Craig Dunaway spent nearly as much of his life working as an accountant as he has leading the successful Penn Station East Coast Subs. In August, Dunaway will celebrate 17 years at the helm of the national fast-casual chain.
While attending the University of Indiana Southeast, Dunaway set out to pursue a career in accounting, and started out as an accounting intern. After graduating in May 1983, Dunaway became a partner at the same regional accounting firm — McCauley, Nicolas & Company, LLC — where he worked for 16 years.
Before joining Penn State Subs, Dunaway owned interest in Coastal Cheesesteaks, LLC and Louisville Cheesesteaks, LLC — both are Penn Station franchises — and served as the Managing Partner and Secretary/Treasurer of both franchises. In 2011 and 2013, he sold his interests to concentrate solely on running Penn Station. He also had ownership interests in a Papa John's® franchise, where he also served as the Secretary/Treasurer.
Known for its profitability and return on investment, and with 304 locations in 15 states, Penn Station was named the best sandwich chain by the Nation’s Restaurant News in its 2015 Consumer Picks survey. Dunaway shares the secrets to chain’s success below.
Q&A with Craig Dunaway, President at Penn Station East Coast Subs
Foodable: How are you growing and keeping your business competitive?
Craig Dunaway: I would call our growth "aggressive conservatism." We attempt to treat each franchisee's investment as if it’s our own capital. This makes us much more conservative in the approach to approval of sites, allowing franchisees to open additional locations, and the growth strategy overall. We know it’s a long-term view. If they’re making a great return on their investment, they’ll want to open more locations. In essence, we are selling each franchisee’s profitability.
Foodable: To what do you attribute the longevity and success of your business?
CD: This conservative approach. It’s about building one successful location at a time, with franchisees who philosophically approach business the same as we do and not simply those who have money to invest. This isn’t a passive business, so they need to be engaged actively and buy in intimately to the systems that have made us successful — not simply pick and choose the ones they like.
Also, the simplicity of a menu that has allowed us to be named the No. 1 sandwich in America, hypersensitivity to individual store-level profitability, and a keen focus on operational simplicity to yield said profits.
Foodable: To what do you attribute your own personal longevity and success in the industry?
CD: I believe I've achieved success in my career because of three things: 1) Having emotional intelligence to understand people and trying to help fill their needs and desires, 2) Doing what I say I'm going to do when I say I'm going to do it, which leads to 3) Building trust, and providing honesty and candor, even when it's not what the other party wants to hear. If you treat others the way you want to be treated, and do so honestly and with empathy, I believe they'll respect you more and the decisions you make.
Foodable: What are you seeing on the horizon in terms of the sandwich business?
CD: The sandwich business is hyper-competitive with three to four brands becoming national players and growing at a rapid pace. The fast-casual segment is the fastest growing at five percent in an industry that is flat or retrenching.
I think fresh and made-to-order will continue to grow and be more relevant to consumers as they find great meals at a $10 ticket compared to the casual dining $15-$20 meals of yesterday.
Technology will continue to play a greater role as the unemployment rate decreases, wages rise, and leaders look for technology to replace tasks that used to be performed by people. A great example is online ordering — in essence, taking the human component out of the mix.
Foodable: What are your top three pieces of advice for a young person wanting to start up in the restaurant business?
CD: 1) Don’t be too cute. If you are “too niche,” you might have a great tasting product but you need to appeal to the masses, not just a few. 2) Focus on unit economics from the start. Making a great tasting product and making money on a great tasting product are two different things. 3) Have a long-term mindset. Don’t sell your soul by just allowing anyone to open a restaurant under your brand’s name. When you’re starting out and struggling, it is easier to accept a franchise fee (money) versus vetting the candidate to ensure you have complete buy in.
Foodable: What is the most impactful lesson you have learned throughout your career?
CD: Be candid, but always see the other person’s point of view. This isn’t meant to be confused with agreeing with that point of view, but if you understand the perspective from the other side, you’ll have a better chance of changing hearts and minds.
Foodable: Is there anything exciting happening at Penn Station?
CD: Penn Station has recently rolled out our app, and we believe it can be “Starbucks-like” for our customers. We are introducing features in phases and are excited about its potential.
Foodable: Any parting thoughts?
CD: What we do isn’t changing the world. We’re trying to serve great food in a welcoming and clean environment with smiling faces. If we keep our focus on helping our franchisees grow and prosper and keeping the brand relevant to consumers, then we, too, will prosper long term.