How I Did It: George Naddaff
As told to Leigh Buchanan
"No business, no problems. No problems, no business. Problems are opportunities for solutions." With that mantra, George A. Naddaff punctuates virtually every one of his stories. And there are so many stories. Now 77, Naddaff has run, launched, or taken national more than half a dozen companies. He's best known for Boston Chicken, whose shares soared 143 percent in a record-breaking IPO in 1993, the year after he sold it. (The company filed Chapter 11 in 1998 and changed hands twice more.) Naddaff's other ventures have included two day care companies, a business brokerage franchise, and, his latest baby, UFood Grill, a restaurant chain for the health conscious. "Cut my veins and salesmanship pops out," says Naddaff. "I love to sell what I believe in."
I was born in Boston, in 1930. My father came here from Lebanon and owned a grocery store. He gave people credit. The Depression came; they couldn't pay, and he went out of business. Then my dad worked in a shoe factory. The glue from the shoes did something to his skin that made him look like the Elephant Man. His hands enlarged. His face enlarged. He was out of work.
To earn money, my brothers and I shined shoes. My dad built me a shine kit. I'd wander to downtown Boston--the Combat Zone back then. It was full of sailors. I'd give them a spit shine and charge a dime. They'd give me 25 cents. I'd rummage around in my pockets pretending to look for change: "Gee, I knew I had some." The customer would get frustrated and say, "Keep the change." That was my first business technique.
My mother would give me a quarter from my earnings, and I'd go to the movies. My friends saw I had money and asked, "George, can you teach me how to shine?" I showed them the spit shine and the change trick. I didn't make any money--I was just helping my friends. Little did I know I was starting to think like a franchiser.
I found out you could make more money selling newspapers. Every morning an orange truck would appear on one corner of Tremont Street. Thirty kids would be waiting. The guy would hand out papers, and they'd all run down the street to the barrooms. A trolley line ran the length of Tremont. I would jump on and hang off the back with the newspapers under one arm--very dangerous, but I didn't have to pay. The trolley would take me to the end of the line, and I'd work my way backward, selling at bars the other kids hadn't been to yet.
At 13, I worked as a baker's helper in a restaurant. I mopped floors, washed pots. One day the manager--Red Litkoff--said, "One of the soda jerks didn't show up. You're working the counter today." Working the soda fountain meant engaging with customers. Old ladies would come from Beacon Hill for tea and crumpets. I'd take special care of them, and they'd leave 10 cents under the plate. It was a license to steal. I said, "From now on, this is my turf. Front of the house." At age 16 and a half, I became fountain manager. I was magnificent. Red used me wherever he needed me. I filled in for the short order cook. I worked with the waitresses. I learned about the mealtime rush; how to deal with customers; how to work for a tip. I was learning the food business.
School and I did not work out. So at age 17 and a half, I joined the Army. I got out in 1950. The first week home, my father says, "You'd better start thinking about college." I said, "Dad, I'm not going to college." He said, "Your brothers went to college, and your sister went to college." I still said no. "Then you'll get a job," he said. It was Sunday. I got The Boston Globe classifieds. I saw an ad that was made for me. "Wanted--Man With Car." I had a 1936 Pontiac. Man. Car. Boom.
Monday morning, I put on my tie and slicked back my hair. The address was a storefront no bigger than this office. There was a guy behind the desk. Hymie Braverman. He had a cigar in his mouth with the juice running down the side. He showed me baby furniture. A highchair that turned into a carriage that turned into a stroller that turned into a bassinet. Manufactured by a Jewish family that was chased out of Austria by the Nazis. The company was called Stroll-O-Chair, and Hymie had the Boston dealership. He said, "What do you think?" I said, "It's incredible. I want the job." He said, "You've got to put down $75 as a deposit." I said, "I'll come back tomorrow with the money." I told my father I needed $75 for a job. He said, "Why should you pay for a job?" I said, "You sell, you get a commission." He didn't understand "commission." I explained. His face got so red. When he first came to this country, my father sold imported handmade lace door-to-door. He had to lug these two big black cases from the South End to Beacon Street. He said, "No son of mine is going to sell door-to-door." I conned my mother out of the $75.
The next day I gave Hymie the money. I said, "What do I do now?" He gave me the equipment and an order pad. Then he said, "Get the hell out of here. Go and find babies." I put the stuff in my 1936 Pontiac. Then I sat in the car for a half hour, sweating. I thought, "What did I do? I took money from my mother. Find babies. Oh, God. Babies." I'm sweating and looking at this stuff in the back seat. "Babies… Diapers!" I came back the next day with a bunch of sales. Hymie said, "How did you do that?" I said, "I went to the South End where we used to play. I remembered there were diapers hanging from lines in the alleys behind the houses. I figured out where those lines were from the end of the street: third house, top floor. Fourth house, second floor. I went around the front, rang the doorbell, and yelled up, 'Hi. Are you the lady who just had the baby?' And she would say, 'Yes.' And I would say, 'I've got something for the baby!' " A great pitch! "And she'd say, 'Come on up.' And that was it."
I became national sales manager for Stroll-O-Chair, together with Aaron Spencer, now the chairman emeritus of Uno's. I trained thousands of salespeople in the art of walk-knock-talk-sell. I taught people not to listen to the word no but also never to interrupt. You need to know the objections so you can counteract them. Objections are like steppingstones across a brook. You have to step on each one to get to the other side.
