AT&T authorized retailer (MWT) opens in Wisconsin
Guest: Paul Yousef
Topics: Millennium Wireless Technology, AT&T
Chris Ressa 0:01
This is retail retold the story of how that story ended up in your neighborhood. I’m your host, Chris ReSSA. And I invite you to join my conversation with some of the retail industry’s biggest influencers. This podcast is brought to you by DLC management.
Before jumping into the podcast, we have a quick new segment called Data drops brought to you by police or.ai. Today’s data drop is about off price shopping. The off price apparel categories experiencing impressive recovery with off price visits regularly outperforming the wider apparel recovery rate. Visits to Ross Dress For Less TJ Maxx and Burlington have been up every month this year when compared to 2019. While July visits to apparel sector only grew an average of 3.8% when compared with July 2019. Ross just for less TJ Maxx and Marshalls saw a year over year increase in monthly visits of 11.3% 7.2% and 12.1% respectively. And Burlington saw the most impressive increase with visits up 12.3% 13.5% and 25.4% in May, June and July 2021 when compared to the equivalent months to 2019. Ross Dress For Less has announced 60 new stores by the end of 2021. And TJ X company’s plans to open 122. net new stores over 2021 Burlington, meanwhile, expects to have 75 new stores open by the end of 2021. To me, this is exciting. I think there’s a lot of reasons why we’re seeing this in the Great Recession 2008, the consumer started to really crave value, off price retailers started to grow at a rapid pace. And they had the branded product at immense values. Not only did they have product values, they had this experience factor where you can find one of a kind or only one of something and it was a treasure hunt to go through. And it’s really resonating with the consumer. I think the off price model has really been a shining star in the retail industry and I expect it to continue to be that because of their convenience and open air shopping centers. The experience they bring in the value they create. Stay tuned as we continue to drop more data drops from Play store.ai Thanks. Welcome to retail retold everyone. I am joined today by Paul Yousef Paul is a principal at MW T. They are an authorized 18 T dealer with 28 locations in the Midwest. I am excited for him to be on the show. Welcome, Paul.
Paul Yousef 2:52
Hi, Chris. Thanks for having me.
Thank you, Paul, why don’t you tell us a little bit more about who you are and what you do?
Yep, I’m Paul Yousef. I’m the principal of Millennium wireless technology and WT and we have 28 locations in Michigan and Wisconsin. We’re headquartered out of Troy, Michigan. So excellent. Paul, I’m
fascinated to know because there are so many different franchises one can get into how did you end up in the authorized retailer of a major cellphone brand?
Great question. So when I was in high school, I was working for my uncle. My uncle owned an Ameritech Siler store that store sold pagers and a little bit of cell phones at the time. So we’re talking like 96 Yep. And so my job was to fix pagers in the back of the store. And so that’s that’s what I did after school, I would leave I would like leave school and you know, get to the store and they had like, all like five or 10 pagers that needed to be repaired from the morning like from that morning people come in, that needed their pagers fixed or reprogrammed, right. So I’d come in, knock them out. And that’s what I did every after school.
Excellent. How did that turn into you? Owning 28
Okay, so good question. I continue to work for this for my uncle, repairing pagers. I eventually when I graduated high school, I was I was going to like a local community college but I will I was also running, running this Ameritech Seiler store. I I became the store manager. And I did that probably till was my 19 So a couple years after F During high school, a gentleman from AT and T or s at the time Ameritech. He was like an account representative. He he saw what I did, like he saw, once he saw what happened when I took over the store as a store manager, and how the sales, how the sales were doing, he approached me and said, Hey, look like you’re doing a really good job. How would you like to own your own your own store one day, I really didn’t know what to say I didn’t really have money. But there was a gentleman. There was a gentleman named Al Johnson. He he had one location. He he was trying to exit the business, he was retiring. And I was introduced to our was a really good guy. And he, you know, my dad, actually, he refinanced our house. And I think he pulled out like $50,000 and I use those proceeds to, to buy the business and get working capital. So I think I was like 19 years old, it was it was pretty, you know, at the time was pretty stressful, Chris just because it was, you know, taking that kind of money and knowing like, you know how it was you would leverage the house. So, you know, that was?
