The Winner's Column - February 2012
As savvy franchise companies continue to flourish in a volatile economy, FUSR continues to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, innovating, and continuing to grow, whether domestically or overseas. This month we feature a special section on six franchiors' plans for growth in 2012. To be considered for next month's Winner's Column, please send your good news to email@example.com.
New Units & Deals
Del Taco Continues Dallas/Fort Worth Expansion
Del Taco has signed a three-unit development deal with DT Restaurants of Texas. The first is expected to open in April at Hawk's Creek Center in Fort Worth. In 2010, the company announced plans to expand in the Dallas/Fort Worth market with approximately 80 restaurants. So far, the brand has opened six in Dallas and area communities including Denton, Hurst, Irving, McKinney, and Plano. The owners of DT Restaurants, brothers Ryan and Chris Blake, are accountants who grew up on Del Taco in Southern California. They have teamed with an operating partner who will manage the restaurants. The first Del Taco opened in 1961 in Yermo, Calif. The brand has more than 530 restaurants in 16 states.
Westin Cleveland Convention Center To Open in Summer 2013
Starwood Hotels & Resorts Worldwide unveiled plans to open the Westin Cleveland Convention Center in summer 2013 adjacent to the Cleveland Medical Mart and Convention Center complex. The former Crowne Plaza, owned by Sage Hospitality, will undergo a $64 million renovation before reopening as a Westin with 481 rooms, a full-service restaurant, and 26,000 square feet of meeting facilities. â€¨Westin has expanded its portfolioâ€¨30 percent over the past five years and expects to add another 30 hotels by the end of 2016. Founded in 1984, Sage Hospitality has grown into one of the largest privately held hotel management companies in the U.S. The company also operates the Sage Restaurant Group, which has created and is managing 10 unique restaurant concepts.
Einstein Bros. Signs 4-Unit Florida Deal
It's doughnuts to bagels in Vero Beach as the former home of Doughboy's Donuts reopens as an Einstein Bros. Bagels. Set for May, the opening is the first in a 4-unit, 4-year development agreement signed by franchisees Jim and Helen Shafer. "Our ultimate goal is to have three stores in Vero Beach," said Jim Shafer, an M.D. who plans to continue in his main business at Vero Orthopaedics and Vero Neurology. Helen Shafer will handle the marketing for both businesses. Einstein Noah Restaurant Group has more than 770 restaurants in 39â€¨states and the District of Columbia.
Big Plans For 2012
Togo's To Open 28 New Restaurants
Togo's Eateries racked up what the company calls "an unprecedented year of growth in 2011," signing 23 agreements for new restaurants and opening 7 new California restaurants, including a new company-owned prototype in Pleasant Hill. The company's strategic plan, launched last year on its 40th anniversary, includes remodeling options for franchisees to refresh existing units, and plans to continue growing in key Western states. For 2012, plans calls for remodeling 80 existing restaurants and opening 26 franchised and two corporate restaurants. "This is an exciting time for Togo's. We have a vibrant, energized brand that's ready for expansion in our existing markets, as well as an introduction into new cities across Arizona and Oregon," said Tony Gioia, chair and CEO of Togo's Holdings, LLC. Founded in 1971, the brand has nearly 250 units.
Russo's New York Pizzeria Set To Expand
After opening two restaurants in 2011 and signing five separate agreements for 31 locations in the U.S. and Middle East, Russo's New York Pizzeria and Russo's Coal-Fired Italian Kitchen has announced ambitious expansion plans for this year. Plans call for opening an additional 10 franchise locations this year, as well as supporting existing franchisees with improved operations and marketing. Founded in 1992 by Chef Anthony Russo, Russo's New York Pizzeria has 28 restaurants in 3 states.
EVOS Gears Up for Growth
EVOS, a fast-casual restaurant concept offering healthier fare, announced plans for new corporate expansion in what it calls its "New Year EVO-lution." EVOS plans to open three to four company-owned locations in Florida, with additional growth taking place on the franchise side. Two years ago, EVOS opened in Pinecrest, Fla. (the first in the state not located in its home market of Tampa Bay), where franchisee Roland Rafuls will be opening two additional locations. EVOS is also looking to expand through a new partnership with Aramark, offering healthier burgers, fries, and shakes at college campuses. The 16-year-old brand has locations in Florida, Georgia, and North Carolina.
