David Ostrowe
President, O & M Restaurant Group
Franchisee, Burger King

David Ostrowe has over 18 years of Senior Executive experience in operations and consulting.  His extensive experience in all phases of business development, through years of field and corporate level, multi-unit managerial positions has provided him with a diversified practical business experience based strongly upon people and financial development. Current and Past holdings include: Personalized Management Associates, a national executive search firm, Ostrowe and Associates, a candidate marketing service, O&M Restaurant Group, a multi-unit franchise of several national restaurant chains, and 180 Business Solutions, a Consulting and Acquisition Group.  David Ostrowe’s focus is providing leadership and incite both employers and affiliates.  He is completely focused on leading the industry in development, quality and service.  Listed as a top 50 Growth Company in Oklahoma, Ostrowe Companies has grown through acquisitions and through the development of original concepts.


 Multi-Unit Franchising Articles

High-Flying Franchisee
High-Flying Franchisee


OCTOBER 27, 2008 08:10:00 AM

Ex-Navy Veteren deftly steers Oklahoma's Burger Kings to success

David Ostrowe is a man on a mission—or 20. First, he says he's really working hard to be a great dad. "It's important to me to be the 'Jolly Green Giant' to my daughter, so I'm really working at it," he says.

The former Navy combat aircrewman, who is FAA Instrument Rated and flies his own plane, also continues to work hard on growing the Burger King brand in Oklahoma.

President of O&M Restaurant Group, Ostrowe took over the state's Burger Kings after a franchisee shut down 14 restaurants in the Oklahoma City area. He wants the brand's reputation in the state to be spotless again. "Burger King is a great brand. I can't say enough --GOod about the product and the people there," he says.

There's also his other business—180 Business Solutions—a management and training consulting firm with franchisee and franchisor clients across the country.

Ostrowe flies his plane every chance he gets, both for work and for pleasure. Obviously, he's a sailor too, although he spent much of his Navy time in the air. The Louisiana State University graduate, who's had culinary training at Johnson & Wales University, had his first experience in franchising as an assistant manager for Taco Bell in 1991. And under PepsiCo's auspices, he became manager and multiunit manager.

"I knew next to nothing about franchising, but back in the PepsiCo days, they truly trained great managers with great systems and processes, and my business still rests on that foundation," says Ostrowe.

"I've always been able to look at an operational problem and solve it. I connect with people and can logically explain the system to them and empower them to follow it," he says. "Our business is all about people, process, and performance. Years later, that still holds true: great people following great processes will get great results."

Says Ostrowe, "I've always felt that I'd rather put money in our pockets than in a corporation's," he says. "A few years back when I first talked about becoming a franchisee, everybody looked at me like I was crazy. They said 'It's cleaner on the corporate side. Why do that?'"

Before partnering with Burger King in 2003, Ostrowe held executive positions with the RTM Restaurant Group and Church's Chicken, and owned four Captain D's restaurants. "I like to take under-performing restaurants and turn them around, but I really like this brand and I think I'll stay with them for a while," he says. "We've shown the consumers in Oklahoma that we're serious about being players in this most competitive burger market, and they've rewarded us."

When he looks at all he's been able to do with Burger King since 2003, he only wishes he'd started on the franchisee side with such a strong brand 10 years earlier.

Ostrowe says by the time his daughter, now 10, was 18 months old, he'd "spent one third of her life in a hotel room. I knew there had to be a better way." The Jolly Green Giant trainee seems to have found it.

Name: David Ostrowe
Title: President
Company: O&M Restaurant Group, Oklahoma City
No. of units (by brand): 8 Burger Kings


Age: 39
Family: My wife of 15 years, Camilla, who's a lot smarter than I am, and her little "clone," 10-year-old Isabella.
Years in current position: 5
Years in franchising: 17

Key accomplishments: Working forward and backward, we've made Burger King a viable brand in Oklahoma again; being named one of the Top 40 Leaders Under 40 in Oklahoma and a member of the Young Presidents' Organization; being an FAA Instrument Rated Pilot and an accomplished sailor; serving on the board of Allied Arts in Oklahoma City; and working in a regional food bank to make sure people in our community—especially children—get fed.

Biggest mistake: Hiring the wrong people—my most costly mistake by far. As a matter of fact, I've done that more than once.

