Cathie Anderson

Wienerschnitzel franchisee doesn’t need a college degree to be MVP

Wienerschnitzel franchisee Farouk Diab, right, shares a laugh with Sarina Nakooka, 31, while working alongside her at one of his restaurants in Stockton. Diab prefers to work in the kitchen every day. “It’s like family here, I can’t leave,” said Nakooka, who has been working at the Stockton restaurant for 13 years.
Wienerschnitzel franchisee Farouk Diab, right, shares a laugh with Sarina Nakooka, 31, while working alongside her at one of his restaurants in Stockton. Diab prefers to work in the kitchen every day. “It’s like family here, I can’t leave,” said Nakooka, who has been working at the Stockton restaurant for 13 years.

A teenage Farouk Diab immigrated to the United States over his parent’s objections in 1975, desperate for a job and deeply desiring a college degree.

The Israeli native never got the degree, though he tried. He did land a part-time job cleaning the bathrooms at a Wienerschnitzel restaurant in San Jose.

“I never thought in my whole life that I was going to work in fast food,” Diab said. “I came here to study. I wanted to become an engineer. … I didn’t have the money to do it. Tuition and fees were so high. It wasn’t really like I made a decision to quit. It was just obvious.”

Today, at age 59, Diab is celebrating 40 years with Wienerschnitzel. He now owns 18 of the restaurants in Sacramento, Roseville, West Sacramento, Stockton and other Central Valley cities. In April, he became one of only 10 restaurateurs in the nation to win Multi-Unit Franchisee Magazine’s MVP award.

“When I was nominated, I was like, ‘How was I nominated?’ and then, ‘How did I win?’ ” Diab said. “Sometimes you don’t see yourself and what you’re doing.”

Now a Stockton resident, Diab lived in San Jose when he first arrived in the States. He recalled walking from business to business seeking work, before he got lucky at the Wienerschnitzel. The manager there, Diab said, was from Jerusalem. He hired Diab and gradually trained him in every job at the restaurant, promoting him into management within two years.

“Then he started telling me, ‘Farouk, you really don’t need me. You don’t need to work for me. You’re doing such a hot job. You could be on your own,’ ” Diab said.

But the 20-year-old Diab demurred: How would he do that? He was just a kid and he didn’t have the money to buy a franchise.

That was when Diab learned that Irvine-based Wienerschnitzel offered so-called limited franchises.

“The limited franchise is basically a corporate store run with their money,” he explained. “They give you even the initial inventory. … They give you the initial money you start out with every day, the till money. Whatever money they give you, you just make installment payments for a year or two years to pay it back. You get a percentage of the profits.”

Within nine months of taking over the corporate store on First Street in San Jose, Diab said, he had doubled the sales.

“All the corporate people flew to San Jose,” Diab said. “They wanted to interview and meet with me. ‘Tell us your secret: How did you do it?’ ”

Diab had no idea what his secret was. He had basically lived at the store, working seven days a week, he said. He knew nearly every regular customer, if not by their name, then by their order. He closely tracked inventory and sales, and he knew when he had a light-fingered employee.

Despite his success, Diab panicked when his district manager told him that the corporate director of operations wanted to meet with him. Why on earth did he want to meet one-on-one with him?

“He came and took me to a nice restaurant, and he started talking to me, asking me about the business,” Diab said. “I thought, ‘When is he going to tell me I’m fired? What is it he wants to tell me?’ ”

Finally, Diab said, the director told him that the company was opening a new store at Branham Lane and Pearl Avenue in San Jose, and they were going to give management of it to the best-performing limited franchisee.

“I looked at him and said, ‘Well, where do I come into the picture?’ ” Diab said. “He said, ‘Well, that’s you.’ My heart almost dropped. I was the best-performing limited franchisee in San Jose. … Wow!”

Diab had done everything he could to prove himself, not only to Wienerschnitzel’s corporate leaders but also to his parents, who had told their 18-year-old son: “Don’t go to the U.S. because you’re going to get lost. You’re just a little boy.”

Running the corporate stores was like getting free experience, said Diab, now a father of seven children with his wife, Sahira Diab, and it was the thrill of his life.

“The Branham-Pearl store was walk-up only, no drive-thru,” he said, “and we were doing $65,000 or $70,000 a month with 15-cent hot dogs. ... I ran it for a year and a half, possibly two years. Then I looked at myself and said, ‘Really, if I can do this for corporate, why can’t I do it for myself?’ ”

He teamed up with his cousin and bought a franchise in Manteca, Diab said, but they couldn’t get along as partners and agreed that one would have to buy the other out. Diab left, but a month before he departed, another franchisee approached Diab about running his restaurant in Stockton, one of two stores the man owned.

Diab didn’t want to be a manager – and declined – so the franchisee agreed to sell the store at 1107 W. March Lane to Diab if he would lease it for a year. They locked in the price and other details.

“That store was doing $35,000 to $40,000 a month,” Diab said. “I’ve been in that store since Jan. 1, 1982, and the store right now, we’re doing $125,000 or $130,000 a month. We’re close to $1.4 million a year. That’s my baby. ... It’s where I go to work every day. I still own it.”

Diab slowly acquired other Wienerschnitzel stores, he said, and by 1990, he had 10 of them and felt stretched thin. He also had a general manager at one of his restaurants who was a real go-getter, Raid Abed, a young man whom Diab had trained up from the entry-level job of janitor. What if Abed and other employees like him left to become limited franchisees for corporate?

They were challenges that Diab knew he had to solve, he said, and one night, as he lay half-asleep, the answer came to him. What if he made Abed a partner? He then would share in the profits and have a measure of autonomy.

Diab’s 49/51 partnership was born: He maintains a 51 percent ownership stake, but his 10 or so partners share equally in profits at their individual stores. Every one of his partners worked their way up through the ranks, and like Diab, most do not have college degrees.

The partnerships have ensured that high performers remain motivated to improve store performance, Diab said, and it has given him a brain trust for sounding out ideas and solving problems. This was particularly helpful, he said, when the recession hit in 2007.

“We got all my partners and general managers in one room and talked about what we needed to do to overcome the situation,” Diab said. “One idea was to call all our vendors, our utility companies, our phone company and ask: ‘What is the best deal you can give us?’ ”

Everyone made a share of the calls, Diab said, and they cut down costs, survived the downturn and now are thriving once again.

“Farouk … has an empire of talented business partners working with and for him,” said Wienerschnitzel’s vice president of operations, Stuart Morris. “Yet he can be found nearly any day of the week at lunch time working the hot dog grill at his March Lane … Wienerschnitzel location.”

Diab also drops in on his stores unannounced to see how things are going. On the day Diab was to be interviewed, The Sacramento Bee’s photographer arrived at his restaurant in North Natomas and discovered that employees had no idea that either journalists or Diab would be in the store that day.

“I expect my employees to be ready for me, for you or for customers,” Diab said. “Everyone should be treated the same.”

Diab is now shooting to open two Wienerschnitzel locations a year. He also has acquired two Strings Italian Cafes, one in Modesto and another in Livermore. He’s started a new coffee-shop concept called Omelet House with locations in Stockton and Lodi. One of his sons-in law has experience with running liquor stores, so Diab bought the Liquor Center, 5625 Mack Road, in south Sacramento.

Cathie Anderson: (916) 321-1193, @CathieA_SacBee

Related stories from Sacramento Bee