That was a big deal is yeah, you know, kudos to you.
Before we get started,
we have a segment in the show called Clear the air. I’ve got three questions. They’re fun questions. Tell me when you’re ready. Go ahead. Okay. Question one. What is one skill you don’t possess? But wish you did speed reading and me to and is a good one. You get so much information put in front of you, you have to evaluate if you could get through it in half with a man with retention, like I have to be able to retain obviously, you have to be able to attend it. Yeah, good point. Okay. Question two. When is the last time you tried something for the first time?
A couple of years ago, I went out because I wanted to learn more about commercial real estate. And I got to my CCIE am designation, took all the classes in and got got this designation is
wow, that is a cool, cool one. Not many franchisees authorized retailers would get a CCIE and why don’t you explain what a CCI m is?
Yeah, so the CCI M is a certified commercial investment member, that’s the acronym that stands for. And they basically teach you everything you you want to know about, about a commercial real estate investment. And they what’s cool is they cover like four major modules they cover like how to look at the market, how to analyze the numbers, how to, they go to how to, like make decisions of which investment property to go after, like, if you have Option A and Option B, how do you make the decision of of which which one to buy, um, a lot of it is, it was the best thing I ever did, because we would like to own more of the, you know, the buildings that that we, that we do do business in. And so that’s kind of like what that was like the catalyst of what made me want to want to do it, but I would highly recommend it to anybody who wants to further their commercial real estate investment, like know how and, and really understand it from the investor’s perspective. So there’s a lot of brokers in there, most of the people in the class are brokers. And they they wanted to understand like, how to present to their, you know, potential clients and, and stuff like that so and what it’s like sitting on their side of the table. So I think it was a it was a great class i i learned a lot
Yeah, I’ve heard good things. I don’t have one but I’ve heard good things. You mentioned to own some of your buildings, you have 28 stores, how many of those 20 stores do you own the the underlying real estate?
We don’t we don’t want any of our current real estate right now. One of the major reasons is because we always select the best real estate in the trade area. So if if it was between owning our building or being on Maine and Maine and paying 40 bucks a foot we’re we’re going to be on Main me because you’ll just the way it works for us is we’ll just make so much more money than trying to just own the real estate.
Yeah, who owns it is less relevant As long as you’re operating your business in what you consider the best real estate.
Yeah, and I will tell you this Chris is, um, through this CCAM class when it came to studying markets. I learned a lot about how to study markets and the tool, some of the tools that were available and how to use those tools. And so I’ve been able to use those tools to help me make better real estate decisions for our at&t business.
That’s, that’s, that’s a good one to hear. Cool. All right. Question three. What is one thing most people agree with, but you do
not. Okay, so I hate Manet’s. Oh, boy, I think it should be banned.
Oh, my goodness. Oh, my goodness. We have to disagree on this one. However, I understand but I do like man is so no chicken salad and tuna salad for you
know, man with the smell just. Yeah. Do it for me,
man. No, can do the ketchup mixed with mayonnaise. Can you do that?
No, man. No. Nope. You know, no special sauce? No. Yeah, like, no special sauce, none of that stuff. Just anything that’s got mayonnaise in it like, yeah, no spicy mayo? Like sushi. No, spicy. None on your app.
Okay. That’s a great answer. I don’t agree with it. But it’s a great answer. Okay. Let’s move on to story because you have a fascinating story about how N W t ended up opening their stores in the state of Wisconsin. So it’s not a one store thing. But it’s about how you entered Wisconsin, you and you ended up owning and opening multiple stores? Take us through the story. Because I find this one great.
