The statistics couldn’t be more accurate. Most businesses fail within the first 1-2 years.
Why is that?
Because Your Marketing Sucks!
It’s that simple.
Your Finance Business degree won’t save you.
How do I know?
That’s what I went to school for, and a Finance Business degree is worthless as far as owning a business is concerned. I’ve never used it for anything, including my 15 years in banking, and all 11 years owning 2 businesses.
The picture you’re looking at is a Cheeba Hut Sub Shop T-Shirt from a Flagstaff, Arizona location.
Cheeba Hut is a delicious sub sandwich shop with Restaurants in Phoenix, Colorado, and now Flagstaff.
The sandwiches are delicious and they have an awesome theme. The sandwiches are named after various marijuana “names, sayings, or slang”; Names like “Five-O” sandwich, referencing a cop, is one of my favorites, and they put, five different kinds of meat on it. Another example is “The Kind” Sandwich, which stands for premium quality marijuana, also known as “The Chronic”.
The business was started over a decade ago, and had two different shops I personally used to frequent.
One sub shop was between Priest and Mill Ave on University. The other sub shop was across the street from Mesa Community College, on Dobson Rd and Southern.
The sub shop was started by a Mother, and her son. They started selling Franchise opportunities about 10 years ago. My partners and I heard about it. We had already owned our bars for a year and were excited at the chance to own a Cheeba Hut.
Prior to meeting with the owners, we scouted locations for the new Cheeba Hut in Flagstaff. We discovered a location that was about to be closed for business. The name of the business was “The Alley”. They sold CD’s, Tapes, Videos, Records, and live band performances on occasion. The business was on the corner of San Francisco and Milton, just left of a business known as “Crystal Magic”.
We had the price negotiated down to $2,000 a month for rent, taxes and insurance. A triple net lease for that low of an amount, in that location, was unheard of.
The location was perfect.
Picture the corner of Mill Ave next to ASU in Tempe, or the corner of Stetson in Downtown Scottsdale where all the Restaurants and Nightclubs are. Yes, the location was that good, and still is.
After we had the location decided, we arranged a meeting with the owner.
Hal, Bob and I met at the Cheeba Hut on Dobson Road with the owner. He told us the Franchise fee was $50,000. We told him we have the $50,000, so let’s move forward. The owner said the Flagstaff location had already been promised to the General Manager of one of their stores. He made it clear, that if she didn’t have all of the start-up capital, one or two of “them” would jump into business with her, to get the business going, and take care of selling their share of ownership back to her down the road. He said that “they take care of each other”, and since the Flagstaff location was promised to their GM (Her), they only had a couple of West Phoenix locations as options.
I couldn’t believe the bunch of crap coming out of this guy’s mouth. Why don’t we all sit around the table, load up the peace pipe with Cheeba Hut’s finest weed, and have a smoking session. All I could think was, “This guy must be stoned all the time”. Only an idiot would turn down $50,000 cash. I literally felt like yelling, “What are you freakin high”??!!
We obviously turned down his counter offer for the west side of Phoenix, as we all lived in Flagstaff. That was the end of our possible ownership of Cheeba Hut. The guy was Stoned.
Now the location I told you about was eventually lased to a touristy retail shop. Approximately 100 yards North, at the next traffic light, is a Pita Shop called “The Pita Pit”. This Pita shop was opened a couple of years after we lost out on the Cheeba Hut purchase.
Long story short, 2 NAU graduates opened that Pita shop. They made ridiculous amounts of money. They even started staying open an hour after the bars close, so you could go there after bars close, for an economical price. Plus everyone always needs a place to go after the bars close. There were no other places to eat at the time. Denny’s, or Drive-thru fast food was your options. Eventually, the owners made so much money; they didn’t even need to be there anymore. They just have employees there now, and they reap the rewards of large monthly profits.
The same philosophy applied here that applied when we were trying to open our sub shop. This was the perfect location downtown. No other sandwich shops around. A reputable name. Marijuana fits Flagstaff perfectly, and people would have come in hoards. I would be retired by now. Yep. I’d be retired.
The reason why I told you this story is because Cheeba-Hut eventually did make it to Flagstaff.
Now I’m going to tell you how I helped launch their Grand Opening, with my Marketing Skills.
In 2008 I learned about a Cheeba Hut opening in town. I was pretty excited because I loved the sandwiches. The owners talked to a person I knew, so I decided to meet with them.
I met with one of the 4 owners, Lisa, and her General Manager, Michael. They were very nice, and they showed me where the new location was. The location is where a business called “Play it again Sports” was located, but closed down.
My first thought when I saw this was, “Bad Location”. The sub shop was in the same business plaza as a “Subway”. Cheeba Hut was also at the end of the plaza, behind a big square restaurant called, “Strombolli’s”. There was also a McDonalds next door to Cheeba Hut.
The sandwiches are priced similar to Quizno’s prices. This was a disadvantage in my eyes, because there are two lower priced restaurants next to Cheeba Hut. Again, the Cheeba Hut is also behind Strombolli’s Restaurant.