Smartest mistake: I've made a lot of smart mistakes. Our attitude is that we make the best of it and make it work. And if that isn't right, at the end of the day, it's my fault.

How do you spend a day, typically? I start every morning by 7, reviewing the numbers at store level for the previous day. By 8:30 or 9, I've had multiple conversations with Tim Morgan, my VP of ops, who's already in the field. By 11, the accounting on the ledger is completely up to date in real time. I manage calendars electronically, and I always make my appointments on time. It's how I stay organized.

Work week: I maintain office hours or a visible presence in the field where I can be reached Monday through Friday from 7 a.m. to 6 p.m. On weekends, I make lots of pop-in operational visits. Tim and I do a lot of phone work. We're never really off and we don't screen our calls.

Favorite activity: Clearly, flying. I have a Cirrus SR22, and a Cirrus Jet on order. Both are economical to use for both business and personal. My Cirrus gets better gas mileage than my wife's Suburban. It's my favorite toy—my boats have been neglected lately—and has also enhanced our family life, enabling us to take short trips to visit family in Louisiana and Mississippi. (For you IRS readers out there, we do meet the requirements.)

Exercise: I run four times a week, five to six miles each day. I find it helps me download and purge unnecessary clutter. I load fiction onto my MP3 player for enjoyment when I run, and I like to swim laps. Since I'm a huge BK consumer—I eat it every day of the week—I have to keep myself in --GOod physical shape.

What do you do for fun? Flying and sailing, spending time with my wife and daughter.

Books/magazines recently read/recommended: I'm a huge fiction reader. My favorite author is Ken Follett. I guess his latest is World Without End—it's an excellent read. On my desk, I have Horizons from YPO, Area Developer, and a flying magazine.


Management method or style: Very hands-on, and we don't sleep much. We give people the tools and the autonomy to make the right decisions. One of our big management philosophies is that you'll never get fired for making the wrong decision. If your decision is ethically sound and within company guidelines, your decision stands even if I disagree. On the other hand, you could lose your job by not making a decision.

How close are you to operations? Pretty close, although I try not to micromanage. I do question things that are --GOing on, but I'm learning. The other day, Sarah Malone, the third full-time person in our main office, asked me if I wanted the details of a project she'd managed, or if I simply wanted to know if it had been handled. I said I don't need the details, but I do want the assurance that somebody does. With Tim and Sarah, I have that. We're a team.

Greatest challenge: Our biggest challenge—I see it as our biggest area of opportunity—is moving forward. We're about 110 percent staffed in the management consulting business. Since we're overstaffed, my minimum hiring requirement is that a person has to be better than our top person in that area.

Personality: I speak from the heart, but in all my interactions with vendors, employees, and franchisees, I treat them with respect. I'm a realist, and in our business, nothing surprises me any more. Things are --GOing to happen regardless of the quality of the system or the process. But people never have to worry, because I will tell them the truth. They might not like it, but they'll know it's true.

How do you hire and fire? I fired my first team member in three years. Somebody --GOt into a confrontation with a customer, and he didn't understand why it was a problem. In that case, I terminated him and wished him luck.

Find --GOod people? We use every source under the sun, from personal referrals (we pay employees for them) to job boards and headhunters. And recruitment for us should occupy 25 percent of every salaried employee's time. It's the only way we've grown.

Train them? We've rolled out the improved Burger King Foundation program, and we hold our training managers accountable for their trainees. Nothing irritates me more than finding a --GOod candidate and learning that we threw them to the wolves and they never --GOt a --GOod foundation to grow with us. Tim Morgan and I audit all our training on a weekly basis. We ask, "What do you need? What can we do better?" We validate their training through weekly testing on everything from operations to management to overall leadership. We also use the psychology test Burger King developed.

Retain them? Our people are the highest paid in their field, but we want to do more than offer competitive salaries. We want to show our employees that, at the end of the day, we care about them. We offer employee loans, a morale assistance fund; when bad things happen—somebody's house burns down—we all rally around them as a team. We're known for that. Coming into our brand after 14 stores had shut down, we didn't have a --GOod reputation in Oklahoma City. We've worked hard to build our reputation in the marketplace, and we'll be with this brand for a long time. I can't say enough --GOod things about the Burger King product and team.