Yeah. So in 2017, one of my friends, Rick, who was a like a national authorized retailer for at&t, so he was in more than like, four or five or six markets, he was all over. He was he had called me up and in like, late 2017 and says, Hey, I’m exiting the Wisconsin market. And, you know, I’d like to offer them to you. And so I said, Fine, send me, send me the, you know, send me all the analytics. And let me let me do a deep dive and review everything. So he sends me, he sends me all this stuff. And I call him back and said, like, you know, Rick, you’re losing money. Like, I don’t know what you’re selling here. And he’s pretty much like, I’m not going to sell you the stores, I’m going to give you the stores. And by the way, Rick is like the nicest guy in the world. Just the nice, one of the nicest human beings. So. But alright, get back to you. So I have my brother Peter and I are in business. We’ve been in business, you know, this this whole time for the last 24 years. So I, I brought it up to Peter. And, you know, Peters, like, why do you want to do this? You know, we’re everything. You know, we’re in a really good situation with our 17 or 18 stores in Detroit. What’s the reason? Why do you want to do this? And I told him, like, listen, like, I convinced him to do it. And I showed him the numbers. And he’s like, the only way we’ll do this, if we can get him to come to closing with $500,000. My initial reaction to Peter was like, you’re, you know, you’re doing this just to sabotage this deal. Like he’s giving us the stores for free. And, you know, we, we always got to agree on things. So I’m like, All right, I’m gonna go back to Rick, and he’s the nicest guy in the world. And I’m after he just told me he’ll give them to me. I’m gonna ask him for half a million bucks. So take my call. What’s that?
Take his stores, but they could start your stores, but you have to give me $500,000 To do it, and I’m gonna pay you zero.
Yeah, so I call Rick and like, Rick, um, you know, we’ll do you know, I told him and then he got silent. He has, I didn’t hear like crickets. Right for like, I think like, it was like 10 seconds, but it felt like, longer, you know? And then he says, he says, would you take 300,000? And I couldn’t believe it when when he responded, and I said, I’ll call you back, Rick. And Peter? Nope. Don’t want it. It’s either half a million bucks and we’re not doing the deal. Go back to Rick. Rick made it happen. You know, he was able to get us to 500,000 Ops. And that’s basically that’s the flick the first that’s how we were able to get in.
Wow. For a lot of people who aren’t in business deals every day that that person probably sounds so strange. But I’ve actually seen this before, in in many transactions actually where, and typically what happens is, somebody has a large transaction, maybe they’re selling 100 stores or they have $100 million business and they need to sell off a part of the business that’s worth $400,000. But they have to get get it all off. And sometimes the only way to make that sale happen is to transfer the interest. Was this one of those times will? I have to imagine this was part of a larger sale? You’re spot on Chris. Okay.
So, this, the seller, the seller did not reveal that to us. Okay. We found that after the fact. But he he’s had sold pretty much his entire portfolio, except the Wisconsin stores. That’s because they were losing. I felt a little I mean, honestly, like I did, I did feel like a little betrayed, because I’m like, you know, but then I got over it pretty quick, because we got the half a million bucks. So yeah, you’re right, his stores. He sold all of them, just the ones up in Wisconsin were the ones that he he sold to us.
And you were buying how many stores in this transaction?
It was. So it was seven stores, but only four of them were open and operating. And there were three signed leases. Wow.
Yeah. So this was going to be work you had you weren’t just buying existing operating fun cash flow in businesses, you were buying businesses that we’re failing. And you were about to double down and open up three more.
Yep. And so we we analyze the, you know, Oh, one other thing to add to that was the leadership for these, there was no district manager. So the leadership was out of Chicago. We weren’t getting the district manager.
Oh, wow. So you’re gonna have to go hire,
we had to hire. And I think there was, by the time we took over. By the time we took over the stores, there’s only seven employees running for stores. And I think only there was like, not every store had a store manager, like one of those stores is missing a store manager. So yeah.
So as part comes to closing with half a million dollars, you take the stores and a half a million to get the stores to profitability up. Well, first, are those four stores profitable today? You just bought in 2017. And we just did a pandemic?
Yeah, they, they are kudos to you. But some of them have been relocated. And then some of them have been reload. You know, and we have better management now. But yeah, the short answer to your question is, is I think most of them are profitable, we might have one out there, that’s not, you know,
enter the other three open.
The other three opened up within six months of, of us going into the market, because we closed, we went in on February 1, and so they they had opened up all within 2018. We had by the end of 2018. We had seven, seven open locations.
And and now you have 10 You actually went and you open three more correct.
