Q&A With Bob Watson of 5 & Diner
BOB WATSON
TITLE: CEO, 5 & Diner restaurant chain and LPM Holding Co.
HOMETOWN and RESIDENCE: Boston
EDUCATION: Bachelor's degree, Northeastern University; MBA, Suffolk University
In a city where diners are part of its history, Bob Watson and his wife Laurie started growing a business when they opened the 5 & Diner on Lincoln Street in 2006. They later bought the rest of the chain, which has 12 locations in five states. Now, they're looking to expand the brand up and down the East Coast, with its 1950s-style motif, which includes round, red-padded counter seats, pictures of Elvis and music from the likes of Little Richard and the Big Bopper playing in the background.
What is it about the '50s that keeps it alive in the minds of Americans, especially businessmen such as yourself?
The reason that it stays alive in the eyes of most Americans, even today, is that the '50s and '60s were a simpler, fun time. And surprisingly, (many) more younger people have been coming here than we anticipated, because I think they (like) the music a little bit. I think they see it as ... cool.
How did you move from franchisee to head honcho?
I admired the gentleman who owned the diners but I was concerned that he might not own the diners long term. So when we bought our franchise, we wrote into our deal the right of first refusal in the event he decided to sell. What happened was - I'm sorry to say - he got sick and decided he wanted to cut back. And he actually had a significant offer from another company, but he had to come back by contract to us.
There are many people who have gone into franchising and many others who may be considering it. What advice would you have for them?
Know what you know and be comfortable enough to know what you don't know. We chose franchising because we thought it could help us with the retail marketing aspect, with the operational piece of how to run a kitchen and, oh by the way, how to run this diner. ... We knew enough that even though we know what a diner looks like, we couldn't have built one without some help.
In a recent article, you talked about a new prototype that would allow for the development of 5 & Diner franchises that are not free-standing units. How can this help the chain?
Almost no bank will give you money to build something like this (the Worcester diner, which he said cost $1.3 million to build). Our bank helped us with the equipment piece, but Laurie and I paid for the rest and so it's very expensive to build one. If you go inline (opening a restaurant within an existing building) the four walls, the roof and the floor are already there. So that takes your construction costs and lops about 40 percent off. So instead of being $1.3 million, you could build a diner for ... $450,000 to $750,000.
You recently announced plans to expand to Connecticut with five new locations. How are those plans coming along and where else are you looking to expand?
We've targeted a few areas (including spots in Florida and the New York-New Jersey area). I told the Hartford folks that we'd like to open three to five next year. I'm OK if we open one, and I'll tell you why: I don't want anyone to be hurt by this. So it doesn't matter to me if we open one a year and it's successful. I'd rather do that than open three or five and have one of those not be successful.
What's your management philosophy for leading and running the 5 & Diner chain?
Our entire role ... is to be supportive of franchise owners. ... We (also) want the diner to be a fun place for people to go. ... There's music playing here, the staff (is) having a good time (and) customers are comfortable - that's our whole goal.
This interview was edited for length.
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