In addition to the bad location it wasn’t set up for a restaurant. It was a retail sports store.
As the owners were working on the restructuring of the leased location, Michael invited me to come in and check out the construction. I walked in to ditches dug with 5 foot piles of dirt everywhere. It appears they had to lay new plumbing, install a walk in cooler, and install a hood system, a Mens and Womens restroom, and all cosmetic and equipment expenses.
The actual cost was $500,000 for the Rebuilding, Lease, Liquor License Franchise Fee, and Equipment. Wow, is all I could think. This amount split between 4 different owners isn’t that bad. Personally, I think that amount for a sandwich shop is insane. So should you.
They could have picked another location that was already set up for a sandwich shop or restaurant. This alone would have saved them a couple of hundred thousand dollars. Again, on top of the expense, it was a horrible location.
Choosing a bad location was the first mistake, in addition to not being set up for a restaurant. This one very important decision can mean the difference between business success and failure.
Visiting the shop helped me put together a realistic timeframe for the Grand Opening. This was important because we needed time to do our marketing promotions, a couple of months prior to opening. It needed to be a structurally, sound marketing plan, in order for lots of people to show up, but also for longevity, and consistency so customers will continue to come back.
The first promotion I decided to do included promotions for Cheetah Hut at the most packed bar in town, Mine. There has always been one night “The Joint”, my bar, owned Flagstaff. That night was Wednesday night.
Wednesday I drop the price of well drinks to 25 cents, and Pabst Blue Ribbon Beer to 50 cents. I play old school hip hop, and nothing else. Breakdancing B-Battles, Guys and Gals bumping and grinding all over the dance floor, it’s a real singles meat market. In addition to college kids, people in their 30’s and 40’s come and party all night. Local people and tourists fall into it because of all the hype around town. My club is so packed; you can barely walk through it. A night created by yours truly, William Whitlow.
My decision was to do promotional materials like Frisbees, bumper stickers, coupons, hats, t-shirts, etc., given out on Wednesday nights to the patrons. I also decided to constantly do promotions over the microphone about Cheeba Hut coming to town, how much I loved their sandwiches when I lived in Phoenix, etc.
Mike the GM, and Lisa, one of the owners, came by every Wednesday night, to promote, and party their ass off. I introduced them to tons of people, shaking hands with fellow business owners, town friends, and college kids.
True story, Lisa started dating Killah Priest from Wu-Tang after he played at my club. It was pretty cool. He would come by “The Joint”, looking for her. I have multiple stories about celebrities like this one, I’ll throw at you out of the blue. FYI. Now back to the story.
This part of the plan worked wonderfully. And we promoted every Wednesday night, until the Grand Opening.
The next part of the plan was to let them know which bars people frequented. They also needed to know the theme nights, so they could see where large groups of people hung out, and on which nights. This idea was great, but some bars didn’t hold up their end of the bargain. The total amount of bars that cooperated was about half. Not too bad, because we were still able to get to our target audience and promote.
As far as newspaper and Radio I advised which ones were the best and usually just use them for Grand Opening advertisements, and then decide which ones to use on a consistent basis, to keep the customers flowing in.
Flyers were discussed and locations. Since NAU was directly routed to Downtown on San Francisco Street, the majority of flyers would be distributed there. Inside business locations with coupons on Index Card Stacks is a great ides, especially for tourists. I also reviewed other areas of town to flyer where large amounts of people frequent.
Setting up the bands was easy because I’ve booked a million bands over the 11 years I owned my bars. We decided on a Reggae style band to play while people were there in the daytime. Sound was the main concern, and we were able to use a sound guy I used for multiple shows.
Another part of the Grand Opening was to make sure fellow business owners, visited on opening day. The GM invited people he had formed relationships with to come. This helped spread the word to other business owners, and citizens in Flagstaff.
Along with consistently marketing at my Nightclub every Wednesday night, all the other marketing was in place.
The date was set, and we continued to market effectively with a huge promotion the week prior to opening all over down town and college. College is tricky because you get into trouble, but we used hungry college students to simply slide our coupons, and flyers, under the doors at every dorm room at NAU. Yes, that’s William Whitlow Black hat Marketing Baby!! Very effective. Ha ha ha ha ha ha ha ha!
The opening day was awesome. I came with my family. Other business owners were there. The owners of The Green Room were there. Many of my loyal customers, and lots of college kids were there. There was a line around the building.
When I ate the sandwich, I was blown away at how good it tasted. I asked Michael why they were so much better than the Phoenix locations. He said it was because the bread is made next door at a bakery. This was unheard of, and the quality showed in the taste.
Everything worked out wonderfully, and the Cheeba Hut continued to operate efficiently when Michael was there.
In 2012 Cheeba Hut changed ownership, and Michael left to pursue other career opportunities.
I hope you enjoyed Marketing That Works with William Whitlow.
Until my next Marketing Article, Keep On Marketing!