We opened three more locations. And they’ve been much better locate like we picked out some really good real estate. So the three that we did open up, we actually what ended up happening, Chris is the original seven. We ended up closing two, and then so we opened up five new ones. That’s how it really happened. Okay, got it. So five of the seven state and then we open up five new ones. So
I think here’s the two questions that everyone’s probably wondering that so they can analyze this deal. So the first question, how much were the four stores losing every month?
The four stores we were I think we’re losing anywhere between five to 10,000 bucks a month. Wow. Or location. Wow. So
we had a mall location, it was a kiosk with probably 100 square feet. The rent there? I think we’re paying was 17,000 a month in rent. We’re paying like 1700 bucks a foot for that kiosk. Wow. And in its heyday, it would you know, before we owned it, it was a good you know, it was a good it was a good store but you know that that was one of the reasons why we asked for it. So that was one of the reasons why we asked for.
Yeah, it’s losing 20 to 40,000 a month. Wow. And the next question is he gave you 500 grand did you have to invest more than that to actually get the stores profitable and rebrand it?
Yeah, we did. We reinvested like the profits. I mean, think thank God, like Detroit was making money. But I would say for about a year, like, we spent like that, that half a million bucks was gone. And then I think we probably put in another million bucks from Detroit to get it to, you know, to get it going.
Wow. Yeah. Going back, when you were like making the deal with Rick, what was it that you looked at? And you said, you know, what, I think we can turn these to profitability?
Um, good question. So anytime, you’re Loke, like, anytime there’s local ownership, like, like Rick was based out of, like, Missouri, right. And his management was in Chicago, like his, his district managers are running out of Chicago. Um, and so we, and then we also had an analytics into how many customers were visiting his stores per month, we, we took that data. And we said, if we can execute this business plan, we can get weak, and we can convert a certain percentage of customers from just walkins into sales and generate revenue, we can break even, and then eventually make a little bit of money, and we weren’t even looking to make a lot of money. What we were trying to do, Chris was expand our footprint, like, in the market. You know, that’s, that was one of the things we’re trying to do.
Got it. Okay. It’s a fascinating story, you’re able to bring this interesting deal to the table. It wasn’t lollipops and rainbows under the hood of the deal. And but you went in and you turned it around, and it’s still working. And now you in 2016, you had zero stores in Wisconsin, now you have 10.
And really, really cool story. And I think you bring something to the show that most people haven’t heard of, you know, at the this, someone giving you the stores, essentially plus cash to try to help get these to profitability. Times like that, though. When you you were pushing for it, your your brother wanted it to be perfect. When you start rolling in 2018 2019, I imagine there was some tug and pull between you and your brother on this transaction. You know, not only was it the 500 yet to sink another million dollars in how was navigating those waters?
You know, that’s a good that is such a damn good question. Because it it made our I’ll put it this way. That was a really tough time for us knowing like, you’re seeing Yeah, this thing is just like, it’s bleeding money, right? And my brother, he was against it. He, he moved to Wisconsin, and he he like, picked up his family and move to Wisconsin.
I can imagine that car right to his wife, why are we moving to my Wisconsin because my brother had to buy this business and I can’t let it and he’s taken all the money from Detroit and led me to get employed and we’re losing everything. So I gotta go. Yep.
And that’s pretty much you know, that’s, that’s probably, you know, that’s probably what you know, how went down, you know? So he did he set up shop there and built some really strong relationships with the local community, the talent that was there. I mean, he like handpicked and recruited the best talent in the market. And he forged some really strong relationships with like 18 T account managers, at&t executives that were there. And what that did was is it built our brand awareness like M WTS. Local brand awareness out there to where we are known as, like one of the most respected employers in the market. And so people advocated for us and at&t wanted to see us win. I mean, we, we really, we took that risk and they want, they really want to see us win. But I think that was the probably the biggest thing was him going out there. And, and recruited the way he recruited, you recruited his butt off?
Wow, have a great story. In a transaction like that? How much is at&t corporate involved?
First of all, like, you have to get their consent. So Right. And you know, and you’re not going to, there’s going to be no deal without their consent. And so they have to, you know, and I had a really good relationship with the VP GM in the market. And she was at a Chicago, she, she, we had a really good relationship with her. So she advocated for us to, to do the deal. And so, because of her approval, we’re able to get like the legal consent to move to move forward to the closing.
