What do a banker, a frozen-yogurt mogul, an interior designer and a former premier do with $100 million? They start up an Italian restaurant franchise, of course.
Trambusto, a “fast casual” pizza and pasta joint, opened its first location in a strip mall outside of Toronto last month. That’s the beachhead from which Michael Lublin, a veteran franchisor, intends to invade Ontario’s restaurant scene. Eight more locations are set to go in Burlington, Kitchener-Waterloo and downtown Toronto, with the company expecting over 20 restaurants to be up and running for 2015. The partners are talking about hundreds more over the next five years.
The unusually ambitious venture is a collaboration between Lublin and financier Kamiar Zahedi. Also on board are Christopher Paul David, an interior designer with Cecconni Simone, and former Ontario premier Mike Harris, who serves as chair of Tramez Restaurant Corp., one of three corporate entities involved with Trambusto.
Lublin’s roots in franchising run deep. He managed brands for MTY Group, and calls MTY founder Stanley Ma, the so-called king of the food courts, his mentor. More recently, he was COO at Yogurty’s, where he met Zahedi, then a Royal Bank loan officer who streamlined small-business loans for Yogurty’s franchisees. Along with his experience, Zahedi brings $100 million to the project from an investor he declines to name.
Trambusto serves generous portions of Italian standards with an emphasis on freshness. “We felt that the pizza and pasta being offered to the general public was more of a mass-scaled product,” says Zahedi. Michael Glen, an analyst with Laurentian Bank, agrees that the appetite for better-quality Italian fare is under-served in Canada.
Lublin knows how to hit a market by storm. Yogurty’s opened 33 locations in 18 months under his watch. But Trambusto is not the only chain vying for this market. Toronto-based Quesada Mexican Grill is looking to grow by 300 restaurants in five years, and MTY’s Via Cibo is already targeting the public’s taste for Italian.
Plus the franchise model can be risky, especially for the franchisees. Les Stewart, a franchisee advocate, warns prospective buyers that parent companies can use a variety of tactics to minimize risk to themselves at the expense of the operators. He says some red flags include the use of multiple corporate entities to put legal distance between franchisor and franchisee, and a heavy reliance on the Canada Small Business Financing program.
With just one, corporate-owned outlet so far, Trambusto has not employed any such tactics. But Stewart is wary of any franchise startup in a hurry. “This remains the wild west of business,” he says.