Vera’s Burgershack – Port Moody Franchise Sells for Staggering Loss

“What? Me worry?” – This could have been the caption on Gerald Tritt’s recent Instagram upload that portrays him living it up with a smile that would put Alfred E Neumann of Mad Magazine to shame.  Mr.Tritt appears not to have a care in the world as he tools about in a loaner Ferrari for the weekend, living the dream as he weekends in Chicago and hangs out with the Boss Man himself, Bruce Springsteen – champagne dreams and caviar fairy tales indeed!
Alas, it is a lifestyle that many Vera’s Burger Shack Franchisees can only aspire to after investing in the Gerald Tritt Franchise system.

In September 2014, the original Port Moody Franchisee managed to escape The System after having his store on the market for over a year.  That particular Franchisee purchased a brand new location on Newport Drive and opened in or about September 2012 at a cost rumoured to be in the range of $375,000.00 to $400,000.00.   Initially, the location recorded robust sales as it consistently ranked among the top of Vera’s locations in monthly sales and $2,000 daily sales were often recorded.  However, the good times were not to last as the Port Moody location began a descent down the sales rankings by location.  By June 2013 a scant nine months after opening, the Franchisee had had enough and listed the location for $379,000.00, but, like the Broadway location, the Franchisee could not find any takers.  The location remained on the market as sales continued to decline pushing it ever downward on the Vera’s sales rankings by location.  In September 2014, the news broke that the location had sold but at a price far far below the Franchisee’s investment.  Reports suggested the location, less than two years old, had sold for a price between $215,000 – $200,000.00 representing a loss in excess of $150,000.00 to the Franchisee who had bought into the Vera’s Burger Shack brand.

It was the second location within three months that had sold at a loss in excess of $100,000.00 to its selling Franchisee.  Unfortunately, it appears that unlike Gerald Tritt, neither the Port Moody nor the Broadway Franchisees will be driving Ferraris anytime soon.

Style Over Substance: A Nightmare Recipe for Vera’s Franchisees

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It was the best of times for Gerald Tritt and Noah Cantor, co-founders of the Vera’s Burger Shack franchise, as the summer of 2011, saw Vera’s Burger Shack ink a deal to expand the Vera’s franchise to the United States Pacific Northwest.  Vera’s was flushed with a run of several years growth and had grown from a seasonal concession stand in West Vancouver to a flourishing franchise with sixteen locations.  However, it wasn’t to last – without an underlying business model that went beyond depending upon the personalities of individual Franchisees and a cartoon logo – it could not last.

A clue to the coming debacle for many of the Vera’s franchisees can be found in Gerald’s choice of individuals to expand the Vera’s brand in the USA.  The purchaser, Paul Brown, a promoter, who promoted such sport luminaries as Tonya Harding, figure skater turned boxer, appeared, at least according to Vera’s own press release,  to have no experience in operating a single restaurant, let alone operating/managing several restaurants within a cohesive franchise system. On the face of it, Gerald and Noah seemed to want someone to promote the brand as oppose to having someone with strong restaurant experience to screen and assist prospective franchisees in opening Vera’s franchises in the Portland area.

Up to the time of the signing of the U.S. expansion deal, Vera’ s Head Office had often emphasized style over substance when managing the growth of the Vera’s franchise system.   A failure to establish a head office training system for new Franchisees, a comprehensive training manual, regular inspections, and even one method of cooking the burgers had led to an absence of standardized behaviour across the Vera’s franchise system.  All the while, Gerald Tritt was fond of telling Franchisees he had spent over a $100,000.00 on branding the Vera’s name.

By the spring of 2013, Gerald Tritt had found himself rid of his most troublesome Franchisee who had made the painful business decision to lose six figures as oppose to continue being a participant in a franchise system that was failing to maintain standardized behaviour amongst its Franchisees.  However, it was clear that franchise’s troubles were just beginning.

By August 2013, eight of the thirteen franchises were listed for sale (and this was excluding the two that were sold at the beginning of the year) – a stunning indictment of the Vera’s franchise system for the stampede of Franchisees wanting out was nearly as crowded as the last train rolling out of Paris in June 1940 before the Nazi advance.

It is now over a year since the Franchisee stampede began and with the exception of North Vancouver and Broadway (which sold at a loss of at least six figures to its franchisee – see A Poor Broadway Performance), the remaining six Franchisees continue to list their stores for sale – albeit some at substantially reduced listing prices.  It was rumoured that others were listed for sale but these cannot be substantiated at the time of this article.  The U.S. expansion plans remain exactly just that – plans.

To date, Vera’s is limited to being a Lower Mainland franchise with half of the franchisees wanting to sell and with its head office having no immediate plans to open locations elsewhere in Canada or the USA.  As Gerald Tritt’s plans for a thousand store empire slowly fade to oblivion, the Vera’s nightmare lives on for its Franchisees.