"Growth meter"—How do YOU measure your growth? We have an entire plan in place every year, and we're more financially driven than anything. We never miss our projections, and we share our plans and results with our employees. We're all tied to the same plan from Day 1. The Young Presidents' Organization has also helped me to hold myself to a high standard. It's been a great vehicle for sharing stories and solutions.

Annual revenue: $13.5 million

2008 --GOals: Implementing our 10–15–20 plan: growing by 2010 to 15 units and $20 million in revenue. We also have an acquisition pending.



Managing the numbers


Tips for Successful Multi-Unit Operations — David Ostrowe
David Ostrowe

Debb Lowe talks to David Ostrowe, a multi-unit and multi-brand franchisee in the United States. Debb caught up with David in Scottsdale Arizona, at a multi-unit franchising conference in April 2008. As a multi-unit and multi-brand owner, David has put in place a management structure where a multi-unit operator is responsible for running a group of stores. This discussion covers the following topics:

  • How to structure a multi-unit operation.
  • How hands-on do you need to be?
  • The role of technology in running a multi-unit operation.
  • Tips for retaining employees through incentive programs.
  • How to grow from two stores to many.



Let's Make A Multi-Deal!
Franchisors, Developers Pursue The Perfect Match



When it comes to evaluating a potential area developer, don't marry for money, say franchisors. With money as a given, look for that indefinable "fit" and you're --GOlden for the long haul.

When it comes to evaluating a potential franchisor for a multiple unit deal, verify the numbers, say franchisees. If they're --GOod, see how you get along with the "family" you're about to join. If all --GOes well, you'll be working closely and making money for decades to come.

When it comes to marrying for love or for money, in the franchise business it had better be both. Unlike real-life marriages, where someone will get rich eventually, even if both parties are miserable, in franchising you'll get neither. Money does not buy success in franchising, even if you outlive or outlast your "spouse."

"You can have the greatest partner, but the unit economics have to work," says Rocco Fiorentino, a Krispy Kreme area developer with a deal for 27 units in the Philadelphia area and western Pennsylvania. "The relationship is important from an operator perspective; brand affinity and unit economics are important from an investor perspective."

Assuming the unit economics work, there are the intangibles, the "click" that happens (or doesn't) when people meet. "It's one of those things," says Darin Harris, VP of franchise development for Captains D's Seafood. "If you or I are looking for employment and --GO into an interview, there are questions we ask about each other and our background, our objectives and long-term --GOals. You immediately see where there's a marriage or where there's not."

Looking for Mr. --GOodDeal

Several of the operators interviewed for this story had cashed out of successful multi-unit operations-bagels, burgers, tacos-and were in the "flirting" phase, shopping for the right deal but sitting pretty enough to be patient and ne--GOtiate on their terms.

"We originally were looking at several different markets," says Clarence A. Mitchell III, who in 1998 was majority owner of 15 Taco Bell franchises in Charlotte. In 2001 he sold his holdings and started looking for another restaurant concept. Mitchell, who has spent nearly 30 years in the restaurant industry, began as an 18-year-old employee and worked his way up.

Along with his three operating partners in Serve Holdings, Mitchell soon found Captain D's an attractive potential partner, but they didn't tie the knot until 18 months after their initial meeting. They closed the deal on Nov. 3, 2003, agreeing to buy 20 corporate locations in the Memphis and Jackson, TN areas, and to build 15 more in the next 5 years. The territory includes sites in Arkansas and Missouri.

"When we first sat down with Captain D's, we zeroed in on this market as the ideal location for this organization," says Mitchell. It was a large deal, and they needed to be certain it was the right area and the right market at the right time.

"We have a buy-and-build strategy," says Mitchell. "As we started looking for the next move for our company, we wanted to be sure there was an acquisition opportunity big enough to be a springboard for growth."

With the other deals they considered, the necessary elements did not fall into place. Some franchisors didn't have enough restaurants they were willing to sell, or the ones they did want to sell were not generating the cash flow they wanted. "We buy cash flow," says Mitchell. Some offers were simply in the wrong part of the country.

"We're extremely happy with the results thus far," says Mitchell, who will remodel the 20 stores with Captain D's new prototype. "From a pricing standpoint we feel that we --GOt an excellent opportunity. We have a lot of upside left in the market from a growth standpoint with the existing locations. And from a developer's standpoint it's not oversaturated."