Mooyah Seeks To Double in 2012
Mooyah Burgers, Fries and Shakes plans to nearly double the number of existing units in 2012 with new restaurants in Alabama, Arkansas, Florida, Kansas, Louisiana, Oklahoma, Virginia, Maryland, and Washington, D.C. In 2011, the brand expanded out of its home state of Texas into California, Connecticut, and Tennessee, ending the year with development contracts and agreements in place for more than 300 units. Recent openings in Texas include Tyler, where business partners Scott Isabelle and Mark Ott opened the first of five planned locations in January, with a second scheduled to open in Denton in March; Mansfield, by franchisee Johnny Collins, who also owns a Mooyah in Colleyville that opened last year and is planning a third for his hometown of McAllen; and Deer Park, where franchisee Brij Agrawal said, "Speaking as a vegetarian, no other burger place can compare." Other openings include the first Mooyah in Virginia, at William & Mary University in January, and the first Mooyah in California in Merced last October.
Jack in the Box Expands "Seed" Strategy, Discounts
Setting up corporate stores in targeted markets, getting them off the ground, and then offering them to franchisee groups seems to be paying off for Jack in the Box. According to the company, potential franchisees can "franchise recently opened company restaurants and use these locations as a platform for future market development." Royalty fees can be reduced for up to 5 years, initial franchise fees (up to $50,000) waived, and up to 75 percent of advertising fees invested in local marketing. The strategy is part of the brand's continuing effort to shift to a predominantly franchised company. The program seeks to sell the corporate "seed" restaurants in groups to experienced multi-unit franchisees. "When the company goes in and launches - say in Oklahoma City or Kansas City - we're controlling how the brand is first being positioned in the market. We can use the high profile locations and have the resources and capital to move quickly to secure the best sites and launch the brand in the right way," said Grant Kreutzer, director of franchise licensing and recruitment in Nation's Restaurant News.
Twin Peaks Looks To Surpass 2011 Success
Twin Peaks Restaurants reported an "exceptionally successful" 2011, with 8 new restaurants, expansion into four new states, and five additions to the management team. The company plans to continue to fuel growth through franchising in 2012. Targeted markets include Baltimore, Las Vegas, Chicago, New Orleans, St. Louis, and Washington, D.C.; as well as Ohio (Columbus, Cincinnati, and Cleveland), Arkansas (Fort Smith and Little Rock), Kentucky (Lexington and Louisville), Tennessee (Memphis and Knoxville), Florida (Miami, Tampa, West Palm Beach, and Fort Lauderdale), Virginia (Norfolk and Richmond), Pennsylvania (Philadelphia and Pittsburgh), and California (Sacramento, San Diego, San Francisco, and Los Angeles). Founded in 2005 near Dallas, the chain has 20 locations in Kansas, Nebraska, New Mexico, Oklahoma, Colorado, Arizona, Louisiana, and Texas.
New Brand Launches
Bach to Rock Launches Franchise Program
Bach to Rock (B2R) plans to expand by franchising its music instruction concept nationwide. The company has begun by seeking franchise candidates for the Mid-Atlantic region from New Jersey to North Carolina, and plans to broaden its efforts into markets across the country. "Interest in playing music is at an all-time high, especially with the popularity of television shows like American Idol and Glee, as well as pop culture phenomena such as Guitar Hero, Rock Band, and iTunes," said company President Brian Gross. B2R opened its first corporate-owned location in Bethesda, Md., in 2007 and has grown to six schools, two in Maryland and four in Virginia. Initial investment starts at about $400,000, including a $35,000 franchise fee. B2R is owned by investment firm Cambridge Information Group.
Bennigan's Revives, Sets Sights on Growth in 2012
After several tough years, Bennigan's Franchising Company began a comeback in 2011, starting by naming Paul Mangiamele president and CEO. In 2011, the company (33 domestic and 45 international locations) signed franchise agreements with 8 new franchisees to develop more than 30 new restaurants, and plans to open 12 new restaurants this year. Projected 2012 openings include Arkansas, Texas, Maryland, Washington, D.C., New Jersey, and Florida, as well as Cyprus, South Korea, Mexico, El Salvador, and Dubai. "At a time when many companies are cutting back, we are making investments into a strategic plan to rekindle the fire of a great brand," said Mangiamele. "There is a lot of nostalgia, goodwill, and pent-up demand for Bennigan's that we are bringing into the 21st century." Menu optimization, increased operational standards, server training, and a local-store marketing push at the company's flagship restaurant in Chicago resulted in double-digit sales increases, which Mangiamele says will translate to the chain's franchised units. The company also debuted a new prototype in Appleton, Wisc., with a smaller footprint and updated menus, bar offerings, uniforms, logos, and signage. Another part of the strategy is to pursue growth in non-traditional locations through Bennigan's on the Fly, a fast-casual model suited for airports, hotels, hospitals, cruise ships, and universities.
