It may seem like easy street for long time restaurant operator Sean Tuohy  of Memphis, now that heâs sold 105 restaurants and 55 properties for $213 million in six separate transactions. His company, RGT Management, completed those deals with the help of longtime investment banker Auspex Capital last year. Turns out it was a tough road.
âItâs a lot harder to unwind a company than to build a company,â declares Tuohy, the protagonist with his wife, Leigh Anne, in the 2009 hit movie âThe Blind Side,â about their adoption of Michael Oher, a homeless African-American kid they saw on the side of the road, wearing cut-off jeans and a T-shirt in the bitter cold.
Oher went on to play NFL football for the Baltimore Ravens and the Carolina Panthers, and Sandra Bullock played Leigh Anne Tuohy in the movie. Tuohy downplays the initial encounter with the 16-year-old Oher, which perhaps explains why heâs a no-nonsense restaurant oper ator who leaves the dramatic stories and impassioned statements to his wife.
âIt wasnât that big of a deal. We just happened to pass him,â and then his wife ordered him to stop. âLeigh Anne told me to pull over. Iâm very coachable. Itâs a theme of my life.â
As for divesting his restaurants, includ ing 28 KFCs to his longtime operating partner Michael Roe, whom he calls a superstar, itâs a process. âYou canât just walk away. You have to stairstep it down. Thereâs people involved. I thought, turn the lights off and you leave,â but no such luck.
His wifeâs younger brother got him into the game three decades ago. âHe had a good night, and he couldnât find a Taco Bell,â says Tuohy with a laugh. He bought one Taco Bell restaurant in Meridian, Mississippi, a four-hour drive each way every day, which corporate said was challenged. âIt was a euphemismâ for underloved. âI loved it to death,â he says. âIt was mine. I enjoyed cleaning out the grease pansâ and sweeping out the dirt.
âIt was my dirt. I was responsible for the dirt.â
He and Roe grew the business to 115 Taco Bell, KFC and Taco Bell/KFC co-branded units in six states, seven Freddyâs locations and the real estate underlying 64 of the restaurants. On the advice of Auspex, he retained 11 Taco Bells, all in the beautiful and warm Florida Panhandle, something he advises others to do.
âI would recommend not getting outâ all the way. âI would recommend get
ting to a comfort level.â Chris Kelleher and Naveen Goyal, his advisers at Auspex on both the ride up and the divestment down, told him over eight years to con sider the emotional as well as the financial aspects. âYour competitive nature, there will be a vacuum,â he recalls Kelleher say ing.
So which do the folks at Auspex like better, the ride up or the ride down, I asked, and they couldnât come up with a pat answer. âItâs kind of bittersweet,â says Kelleher, when the clientâs portfolio is sold. âWeâve had a long relationship with Sean. I went to his daughterâs wedding. When I go to visit him I stay at his house, and that relationship is going to be not as close,â he says, although he knows it wonât completely end. âI still talk to him all the time. We enjoy the relationships and thatâs what we build our business on.â
Adds a philosophical Goyal: âItâs part of the journey. Theyâre going to have to build until itâs time to harvest.â
And then thereâs this: âWhen you sell you make a lot more money a lot quicker.â One thing Tuohy does enjoy post sale is a big pile of cash. âThereâs nothing wrong with that,â he says, especially because âIâve never had that before.â His father was a schoolteacher and coach and his wifeâs father was a police officer. âPeople who say money isnât important are the people who have it.â
Besides, itâs been a long time com ing. âI think we started out negative,â he said, referring to cash on hand, and money stayed tight most of his career as he poured back equity into buying more restaurants, and adding debt with each transaction.
âPeople like myself who grow wealth through leverage,â because they donât have any capital to start with, âyouâre fighting the leverage the whole time.â
Even though your top line keeps grow ing, âyour bank account doesnât show it. I kept telling my wife, âWeâre doing great.
Weâre doing great,ââ he says, but she wasnât feeling or seeing it.
âI was five days from bankruptcy twice,â he said, in the year 2001, and he remem bers the time frame clearly because the companyâs massive restructuring doc ument he and his vendors and bankers had worked on for months literally got destroyed on 9/11. âThe last signature was someone in the World Trade Center,â he says, so the entire restructuring had to be postponed for a later date.
How did his operation get in so much trouble back then? âIt was going down the cafeteria line, and my eyes got bigger than my stomach.â
At one time he had as much as $70 million in leverage on a $200 million operation. Did that make him nervous?
âIt didnât when I was 38. At 59 you donât know how much rebound time you have. At 38 I had all the time in the world.â
The basketball metaphor isnât an acci dent. Tuohy got a basketball scholarship to Ole Miss, also known as the University of Mississippi, after he went to an out standing high school, Isidore Newman, because his father taught there and his tuition was free. He was not a standout student. âI tease everybody, I made the top half of the class possible. I was just a meathead trying to get to college on a basketball scholarship,â he says.
âI was undersized and under-talented and we werenât very good when I got there,â he says, but Tuohy led the Ole Miss Rebels to their first SEC menâs bas ketball tournament championship in 1981. A point guard, âI played by fear that I was going to get run over,â but many of his records still stand.
Leigh Anne was a cheerleader for the basketball team, and they got together. âShe said it was because we had short shorts back then,â he jokes. If they had worn the long, baggy shorts with the leggings like today, forget it. âI am the
exampleâif people give you a chance,â something good can happen.
The sentiment was bred into him by his father, Tuohy says, a beloved coach whose players still say decades later that the elder Tuohy lifted them up.
When the couple met Oher, the idea became action. âIt really was the underly ing basis for our developing a relationship with Michael. We couldnât understand why people valued him the way they did,â he says. âPeople are so undervalued. When given the opportunity, people can do wonderful things. Itâs the foundation by which this whole world is flawed or existed or has prospects.â
Oher just retired from the NFL at age 32 but Tuohy isnât worried that he will go broke like other young athletes. âHeâs not
one of those. Heâs very smart. Heâs very frugal,â and heâs been that way all along. âWhen he came here, thatâs who he was. We just didnât screw him up. We just gave him an opportunity.â
Both with his children and with his employees, heâs tried to follow the same path, âthat came to me by DNA.â His style is âmaybe a little hands off for peo ple. You have to allow them to get there,â
he says. âIâve tried to let people become who theyâre supposed to be. Itâs a harder avenue than the other one. The people who are like me,â meaning restaurant operators, âwe are control freaks.â
He closes with advice for other own ers in the same spot as heâfind advisers and listen to them over your career, as he did with Auspex Capital. âI know then and I really know now that I couldnât do it without them,â he says. âThe problem that people have who are at this level I was at, thereâs nobody to ask that ques tion of. Thatâs why Auspex was important to me.
âWe donât have boards. We donât like to listen to anybody,â he says. âThatâs when it changes, when you start listening to someone.â