Covelli Tells His Company's Story to Warren Rotary
WARREN, Ohio -- Businessman Sam Covelli says his company is prepared for the impact of the Affordable Care Act, although he expressed his doubts about the effectiveness of the law.
“Don’t get me wrong, I wish it wasn’t happening but I think we’ve got a pretty good game plan on how to do it,” the owner and CEO of Covelli Enterprises told members of the Warren Rotary and guests Wednesday afternoon during a question-and-answer session. “I don’t think it’s going to work but we’ll see what happens. A lot of things are going to have to change. I don’t think they’re close to where it’s going to be at the end.”
Implementing the law will cost his money, Covelli acknowledged. He was the featured speaker at a noon luncheon meeting.
“These are exciting times for our company,” he said.
Covelli Enterprises is the largest franchisee of Panera Bread and O’Charley’s restaurants, and recently was named the fourth largest restaurant franchisee in the United States. The company opened its first Panera Bread in Boardman in 1998, and in about three months will open its 250th bakery-café on Market Street in Boardman.
The company founded by his father was the nation’s largest McDonald’s franchisee until the late 1990s but was running out of territory to grow further, Covelli said. “I started realizing a segment of the population was looking for an alternative to fast food,” he said. He read about the St. Louis Bread Co. chain and met with the president to discuss becoming a franchisee.
“We told them we’d give them their first $2 million store,” then did the chain’s first $3 million and $4 million stores, Covelli continued. Covelli Enterprises also worked with St. Louis Bread to develop the Panera chain and brand.
Although some said he was “nuts” to leave McDonald’s for Panera, there are “a lot of wealthy people in Trumbull County” from purchasing Panera stock back then, when it was $4 per share, he said. Panera, which trades on the Nasdaq index, closed at $167.4 per share Wednesday.
Covelli attributes his company’s success to adhering to four standards that he says are the “bible in this business:” hiring good people, serving quality food, offering great value and maintaining clean restaurants. “If you take one of those four standards away, you’re not going to have a long-term restaurant,” he said.
The company has grown by doubling its size in markets it has acquired, he explained. The West Palm Beach-Fort Lauderdale market, which it acquired six years ago, has grown from 14 to 27 stores, and per-store volume has doubled as well. Columbus, which had 19 stores, now has 32 with eight under construction. The largest Panera in the country is on the campus of Ohio State University, its second, and third units opened in Ohio Stadium. Two are going to be developed in OSU’s Wexner Medical Center.
Covelli Enterprises also was chosen to develop Panera in Canada. “I never thought I would go international,” he told Rotarians.
This year the company is on pace to open as many as 30 stores; it issued 25,000 W-2 forms to employees for the 2013 tax year, he said. In the past 18 years there hasn’t been a year that growth has been less than $60 million, and in some years it’s exceeded $100 million, he reported.
Covelli Enterprises became an O’Charley’s franchisee a few years ago and operates five restaurants, including in Niles and Boardman, and a sixth is being developed in Strongsville. Covelli said he fulfilled a lifelong dream of owning his own Dairy Queen last year when he opened two DQs on the Ohio Turnpike to compliment the Panera Bread bakeries at the new Glacier Hills and Mahoning Valley travel plazas.
“We thought Dairy Queen would be the perfect complement," he said. Today his company owns nine DQs, including a DQ Grill and Chill opened at the Eastwood Mall Complex in Niles last year.
Following his presentation, the Warren Rotary named Covelli a Paul Harris Fellow, an honor that recognizes one of Rotary International’s founders. Covelli “exemplifies the humanitarian and educational objectives of the Rotary Foundation,” said Rotarian Dallas Woodall, a Warren attorney.
Covelli Enterprises sponsors the annual Panerathon, which raises funds for the Joanie Abdu Comprehensive Breast Care Center, among many other charitable programs.
Covelli said companies have an obligation to contribute to the communities where they are located. When he sees a successful business that hasn’t done anything for its hometown, he says, “Get the hell out of the community.”
Copyright 2014 The Business Journal, Youngstown, Ohio.
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