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Vera’s Burgershack: A Poor Broadway Performance for a Vancouver Franchise

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In late March 2013, Gerald drew a sigh of relief as the soon to be ex-Franchisee walked out of Vera’s flagship location in Kitsilano with lease assignment in hand.  As sales figures across a number of franchised locations had sagged, the Franchisee had proven quarrelsome and unwilling to follow the Gerald Tritt Franchise System to a tee.  Even worse, the Franchisee had shown Gerald up in email discourse that took place in full view of all the Franchisees when the Franchisee pointed out that absence of inspections and adequate training from head office had led to a lack of standardized behaviour throughout the franchise system.  Gerald’s response to this rebellious insolence was to change the email settings so that a Franchisee could only reply to Gerald and not to the Franchisees at large.

Gerald’s response to this rebellious insolence was to change the email settings so that a Franchisee could only reply to Gerald and not to the Franchisees at large.

In any event, the Franchisee was gone and with him out of the way only better days could lay ahead for the Vera’s franchise system – or so Gerald had assumed.  His optimism proved to be short lived.

In the fall of 2012, while warring with the aforementioned troublesome Franchisee he had approved the sale of the Broadway location to the youngest Franchisee ever.  The Broadway location had had a troubled history in that in recent years it had not been that profitable.  Of course, profitability from the Franchisees perspective is quite different from that of the Franchisor.  While a store Franchisee (location owner) can be barely paying the bills or even losing money hand over fist, the Franchisor will always take their cut off the top of every transaction that goes through the till. From Gerald’s perspective, franchise fees generated by this location read ‘just fine’ on the profitability meter.  In any event, the location had changed hands repeatedly over the past five years.

Notwithstanding new ownership, the Broadway location lagged at the bottom of the Vera’s locations’ monthly sales rankings being in front of only the Aberdeen Mall location.  As ‘victory has a thousand fathers and defeat is but an orphan’ as quoted by John F. Kennedy, Vera’s head office and the Franchisee began to blame each other for the location’s poor performance.  The details of the relationship between Gerald and the outgoing Franchisee remain murky but without doubt it was fractured.  The Franchisee blamed Gerald for a lack of training while Gerald blamed the Franchisee for being unable to operate the location in a professional manner – a typical Franchisor-Franchisee dialogue where systems are found wanting and Franchisee’s bank accounts drained.

By the fall of 2013, the negative reviews online were stunning in their criticism of the Broadway location’s operations with some of the reviewers going so far as to accuse the Franchisee of tax fraud because of its “cash only” policy.  Inexplicably, Vera’s Head Office failed to take steps to revoke the franchise and allowed Vera fans’ to part with their hard earned cash to pay for what appeared to be a substandard product and experience.  The negative reviews continued to pile up online yet Vera’s Head Office appeared, at least on the surface, to do little to intervene to protect the brand.  Other Franchisees began to express concern that brand integrity was being compromised yet Vera’s Head Office failed to revoke the location although, based on online reviews as a starting point, sufficient grounds may have existed for such action.

While it is uncertain when Vera’s Head Office began to sour on the Franchisee, it is clear that a scant 3-4 months after buying the Broadway location,  the Franchisee had seen enough of the Vera’s franchise model and listed the franchise for sale for $275,000.00.   Over the next twelve months the listing price inched downwards to the low $200s, as there were no takers.  As 2013 turned to 2014 and the online reviews went from the sublime to the ridiculous, the Franchisee finally had a taker to assume control of the troubled location.  Some reports suggest the sale price as low as $40,000.00 meaning the Vera’s Brand was worth little more than restaurant equipment at this location.  Other reports say the sale price came in between $100,000 to $120,000.00 meaning the Vera’s Brand was worth equal to the equipment and leasehold improvements leaving little value to goodwill.  At this location, instead of becoming a smash hit, the Vera’s Burgershack brand became a Broadway flop.

At this location, instead of becoming a smash hit, the Vera’s Burgershack brand became a Broadway flop.

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Vera’s Burgershack: ABERDEEN MALL: THE GERALD TRITT SYSTEM IN ACTION

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It was the spring of 2011 and many of the Vera’s Burgershack locations had recorded their best ever calendar year sales in 2010.  Flushed with success, directors Gerald and Noah must have been experiencing a supreme sense of confidence when Aberdeen Mall’s property management company approached them to open a Vera’s Burger Shack in the Mall’s food court to replace the recently vacated White Spot Triple O’s location.

Undeterred by the fact that Triple O’s had failed and clearly imbued with the confidence associated with his self appointed title of ‘franchising genius’, Gerald entered into a lease and quickly developed a concept that he was convinced would work in a predominantly Asian food court.  Gerald’s ultimate goal was to open the store with the resources of Vera’s Head office behind him and then flip the store to a Franchisee for a price of $399,000.00 thereby pocketing a hefty profit  – a common business play in the franchising world.

Vera’s Aberdeen opened in the summer of 2011 to great fanfare and high expectations for Vera’s directors, its franchisees, and its fans.  However, from the beginning there were grumblings from the Vera’s fan club that the quality of the food was lacking as compared to other locations.  Even more disconcerting to Vera’s head office, the daily sales figures were low and when the monthly sales rankings were published to the Franchisees, Vera’s Aberdeen finished dead last among the seventeen locations. Initially, it was downplayed with the excuse that ‘it was going to take time for the Gerald Tritt system to win over the Asian crowd in Aberdeen mall’ and that, ‘like Rome, a profitable and marketable Vera’s Burger Shack location would not be built in a day’.  However, as the months wore on and became fiscal quarters, the sales figures at Aberdeen Mall lagged behind every other Vera’s location.