Aaron and I were promised a piece of that company. But after 17 years, it became painfully clear they wouldn't give it to us. So we left. One of our dearest friends was an attorney who owned three Kentucky Fried Chicken units in western Massachusetts. He said, "You guys could make more money selling chicken." So we went down to Louisville and came back with a master license for greater Boston.
I'll never forget the day we graduated from Kentucky Fried Chicken University. [CEO] John Y. Brown came into the room and said, "Just imagine I'm taking a paintbrush and making a line right down here on the floor. Never go off that white line. We're teaching you a format. The formula for doing Kentucky Fried Chicken. If you stick to that formula, you will not fail. If you step off the line and do different things, you will fail." That was where I learned franchising.
In 1971, I was looking for a school for my 3-year-old son. My neighbor said, "Enroll him in Green Acres." I went to see Green Acres: 22 beautiful acres with a pond. All the teachers had master's degrees. They taught kids they could do anything. I was salivating. But here was a waiting list of 357 people. I looked everywhere but couldn't find anything equivalent. The more I looked, the more upset I got. I went to see the school's founder. I said to her, "Why couldn't you be like Maria Montessori and spread your philosophy around? I'll find a facility, and we'll turn it into a school and put those 357 people into that school." She said, "Can I have your card?"
I sold the chicken company and started Living and Learning Schools. We had 48 schools in greater New England. These were the most gorgeous schools you ever saw. We were the first in the country to offer day care on corporate campuses. Union Mutual. Aetna. KLH. Polaroid. But when interest rates shot up to 22 percent, we had no way to build more schools. We finally sold to Kindercare. I spent eight years at Living and Learning, and I've never been happier or prouder. If I kick the bucket tomorrow, put on my tombstone, "This little Arab kid built schools."
After that I retired. I was visiting the West Coast, and in the local paper I saw an ad for a company called UBI--United Business Investments. I thought, Oh, my God. Someone is franchising business brokerages! I bet I could get the master license for New England. The next day I drive to UBI's office in Paramount, California, and ask to speak to the president, Tom West. I was told he had just sold the business.
Tom had 44 locations, all company owned. They sold bike shops. Pizza shops. Tom was getting ready to move to Concord, Massachusetts, where his wife came from. I said, "How about you and I start a company on the East Coast to franchise business brokerages?" We came back here and started VR Business Brokers. It was the fastest-growing little franchise you ever did see--walking down Main Street, knocking on the door of a business, and saying, "Hi. We may have a buyer for you. Is this of any interest?"
But we had more demand than supply. So I went to franchise companies. And I said, "Such a deal I have for you!" In every VR office, I put a franchise desk with VHS tapes featuring the chairmen of companies hawking their franchises. Fantastic Sam's. UPS. Mailbox USA. AlphaGraphix. Sylvan Learning Centers. We became a franchise to sell other franchises. Eventually, an outfit out of England called Christy and Company acquired VR. It went public in 1986.
One day my bride, Martha, called me and said, "Honey, when you come home, please bring a rotisserie chicken, steamed vegetables, and some corn bread." I said, "Where is this place?" She said, "Right around the corner from your office." I said, "There's a Kentucky Fried Chicken around the corner. I'll pick up a bucket." She said, "I don't want that fried stuff. I want rotisserie. Steamed vegetables. Corn bread." I don't argue with my wife. The line was out the door. Ninety percent women. The same women that had gone to work in the '70s and used my day care centers. Now they needed food to take home to their families. It was like a lightning bolt. Day care. Chicken. Unbelievable.
I spent months negotiating with the two owners. They wouldn't let me in the back of the house. They thought I was after their marinade recipe. I said, "No, I want your concept." They were doing $1.4 million in 700 square feet. The average check was $13.75. I finally bought the rights to take it national. The year I started, 16 competitors opened. I had two stores. I said, "Damn. I'm going to get lost among these Chicken Outs, Chicken A-Go-Gos, Chicken Expresses." I decided to push the franchise button, quick. It was like putting a match to lighter fluid.
In 1992, we had 48 units open and 200 sold. Revenue was about $42 million. Some guys from Blockbuster (NYSE:BBI) approached me about buying the company. They asked me to stay on as chairman, but I don't work for people. I stayed until they went public, in 1993. It was the highest IPO in Wall Street's history at the time.
Not everything I touch turns to gold. In the mid-'90s, I did Coffee by George: a bakery and a drive-through. Today you see Dunkin' Donuts opening them up; some Starbucks have drive-throughs. But I was too early. I also went against one of my cardinal rules--give me one of something that works and I'll see if I can franchise it. Coffee by George was my own idea. After about two years, I shut it down.
In 2003, I came across Low Fat No Fat Life Style Grill in Watertown, Massachusetts. I always look for lines: This place was in a terrible location but had a line out the door. Inside, I see a menu printed with nutritional values. Who is in this line? Gym rats. Girls in spandex. Guys with shirts and ties. What are they buying? Bison burgers. Turkey bacon on whole-wheat buns. Chicken meatball wraps. The potatoes are air-fried. Average check: $8.50. Not bad. What's in that other room? Supplements. Like a GNC. How many people leave the restaurant and walk over to pick up some supplements? Convenience. Symbiosis. What an idea! Again, negotiations. I gave the three owners a piece of the action. We have nine stores now in places like Boston, Sacramento, and Naples, Florida. By 2011, we plan to have 800 units nationwide. We're changing the name to UFood Grill. George Foreman is our spokesperson.
When I saw this concept, I remembered the women who used to write me letters at Boston Chicken: "Thank you for your healthy product. Thank you for giving my family an alternative to fried foods." We're all products of our life's experiences.