From one franchise to an empire of 192
Roland Spongberg counts El Pollo Loco and Krispy Kreme among his brands.
The gig: Roland Spongberg, 67, is founder and chief executive of WKS Restaurant Group, based in Cypress. WKS has more than 5,500 employees and 192 restaurants in 11 states, mostly in the West. Spongberg’s company is the largest franchisee in the El Pollo Loco and Krispy Kreme Doughnuts systems as well as the largest Wendy’s franchisee in California. Other holdings include Denny’s, Blaze Pizza and Corner Bakery franchises. In July, Spongberg was named as an Orange County entrepreneur of the year by Ernst & Young.
Numbers man: Spongberg studied accounting at Brigham Young University and initially found success in commercial real estate development with a firm he and his colleagues named Spongberg, Kirkland & Associates. “I was a real estate developer who was very active in Long Beach, West L.A. and in other parts of Los Angeles and Orange counties,” Spongberg said. “I thoroughly enjoyed it. Had a great run.”
S&L crisis: But trouble was brewing in the early 1980s as a recession gave way to the beginning of the savings and loan crisis, which ultimately wiped out about a third of the nation’s S&L institutions. That had a serious ripple effect on real estate and other industries that were S&L customers. Spongberg and his colleagues did what they could, but the business wasn’t going to make it. “It was a tough deal. I remember I had all these banking people I had known very well for years and all were saying, ‘File for bankruptcy’ and ‘What are you doing?’ I said, ‘I’m trying to survive. I’m trying to keep this thing going.’ They said, ‘Just file.’ And then I did.”
Unfortunate expertise: Spongberg recalled that one of his nephews, then the head coach of the El Camino College baseball team, asked him to come give a talk to his players, saying, “You’re the biggest failure I know. And I want you to come and talk to my team. Because in baseball, you know, it’s more failure than success. You get two, three hits out of 10, you’re a hero. So I want you to come and talk about failure, and then how you responded.”
Lesson learned: “What I thought about wasn’t the hard times,” Spongberg said. “What I thought about were all of the things I learned going through that, that helped me.” One important lesson was that success in commercial real estate sometimes depended on factors beyond his control. “In the restaurant business, you build something, it’s full. We are the tenant. And so that cash flow is king. Where it’s very speculative in the development side, in the restaurant business it’s very steady.”
Leap of faith: After Denny’s Inc. bought El Pollo Loco’s U.S. restaurants in 1983, friends and associates encouraged Spongberg to become a franchisee. Despite lacking restaurant experience, Spongberg and a partner formed WKS Restaurant Group in 1987 and immediately began looking to acquire a franchise. The venture, which acquired its first El Pollo Loco in 1988, initially seemed like a terrible idea, especially with another recession looming. “My partner said, ‘Let’s get out of this, go. We’re not making money. This is not working.’ I ended up buying him out for not very much. I said, ‘There’s got to be a way. These things have to make money.’ ”
In the trenches: Spongberg parked a construction trailer outside one of the restaurants and made it his office, determined to figure it all out, he said. “What I found was a bunch of nice kids who could[n’t] care less. With no management. A customer walks in, and they say, ‘I’ll get with you in a minute.’ The chicken’s a little burned. They say, ‘Sell it anyway. We’ve got to cover the food cost.’ I told them we had to focus on customer service. We’ve got to take care of these customers. ‘Prepare that chicken properly, every time.’ And it was like magic. Simply like magic. Turned around in less than two months.”
The mantra: Spongberg’s pitch was to get his employees to take their jobs as seriously as he took his own. “Just get them trained, and get them on the same page. Say, ‘We’ve got to be good at this.’ They’ll do what they’re told. But when the leadership is not good or strong, they’re just going to be kids.”
The formula: As Spongberg’s franchise empire grew to dozens and then more than 100, adding more states to the list, he made sure every location had to have the right ingredients for success. “You’re looking at traffic, visibility, access. It’s really how many people live in that one- or two-mile radius. We look at daytime population, how many people are working in that onemile or two-mile radius. Because you’ve got to have two segments. You have to have lunch and dinner or you’ve got to have breakfast and lunch. It’s hard for a restaurant to make it on just one.”
Build a team: Spongberg is continuing to open new franchises and he’s learned he needs a strong leadership team to help him do it. “I’m really in the people business,” Spongberg said. “When I had six restaurants, I knew every manager, every employee. I could be in the restaurants every day . ... And I realized that, over time, the value of a general manager in a restaurant, the value of people.”
Family affair: “It’s a fun business,” Spongberg said. “I call it a family business because I’ve got three sons and a son-in-law that work here with me.”
Frequent flier: “I’m a traveler,” he said. “My kids are all raised. The timing is great. And so I’m probably on an airplane every other week for a few days. I’m going to visit restaurants. I’m going to conferences. I’m going to franchisors’ meetings.”
Advice: For anyone considering the restaurant business, Spongberg said: “There’s a great opportunity in franchising, to be a franchisee. It has very little failure. If you look around at any kind of restaurants that are branded, McDonald’s, El Pollo Loco, Denny’s, a few fail, but not many. So you’ve got lower risk. You’ve got a way better chance of making it. You’ve got people that are ready to finance you because you have the brand, the backing.”
Personal: Spongberg keeps busy with family, church and other activities. “You’ll find me on skid row at midnight every third Friday. I go up with a group, and we take about 200 lunches and some blankets, and some socks, and anything else we can find. I serve a lot in my church. I’m a member of the Church of Jesus Christ of Latter-day Saints. I’ve served as a bishop. I’ve served as a Scoutmaster.” He’s been married to his wife, Sandee, for 44 years. They have six children and 14 grandchildren. Spongberg said he loves spending time with his family, but he’s still got a little of that real estate developer in him, he said. “I just finished a selfstorage complex in Long Beach. Took me a long time. It’s on an old city trash dump. But I build things. And I enjoy building,” he said.