Big Banks' Loans Rise: First Time Since 2008
According to a recent article in the Wall Street Journal, lending is picking up at three of the nation's big banks. While the article is framed to report on the good news for the banks, it also indicates a turnaround in their lending practices - good news for franchise companies whose growth has been stymied by years of tight credit. Overall, among J.P. Morgan Chase, Citigroup, and Wells Fargo, loans outstanding were up $41 billion in the fourth quarter compared with the previous year - and marks the first time since 2008 that aggregate loans outstanding from these three banks rose. According to the article, "The data offer the latest signal that the deleveraging that swept the economy following the 2007-08 turmoil may be easing." Jeffrey Harte, a principal with Sandler O'Neill + Partners LP, was quoted as saying: "From what we can see so far, there is actual demand for loans, as opposed to banks going down the credit spectrum and loosening their standards."
JIB Franchisee Lands $18 Million from GE Capital, Buys 51 Units
Feast Foods LLC, a Jack in the Box franchisee with more than 100 units in California, Texas, and Oklahoma, received a $16.3 million term loan from GE Capital, Franchise Finance to acquire 51 additional Jack in the Box units in Washington, Idaho, and Oregon. The deal also included a $1.7 million development line of credit. Feast Foods is headquartered in Marietta, Calif. San Diego-based Jack in the Box Inc. has more than 2,200 restaurants in 19 states.
Franchisee-Turned-Franchisor Reports Positive 2011 Growth
Diversified Restaurant Holdings, a large franchisee of Buffalo Wild Wings (BWW) and the franchisor of Bagger Dave's Legendary Burger Tavern, reported 34 percent revenue growth for 2011. Along with the successful openings of six new restaurants in Michigan and Florida, the company tallied $60.7 million in revenue for 2011, up $15.5 million over 2010. The openings consisted of three new Bagger Dave's and three new BWW restaurants, bringing the organization's total number of units to 28. In all, the compay operates 22 BWW restaurants (14 in Michigan, 8 in Florida) under an area development agreement to build out 32 by 2017 (in addition to the 6 opened before the agreement). Michael Ansley, company president and CEO, said, "We're extremely excited about the growth and customer acceptance of Bagger Dave's. Every subsequent store we've built has produced higher volume than the last. We doubled the number of Bagger Dave's this year and plan to continue accelerated growth of this concept throughout the Midwest in 2012." Read an in-depth profile of Ansley in Multi-Unit Franchisee magazine (4Q 2011).
AlphaGraphics Acquired by Blackstreet Capital; CEO Cushing Out
AlphaGraphics, Inc. has been purchased by an affiliate of private equity fund Blackstreet Capital Partners II. The transaction closed on January 11. The seller was G A Pindar & Son Ltd., a U.K.-based graphics and printing services company. Founded in 1970 in Tucson, AlphaGraphics is based in Salt Lake City and has about 280 franchised locations. Blackstreet Capital is a private equity firm in Chevy Chase, Md., managing more than $200 million in capital. Kevin Cushing, CEO since 2004, left the company in late January. For an in-depth profile of Cushing and his plans for the company, see Franchise Update magazine (1Q 2012).
UFood Restaurant Group: 10 Units in British Columbia
Building on the burgeoning healthy fast-food movement, the UFood Restaurant Group has granted a territorial franchise agreement to ASA Capital Alliance to develop 10 UFood Grill units in British Columbia. The first is projected to open in Vancouver by April. Zaid Al Chalabi, CEO of ASA Capital, currently operates two Cazba Restaurants in North Vancouver serving Persian cuisine. Based in Boston, UFood Grill is led by franchise veteran George Naddaff.
Maui Wowi Opens Fifth in Saudi Arabia
Maui Wowi Hawaiian has opened a new retail location in Riyadh City, Saudi Arabia, bringing the brand's total in the Kingdom to five. This is the fourth Maui Wowi location for master franchisee Mohammed Alhumaidhi, who is scheduled to add two more retail locations, mobile units, and catering by year-end. Started in 1982, Maui Wowi operates 575 locations worldwide.
Nestlé Toll House Café by Chip Debuts in Saudi Arabia
Nestlé Toll House Café by Chip has opened its first café in Saudi Arabia. The location is the first of nearly 50 planned for the country in the next 10 years by the Emad Al Aboud Group, which became a master franchisee in December 2010. The brand franchises more than 100 cafes in the U.S., Canada, and the Middle East.
WSI: Sprechen Sie Deutsch?
Targeting the German-speaking regions of Western Europe, WSI has opened a master franchise office in Effretikon, Switzerland. The "DACH" region, consisting of Germany, Austria, Switzerland, Luxembourg, and Liechtenstein, has a population of about 100 million. The office will be operated by William Jacober, who spent the past decade operating his own business management consultancy firm. WSI also has master franchise offices in the Baltics, Cyprus, United Arab Emirates, Qatar, Bahrain, Portugal, Brazil, Spain, Central Spain, Egypt, France, Czech Republic, Slovakia, and Portugal.
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