089: "What Most People Get Wrong About Franchising" ft. Craig Dunaway

What does it really take to thrive in the hyper-competitive world of quick-service restaurants? Erik sits down with Craig Dunaway, President of Penn Station East Coast Subs, to unpack the operational DNA of successful franchises, the post-COVID evolution of the restaurant industry, and what many leaders get wrong when scaling through franchising. With nearly four decades of experience in the franchise world (from Papa John's to Penn Station), Craig drops hard-earned wisdom on leadership, operations, and why a 6¢ ketchup packet might be more important than you think.

👤 About the Guest

Craig Dunaway is the President of Penn Station East Coast Subs, where he oversees over 300 franchise locations across the U.S. With a background in public accounting and decades of leadership in franchising, Craig brings a systems-driven, ROI-obsessed lens to running and growing franchise businesses.

🧭 Conversation Highlights

• The difference between thriving and failing QSR brands during COVID
• Why customers now dictate how food is served—and how restaurants must adapt
• The real cost of labor inflation and how it’s impacting the restaurant model
• What private equity often gets wrong about franchising
• How Penn Station evaluates tech and why they don’t chase trends
• What prospective franchisees must understand before they buy in
• Why setting expectations is the secret to culture and performance

💡 Key Takeaways

• The franchisor-franchisee relationship must be built on trust, alignment, and a shared obsession with ROI
• Don’t underestimate labor costs or customer experience—small gaps lead to massive losses at scale
• Successful franchise systems prioritize replicability and clarity over novelty
• Vetting franchisees is just as important as supporting them
• The best leaders set expectations and hire for alignment, not just experience

❓ Questions That Mattered

• “How do you lead a workforce that’s been changed by social media and remote work?”
• “What should franchise candidates look for in an FDD?”
• “How do you scale culture across hundreds of locations?”
• “Is it better to be an early adopter of tech—or let others take the risk first?”
• “What’s the difference between a good product and a good business?”

🗣️ Notable Quotes

“You can hire an idiot and train them. But at the end of the day, you’ve got a well-trained idiot.” — Craig Dunaway

“The guest only cares about their $14 meal. And you’ve got to deliver for them—every single time.” — Craig Dunaway

“If a concept like Chipotle isn’t doing it, what makes us think we’re smarter than they are?”— Craig Dunaway

“Don’t get into franchising if you want to change the franchisor. Follow the model or don’t join.” — Craig Dunaway

“As a franchisor, we have two customers: the guest and the franchisee. We serve both.” — Craig Dunaway

🔗 Links & Resources

• Craig’s email: cnd@pennstation.com
• Penn Station East Coast Subs