Got it. Okay. Well, listen, that’s a great story. And I’m glad it’s working out today. And truly fascinating. No one’s told one like that on the show before, so really appreciate you doing that. Sure. I want to move to the business for a second just overall, as this dealer, authorized retailer, world that you live. I think a lot of people think of the cell phone store. And the money comes from this, and I’m holding up my iPhone right now. But But what’s really critical? Are the subscribers and the people signing up for the service. So can you walk us through that for a second? I think that would be helpful to the audience.
Really good point that you bring up, Chris? And you’re absolutely correct. It’s, it’s somewhat of a backwards business model. And what I mean by that is, is the carrier’s going to, you know, front, the cut, like, you’re gonna get your $1,000 iPhone. And they’re usually free. Like, if you sign up for new service, typically the iPhone is with AT and T for the last three or four years, they’ve just been given it for free, as long as you sign up for the the installment, you know, the contract or whatever, right? And so they’re giving you the $1,000 iPhone, and then they’re gonna make their money up 5040 bucks a month, right? Over the next three or four, you know, like three years, let’s say. And so that’s so the, they call it monthly reoccurring fees. So the way the carrier makes money is from the monthly reoccurring fees, and as long as you’re a customer, that’s how they that’s how they make
money. Right? And you as and so they compensate you for that.
So what they do for us is they say, All right, just ballpark, you’ll get four to six times the monthly recurring revenue that’s generated from that transaction. So if, say it’s 50 bucks a month, you might get like an if it’s safe, it’s worth five times of the MRC. Like, I probably shouldn’t, it’s, it’s probably like, I probably are not supposed to say exactly, but I’m just giving you an idea. It’s the dealers getting a multiplier of the monthly recurring charge, okay, of the customers bill. Now, depending on the carrier, each carrier is different, and each brand is different. Like there’s brands that only pay like one time MRC, and there’s brands that pay like six times MRC. And so you’re getting that’s on a new line, if it’s a renewal, one, two times three times MRC on renewals. So that’s, that’s the model. And what you’re doing is what you’re trying to do as you get so many customers walking in. Right? And then if you can convert those, those walkins, into renewals or up or new lines or renewables, then that’s how you’re that’s how you’re generating revenue to the business.
So you bring up something interesting, which is you’re you’re really in the service business almost more than that, you know, the retail service business more than the actual product business. It’s a retail service, you’re selling a retail product, but you’re also selling a retail service, where the bread and butter is made. And so I’m curious how Ecommerce has impacted this. How has online impacted your world? So
you don’t think about this right? Like that. You bring up a really good point. Um, You know, you think about like, when Apple does the announcement, hey, we, you know, we’re doing the iPhone 13, that just sounds right. There’s a segment of customers that will love, there’s a segment of customers that will watch that recording of the apple recording when you know when it comes out. And as soon as it’s, you know, pre like the pre launch where you could preorder, they’re ordering the phone, without even like having seen it, like live look, they don’t even care. They’re just like, new iPhone, I’m getting it. And some people don’t even watch the like, the live Apple like thing, right? Some people just say, Oh, it’s the new one, I don’t even need to, I don’t even have seen it, but I’m just gonna order it because I know I want the newest one, you have a pretty big chunk of customers that do that. And when that happens, that doesn’t, obviously doesn’t come to us, it’s going to Apple, or it’s going to go into like ATT direct, right? There’s still a lot, there’s another segment of customers that are they want to do business in the store. The biggest driver for that is they don’t know how to, they still come in, like, hey, I want to I want to see the new iPhone. And it looks like the last one that they had, because it’s just a black screen when you look at it, right? They want to know a little bit about the benefits, but they still, they still really don’t care. They’re more interested that it’s the newest iPhone and they want to get it but the biggest like thing for them is the dilemma is how do I get my, my contact, like all my content, from my old phone to my new phone, and, um, and they don’t, they’re afraid to like mess it up. They don’t want to do anything they don’t want to lose. And that’s the biggest thing. And, you know, our, our retail sales associates, they do it every day, they do it seven days a week. So they they could do with their eyes closed. So they come in knowing that all of their content, all of their pictures and their photos and everything they have is all going to be moved over. And in that, you know,
I think the other piece of that is those are all great points isn’t the other piece like the plants, like even for sophisticated customers like getting your arms around? Like the different plans and deals to me it’s like really hard to navigate online. I don’t know if you see that a lot. But I think it’s easier to navigate in a store when you’re talking.