Franchisees began to question why the Gerald Tritt system was failing so badly in Aberdeen Mall.  A quick glance at the physical layout of the location gave a clue that Vera’s Head Office had totally failed to take into account or simply disregarded that 90 per cent of Aberdeen Mall’s clientele is Asian.  For example, the menu board was in English only thereby failing to communicate in the first language of the vast majority of Aberdeen Mall’s Asian shoppers.  Further, Head Office failed to hire a Mandarin speaking manager to reach out to the Asian clientele to get to know the names of each customer or to tell them stories as burgers were being prepared.  Amazingly, it seemed that most of the staff were unable to speak mandarin/Cantonese as well.  The hallmarks of the Gerald Tritt system were seemingly abandoned in Vera’s Head office efforts to make this Vera’s location ready for a quick sale to a potential Franchisee.

In the fall of 2011, Vera’s Burger Shack Aberdeen Mall was listed for a price of $399,000.00 but the hope for a sale before Christmas 2011 quickly faded.  It was clear that the failure of Gerald Tritt system to bring the sales above the 17th spot out of 17 locations was going to result in a sale price far lower than $399,000.  As the months wore on through 2012, a number of Vera’s Burger Shack locations were experiencing sales figures far lower than the record year of 2010. Gerald Tritt responded to the grumblings of Franchisees by telling them they were not reaching out to their clientele and it was their fault the sales were dropping.  All the while, Franchisees noticed that either Gerald did not even believe and/or follow his own rhetoric based upon his management of the Vera’s Aberdeen Mall location and its bottom-of-the-barrel performance in the sales rankings, or worse, his system wasn’t working.

Vera’s Aberdeen Mall location remained on the market with the listing price dropping from $399,000 to $369,000  and ever downward in Nortel stock-like fashion.  For the next two and a half years, the price continued to sink with various incentives added in to make the location more attractive such as no Franchise fees for the first twelve months.  There were no takers.  By the late spring of 2014, it was being marketed for the price of $50,000.00 as a location that could be redeveloped into another concept.  In other words, the Vera’s brand in Richmond was worth the value of used restaurant equipment in a mall food court.

Then one gloomy day in early July 2014, a visitor arriving at the top of the escalator at the Aberdeen Mall food court was greeted by an abandoned food stall with the cartoon face of Vera smiling over the dark and empty counter that was the only remaining legacy of the Gerald Tritt system in Aberdeen Mall.

As for the Franchisees who had watched this debacle unfold before their eyes, they were kept in the dark as much as that the darkness of that food court counter.  Gerald, who made it a practice, to inform his Franchisees of a four hour closure of the flagship Kitsilano location due to construction, could not bring himself to tell his Franchisees of the passing of the Aberdeen Mall location.  Even more incredibly, he did not even bother to tell his loyal Vera’s fans of its closure notwithstanding Vera’s Burger Shack presence on the web, Facebook and Twitter thereby leaving Vera’s fans to discover for themselves the closing of the Aberdeen Mall location.  The question that arose from his omission was whether Gerald’s ego prevented him from announcing the failure of the Aberdeen Mall location or whether he knew deep down that no one in Richmond even cared.

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NEXT: Vera’s, The State of the Union Today

Vera’s Burger Shack: The Dawn of a Burger Empire?

Part 1 in a 4 Part Series

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According to local folklore and Vera’s Burger Shack’s own PR machine, Vera’s got its start back in 1977 when a lady named Vera Hockfelder opened a seasonal burger stand in West Vancouver and gained a cult following by preparing hand pressed burgers with secret seasoning spice.In 2000, Vera sold out the West Vancouver burger stand to Gerald Tritt who brought in local sports star Noah Cantor a year later to help him open the first year round location in Kitsilano. In the following years, Gerald & Noah opened locations on Denman and another on Davie St in downtown Vancouver. By the second half of the 2000s, Gerald and Noah were selling new franchised locations on Commercial Drive and Main St to a longtime employee and the Denman and Davie locations to other franchisees eager to jump into the burger craze.

By the time of the 2010 winter olympics, Vera’s had 16 locations and all seemed well with Vera’s empire. Its founders had been voted in as members of the top 40 under 40 in Business in Vancouver (BIV) and had been offered a buy out in excess of 3 million dollars. Its founders refused the offer on the basis that the “sky was the limit” in terms of growth and that a 1000 store franchise was in their sights.

However, the franchise’s growth had been fueled by the stimulus spending associated with the Olympic infrastructure and the burger craze sweeping North Amercia As the Olympic construction ended at the same time as the discretionary spending habits of a lot of Vera’s burger fans. The Vancouver economy was about to get a whole lot tighter and the business model that Vera’s operated with in the late 2000s began to stumble with the founders’ former golden touch beginning to rust at the edges.

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Next in 4 Part Series: Shortcomings in the Vera’s Burgershack Franchise System