5 items have been added to In-N-Out's 15 item menu:

• Lemonade

• Dr. Pepper

• Milkshakes

• Hot chocolate

• The famous "Double-Double"

They’re the epitome of keeping things simple, so they can execute with perfection.

On a related note, in my latest podcast conversation, my guest mentioned that the top 3 sandwiches at his bagel shops represent 51% of revenue.

But at one point, they had 32 sandwich options with 11 of them representing 91% of sales. Which means 21 EXTRA options were representing just 9% of sales.

Naturally, he trimmed the menu quite a bit…

I look at many businesses, restaurant or otherwise, that are offering so many services because they want to appeal to as many customers as possible.

But in that effort to appeal to the masses, you create inefficiencies in your business, and miss the opportunity to signal to your customers what you’re all about.

There’s probably some exceptions, but the vast majority of great franchises and chains started with an incredibly limited offering, and have either kept it, or very slowly added to it. Keep it simple!!

If you’re interested in diving deeper on why simple is better, I highly recommend listening to the Founders podcast episode on Sol Price (the man who invented the wholesale club model aka Costco’s model), where the host discusses the “intelligent loss of sales” theory.

Jay Rushin acquired H&H Bagels in 2014. He launched franchising in 2021, and today has 20 locations open and another ~100 units in development.

I came away from this conversation thinking this is a highly underrated brand relative to PopUp Bagels, the franchise that’s valued at over $300 million and has received a lot of media coverage due to their funding and buzzy Instagram.

But H&H appears to be a viable competitor and is also positioned much differently.

For one, as it stands today, they have the same amount of franchisees. Yet PopUp Bagels markets that they have 300+ units sold, whereas H&H says they only have 100+ units in development.

If you have the same number of franchisees, how many “units in development” you have is a function of either selling larger territories, or believing you can, believing markets can support a higher number of units.

The reality is, the only thing that matters is how many locations get open and how they perform, everything else is just noise.

For H&H, so far their average unit volume is north of $1.8 million (out of roughly 1,600 sq ft), with their top location posting revenue north of $3 million.

And they’re doing this with a menu and identity that looks very different than PopUp. No rotating menu of schmears, and no celebrity investors (Jay dumped his life savings to acquire this brand).

H&H is a “meal-based brand”, and that distinction left me wondering - how sustainable (on a nationwide basis) are the other bagel brands who are just offering bagels and spreads? Will they have to add more to their menus over time?

Overall, I really enjoyed this conversation with Jay, and I’ll be keen to follow the bagel wars - as H&H might be setting themselves up to win in the long run.

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