Good question. Good point. Sorry. So you’re right. Like if you’re, if what like what I just mentioned, if it’s like a renewal, like you already have a TNT and you’re gonna stick to everything, hey, I don’t want to change my plan. But like, say you’re coming from like a different carrier, right? Like, I’m coming from Verizon. You come in, you know, you might not be sure about all the plans. You’re just browsing if if I can qualify you, and find out what you’re looking for what you have and, and learn more about you. And where you work. Maybe on your own business. Who do you have for your home internet, because we sell home internet. And if I can create a package for you, and get you every discount that we have. That’s typically not something that you’re going to be able to do. Like online, that’s going to be a lot more difficult to do online. Than what what we would be able to do in the store. I mean that that is a major major advantage. And so having for us, having like retail sales associates that like know their stuff and know their promotions, and know how to like bundle and cross sell, and create like a really good solution for the customer. That’s the value they can bring to a customer. I think that sure and where the customer wouldn’t need to go on the internet, they could just come in and get that. So
this has been fascinating. I do have one recommendation that I think could get dealer stores, corporate stores, sales to skyrocket, ready for this love to hear. I need the in store process to be much quicker. It’s not that it’s any faster online. But I want to be able to walk into a store, get anything I want in and out in 1015 minutes. And if I’m getting a new cell phone plan, it’s really hard. It’s really hard for that to happen. I’ve been at a cell phone store for hours before. And I think a lot of people have had that. And I say that it’s no different online or if I’m calling Verizon or AT and T it’s going to be a long time on that phone. But the carrier who gets the in store experience lightning speed who that’s going to be really interesting to see.
I couldn’t agree with you more. Um, you know, I know that a TNT they’re, they’re pretty more transparent than they should be with dealers. They show us like they talked to us. Does it look like here’s what we’re investing In our systems and it and improving and and they’re always trying to, they’re always trying to improve that process. That’s, that’s one of the biggest. That’s the that’s the part of the retail experience I think we can improve on. So I would, I would agree with you on that. Yeah. And in years, you know, like, it’s, you’re, we’re selling a service. And we’re also selling, even though the revenue generated doesn’t come from the product, but you still have a piece of equipment. Yeah. And so, and trying to move that stuff over, like trying to transfer that equipment over. It’s not simply exactly like what needs to I wish that there was like, Maybe Apple, somebody comes up with it. That just literally just zap like flashes it like it’s just a flash, like, two minute flash, one minute flash, and then everything just, that’s current, that process is not that technology isn’t there yet, but if somebody can crack that code, that would be a absolute game changer for our industry.
Yeah, I think so too. You’ve been a wealth of knowledge. This has been so fascinating. I want to bring us to the last part of the show. You ready? We call it retail wisdom. I got three questions for you. Go, Alright, question one. What extinct retailer Do you wish would come back from the dead?
Probably Blockbuster Video.
Good one popular one. Okay. Question two. What’s the last item over $20 You bought in the store?
Um, I bought some bourbon, walked into, like a liquor store and bought some bourbon kind of. Um, I don’t remember the guy with the guy recommended. It was a total it was at Total Wine. It was this really huge badass retailer in in Milwaukee. And he told he recommended some really good bourbons, but I don’t remember the names.
See everybody. That’s the power of the retail associate. He recommended it and you ended up buying it. That’s what you know, I bought
I walked into buy one bottle, I ended up buying three
more than 22 Associates in your stores. Okay, last question. If you and I were in Target, and I lost you what I would I find you.
Um, I have two small daughters, and I’m always getting them toys. So I’d probably be in the toy aisle.
I was in the toy aisle at Target yesterday. I know all too much. I’m getting to the point where I’m like, I think she has that Barbie. She has that Barbie. She has that one. She has that one. I don’t know what to do. So Well, Paul, listen, this was fantastic. Thank you so much for coming on, and really appreciate it.
Thanks, Chris. Thanks for having me. Here.
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