Aneil Lala and Neal Wadhwa wanted to develop what Lala called “a new style of multi-unit franchise ownership.” Seeking to merge their financial acumen with a management approach that “brings humanity” to the business, the two formed Legacy Capital Partners and are beginning to see results from their strategy.
Since acquiring 10 Wendy’s restaurants in 2020, “we’ve increased EBITDA by nearly 60%,” Wadhwa said of gross profit. “We took customer satisfaction scores from the mid-70s to lows in the 80s. We were able to bring revenue down to 82%. The average turnover rate reaches 150% in fast food restaurants.
Same-store traffic is also growing at their restaurants, all of which are located in Maine. “The base was there,” Wadhwa said of the portfolio of restaurants they bought, “but we brought our own recipe for success.”
This recipe includes a combination of data and decency, he continued. On the data front, Lala said he has invested in developing technology that makes information accessible to all employees and helps general managers make decisions quickly to respond to what they see at the restaurant level.
“Here’s the big challenge for the industry: there are a lot of data channels,” Lala said. “So we put that on a platform and synthesized it.” Employees can see what’s driving store performance and “every store’s general manager is empowered to make the right decision in their store.”
Their approach to humanizing the business, meanwhile, means paying competitively while looking beyond compensation to build a culture of engagement. “From a cultural point of view, we are there in the market,” Lala said. “It’s the No. 1 driver of this part of our success.” He and Wadhwa take the time to communicate with employees, which “allows us to hear the hard truths” and respond accordingly.
After the acquisition, they revamped the benefits program and opened health care coverage to all employees, now with 80% participation. They also point out that there are growth opportunities within the company.
“One of the biggest drivers of retention is having a path. You have a development plan. And there are regular check-ins,” Lala said. “It’s exciting to see it working.”
Lala and Wadhwa met at the Wharton School at the University of Pennsylvania – Lala was getting her MBA and Wadhwa a bachelor’s degree in finance – and both are former public investors specializing in the restaurant industry. Prior to founding Legacy Capital Partners in 2019, Lala worked at Schonfeld Strategic Partners and Wadhwa was at Candlestick Capital.
“Our parallel paths,” Lala said, and both were “ready to work in the business” as their parents and extended family had. Lala’s parents, who immigrated to the United States four decades ago, were entrepreneurs and involved in real estate, while extended family members were franchisees at Dunkin’, Wingstop and Subway.
Wendy’s, ranked #14 in the Franchise Times Top 500 with $12.5 billion in systems sales in 2021, topped their list as they began to evaluate acquisition opportunities. He has a “recognizable and enduring brand,” Lala said. “They do a tremendous job of protecting their brand equity…and they’ve taken the pulse of innovation.”
Legacy Capital Partners owns real estate and is also an investor in ResQ, a startup launched in 2018 that provides catering equipment repair and maintenance services.