Another reason is that Captain D's is not another burger chain. "It's a niche concept, where there's limited competition for the product. When I ride down the street I don't see a lot of competition," says Mitchell.

"They're able to --GO into a market where they may have other restaurants of their own, but no additional territory they can develop," says Captain D's Harris. "They can build out a brand that's not competitive with their brand. That's something we see a lot." This also gives area developers a way to retain valuable employees by providing them with a new opportunity for growth within the organization.

Four Is Enough

Michael McCracken also began early in the restaurant industry, starting with burger chains in high school in the late ' '60s and moving continually upward. By 1995, after 20 years as a Hardee's franchisee, he owned 31 restaurants and knew it was time to get out. "I saw the crash coming for hamburger chains, especially Hardee's, and sold out on top," he says. 

When a bidding war for the units ensued between two Burger King franchisees, McCracken took the best offer to Hardee's corporate in July 1995, which matched the offer plus $1 million. Time to retire at 43? Couldn't do it. Too Type A, he says.

After shopping around, he climbed aboard the Krispy Kreme bandwa--GOn and spent two years with the company, working at a franchise and --GOing to school. But when it came time to award the franchise for central Illinois, he was offered a corporate job in Winston-Salem instead. He declined.

"It's a great company. I love 'em, but they made a decision to --GO with one of their best operators. I have no regrets. They made the right decision," he says. It was time for the free agent to begin his search anew.

"I looked at 50 different franchises. I looked at every franchise there was," he says. Some of the concepts that caught his eye included Zyng Noodlery, Bear Rock Cafe, Atlanta Bread Company, and Jason's Deli. "I wanted to be in the restaurant business, and I knew I could run anything."

In late 2002, during the Christmas holidays, his wife found Camille's Sidewalk Cafe on the Internet. "It was in an article on the top 50 franchises. She looked at every one of them and thought this made sense," he recalls. They traveled down to Tulsa a month later, met with the founders, David and Camille Rutkauskas, and decided to --GO with the concept. 

"They gave me a one-store deal. It turns out I'm --GOing to build four stores for them. That's all I want, to run those four very, very well. I've done the 30 stores across Illinois. Now I want to do four great stores." He has one open already in Peoria, which is Camille's top performer. Two more were scheduled to open in January 2004, one in downtown Peoria and one in the southern suburb of Pekin.

Why Do Area Developers Fall in Love? The reasons Fiorentino chose Krispy Kreme, Mitchell signed with Captain D's, and McCracken opted for Camille's differ for each developer-as they do for the other developers FranchiseUPDATE surveyed, and for the franchisors who signed them. The predominant reasons can be boiled down to two: 1) money, and 2) people. Both parties see a great opportunity to make money together, and to do it by developing a long-term relationship with like-minded people. 

But it's the nuances, the variations, the individual chemistry and corporate culture, along with the vagaries of the marketplace (think Mad Cow) that makes life interesting in the franchise lane. We've sorted out the "wish list" of what franchisors want from multi-unit developers, and what those developers seek in a franchisor into handy, bite-size bullets (see table). Now let's see what the players have to say.

Money Makes the World --GO Round

"Being a banker at heart, we looked at the numbers, the financials," says David Ostrowe, president and CEO of Ostrowe & Associates in Oklahoma City, discussing his purchase of four Captain D's company stores in October 2002. The biggest appeal, says Ostrowe, was the undersaturated, underperforming market. "We knew we could turn this market around fast."

Ostrowe remodeled all four stores in 9 months to reflect the new look of Captain D's. He also ran 26 weeks of TV last year, in a market where Captain D's previously had zero TV exposure. "Our commitment financially to this market has been tremendous, and the sales have paid off," he says.

As a franchisor of the four former company stores, Captain D's has earned more money in royalties than they earned in net profit when they owned the market themselves, says Ostrowe. "Both parties are making money now. Both parties have to win."

"When you have a concept with great unit economics, you want as many as you can have. Krispy Kreme has allowed me the opportunity to build units within 3 states," says Fiorentino. He signed a development agreement for 16 locations in the Philadelphia market, which includes the state of Delaware, and southern and central New Jersey. Later, he signed a second agreement for 10