In the fast-paced and challenging world of the restaurant industry, maintaining a balance between operational details and strategic growth is key to success. Craig Dunaway, the Chief Operating Officer of Penn Station Subs, exemplifies this balance. With a career spanning over two decades, Craig has seen the industry evolve and has played a pivotal role in the growth and success of Penn Station Subs. In this insightful interview, we dive into Craig’s journey, his daily responsibilities, the challenges of the franchising business, and his vision for the future.
As the COO of Penn Station Subs, what does your day-to-day look like?
Craig Dunaway: My role has transitioned a lot over the years. I used to be very involved in the daily operations, but now I work closely with our department heads. I’m not in the weeds anymore, but I still oversee contracts with our suppliers and maintain close communication with our franchisees. It’s all about ensuring they have the best products at the best prices and supporting their profitability.
How do you balance the big picture with the details?
Craig Dunaway: It’s a challenge. In the restaurant business, it’s a pennies business. Small details matter a lot, like ensuring the right portion sizes to maintain margins. But you also need to see the business from 10,000 feet to plan strategically. Understanding both perspectives is crucial.
You’ve been in the business for 24 years. What’s something new you still find yourself needing to communicate every day?
Craig Dunaway: Communication with franchisees is ongoing. We have a lot of unfinished business and goals, like doubling our size in the next six to seven years. The restaurant industry is constantly evolving with new challenges and opportunities, like third-party delivery and AI. So, keeping everyone aligned and informed is crucial.
Speaking of challenges, many people see the restaurant industry as an easy business to get into, but it’s quite tough. How did you get started in this field?
Craig Dunaway: I started in public accounting and transitioned into the restaurant business. A friend and I decided to become Papa John’s franchisees. It was a leap, but we made it work. Later, we discovered Penn Station Subs and saw great potential in it. That’s how our journey with Penn Station began.
It’s interesting that you were managing both Papa John’s and Penn Station Subs while still in public accounting. What did you learn from that experience?
Craig Dunaway: The importance of having a great operating partner. It’s not a passive business. You need to be close to the counter, suppliers, customers, and employees. Building strong relationships and making people around you better is key. That philosophy carried over to Penn Station.
When did you decide to leave public accounting and dive full-time into the restaurant business?
Craig Dunaway: It was in 1999 when Jeff Osterfeld, the founder of Penn Station, asked me to run the company. It was a tough decision because I loved public accounting, but I saw a great opportunity. I wanted to lead the team and help the brand grow.
What’s the hardest part of dealing with franchisees?
Craig Dunaway: The toughest part is when they don’t follow the operational system and their business suffers. We do thorough performance evaluations and leave detailed notes, but it’s hard to see when they don’t make necessary changes. On a larger scale, it’s tough when a franchisee fails. We treat their money like it’s ours, and it’s painful to see someone lose their investment.
Why do some franchisees fail despite the controlled variables?
Craig Dunaway: There are many reasons, like poor location, not following the system, or personal issues. We’ve seen managing partners who looked great on paper but struggled due to personal challenges. Sometimes, external factors like changing demographics or traffic patterns affect the business.
How do you audit the culture within your franchisees’ restaurants?
Craig Dunaway: It’s about understanding what motivates each team member and caring about them. Creating a positive culture involves maintaining a good physical environment, treating employees well, and ensuring they take care of customers. We want our staff to treat customers like family.
Have you ever had to take back a franchise?
Craig Dunaway: Yes, once. It’s tough but sometimes necessary. Not everyone aligns with our culture and values. When that happens, we help them exit the system and find a buyer for their location.
What do you think people in the franchising business often misunderstand?
Craig Dunaway: Many underestimate the importance of profitability and understanding the business model. They think buying into a proven concept is a turnkey solution, but it requires a deep understanding and alignment with the brand’s values and systems.
How have the last few years, especially with COVID, affected the profitability and operations of Penn Station Subs?
Craig Dunaway: COVID created a lot of challenges and forced us into third-party delivery, which is now a significant part of our business. Margins have been thin due to rising costs in labor and food. We’ve had to adapt quickly and find ways to maintain profitability while supporting our franchisees.
What’s your relationship with technology in managing and growing Penn Station Subs?
Craig Dunaway: It’s a balance. Technology is essential, but it can be overwhelming. We focus on giving franchisees the tools they need without bombarding them with too much information. On the consumer side, we’ve enhanced our online ordering system and continue to adapt to changing consumer behaviors.
What motivates you every day after all these years?
Craig Dunaway: Seeing the brand grow and ensuring our franchisees are successful. We have a lot of potential to expand, and I’m excited about the future. It’s about building a great organization and creating a win-win situation for everyone involved.
What has changed for you personally in the last few years as you shifted from being in the details to focusing on the big picture?
Craig Dunaway: I’ve learned to let go and trust my team. It’s about asking the right questions and guiding them without micromanaging. It’s been a transition, but it allows me to focus on strategic growth and long-term success.
Craig Dunaway’s journey from public accounting to leading a major franchise brand is a testament to his dedication, strategic thinking, and ability to balance detailed operational work with big-picture planning. His insights into the challenges and opportunities within the restaurant industry provide valuable lessons for anyone looking to succeed in this field. As Penn Station Subs aims to double in size, Craig’s focus on communication, culture, and continuous improvement will undoubtedly drive the brand to new heights.
