By 2009, Mario Contreras’ portfolio of Charleys Philly Steaks restaurants had grown to seven and was about to get even bigger as friend Jesus Urdaneta joined the business. The financial crisis meant many other franchisees were looking to sell, and within three years their Elbardi Group had 20-plus locations.
“We made a bet on an opportunity to do something special when the rest of the world was going crazy,” said Urdaneta, who at the time was a vice president at Merrill Lynch and able to bring in some fresh capital.
“We spotted an opportunity and were able to get locations for pennies on the dollar,” he continued, “and then invest to turn them around. We were able to raise significant amounts of capital at very favorable terms.” Today they have 41 Charleys units plus two locations of Japanese barbecue concept Gyu-Kaku, with sales in 2021 of $47 million.
Contreras and Urdaneta, both Venezuelan immigrants, “go way back,” said Contreras and were college roommates. He had just finished his master’s degree in international business at Florida International University when, after visiting a Charleys Philly Steaks in Tampa, he decided to pursue franchise ownership.
Jesus Urdaneta, left, and Mario Contreras are longtime multi-unit Charleys Philly Steaks franchisees.
At the time Charleys and founder Charley Shin “were very hungry for growth and they were looking for young people” to join the system, said Contreras, who opened his first location in Miami’s Dolphin Mall in 2003. Charleys now has more than 600 units and systemwide sales in 2021 hit $534 million.
Elbardi Group’s restaurants, all of which are mall-based, span six states and they’re in the process of opening 16 stores inside Walmarts as part a large-scale agreement between Charleys and the retail giant for more than 200 locations. The group’s portfolio has expanded and contracted over the years, at one point reaching 80 units.
“The success of this business depends on occupancy costs,” noted Contreras of their mall-driven strategy. “High labor, inflation on all commodities, which may lead to negative cash flow for low-volume locations” means they’re constantly evaluating store performance. In 2020, they “kept what worked and cut what didn’t,” and following the expansion with Walmart he said the priority is to grow with endcap and drive-thru locations.
Contreras credited close adherence to the franchise’s proven operations as a key driver of the group’s success. “You need to follow everything the franchisor has set … do everything by the book,” he said. “When I see a franchisee struggling, it’s because they’ve gone out of their way to do different things.”
Urdaneta, who recalled helping Contreras serve drinks and make fries in the first restaurant, noted in 2020 they restructured their management approach to “be more agile, faster to respond.”
“Over the years we had built up layers of bureaucracy. The pandemic was an opportunity to spot those, correct them and make things more streamlined,” he said. One thing that didn’t change was a people-oriented culture aimed at employee retention.
“That contributes a lot to the success,” said Urdaneta. “We promote a lot from within the company,” and “health insurance, 401(k), all the perks people are looking for, we have them.” Incentive bonuses and a “culture of fair competition” are likewise important components, he said, and “overachievers” are rewarded with cash, dinners and travel based on metrics such as ticket average and customer satisfaction.
Gyu-Kaku Japanese BBQ, which Contreras and Urdaneta added in 2013 after dining at a location in California, presents another growth opportunity. Elbardi Group has right of first refusal for South Florida. Its two restaurants are in Miami and are “top performers in our portfolio and in the entire Gyu-Kaku system,” said Urdaneta. The challenge, noted Contreras, has been in adding a full-service restaurant to a fast-food portfolio.
“The operations are completely different,” he said. They remain impressed with the concept, where customers cook vegetables and cuts of meat on in-table roasters.
“It’s a casual experience but the kitchen doesn’t require a chef,” he added. “The customer is doing the cooking—that’s a key ingredient.”