A Feast of Franchises

You don't have the latest version of Adobe Flash Player.

Please update your flash player.

Please login or register to make a comment!

villa enterprises management Inc As Seen In: November 2009 When all else fails, food succeeds. Restaurant industry sales are expected to reach $566 billion in 2009, according to the National Restaurant Association. And even though economic uncertainty is encouraging more diners to put their pocketbooks before their stomachs and emphasize value when deciding what to eat, the restaurant industry still accounts for 48 percent of the food dollars spent annu- ally.

Perhaps it 9s not surprising, then, that food franchise opera- tors generally report healthy business despite the recession, with many adding new locations and increasing same-store sales. That 9s especially true for those who address growth niches in the 7eld. One of those is healthy eating.

The restaurant association said three-quarters of adults surveyed said they try to eat healthier at restaurants than two years ago. Another is value. More than one in four said they pay more attention to coupons and value specials when picking a restaurant.

Some things never change much, however, and one of those is Americans 9 attraction to ice cream and other frozen treats. dIce cream is fun; it 9s social and it 9s a medium that brings people and their families together, d says Dan Beem, ... more. less.

president of Scottsdale, Ariz.-based Cold Stone Creamery. That summer-picnic feel about ice cream is one of the things that attracts franchisees to Cold Stone, according to Beem. Another,no doubt,is the $360,000 average annual sales volume each Cold Stone Creamery unit generates. That 9s high for an ice cream parlor. Beem says part of the explana- tion is that the last couple of years they 9ve focused more on boosting same-store sales than growing the size of the sys- tem. They 9ve gone after licensing deals for jellybeans and lip balm, signed a strategic alliance with a chocolate maker to help ease seasonal and time-of-day sales 8uctuations, and introduced new items such as ice cream cupcakes,and iced and blended coffee drinks. cNext year we 9ve got an even more innovative effort from R&D, d Beem promises. In 2009, the chain should grow slightly beyond its current 1,400-location size. But Beem 9s main objective is to keep adding sales while containing costs. cOur focus has been and will continue to be driving that unit volume up in indi- vidual stores, d he says. A focus on product drives Trevose, Penn., Rita 9s Italian Ice. cWhen people come in,they 9ve never tasted anything like this, d says Jim Rudolph, chairman and CEO. Rita 9s prepares its treats fresh daily, and anything left over is discarded after 36 hours. Rudolph, a veteran food industry franchiser, bought the company four years ago, planning to move on after a few months. He 9s stayed, he says, because he senses that Italian ice has staying power. cIt 9s a very unique, different product, d Rudolph says. cTwenty percent of our guests come in once or more per week. The reason is they love the product. d Since tak- ing over Rita 9s, Rudolph has nearly doubled the number of locations to 575. He thinks the next two or three years could be even better. dI 9m stillgoingtobehere, dhesays, dand, hopefully,if thiseconomy improves we could be at 800 or 900 stores. d While Italian ice may still be a stranger to many American palates, the nation 9s love affair with other Italian fare goes far back. Villa Enterprises of Morristown, N.J., opened its 7rst pizzeria in New York City in 1964. Today the company 9s system extends to 96 Villa Fresh Italian Kitchen franchises, as well as approximately 147 corporate owned locations. That rate of growth may pale in comparison to some newer concepts, but Adam Torine, vice president of business development, says the company prefers to take a more gradual, controlled approach to growth. cThe fact that we 9ve been in business so long gives us instant credibility, dhe says.They zealously guard the reputa- tion they 9ve built up. For instance, Villa requires franchi- sees to have prior food industry experience. They 9ve also resisted shortcuts when it comes to the food. cWe 9re still making our own sauce, we 9re still making our own dough, we are still chopping vegetables every morning, d Torine says. A Feast of Franchises From quick-service restaurants to delivering arrangements made with real fruit, these franchises offer great opportunities for entrepreneurs inspired by gastronomic delights. Reach: 1.25 million Ad Value: $21,205 Inc As Seen In: November 2009 2 Villa has fairly aggressive growth plans calling for add- ing 75 or so Villa Fresh Italian Kitchen locations in the next three years. But Torine says they won 9t favor growth over quality when it comes to selling franchises. cOne bad location and one bad franchise can ruin a system, dhe says. dAnd we 9re in it for the long haul. We 9d like to be here for another 45 years. d Mexican food represents another important ethnic cuisine in the franchising world. cMexican is in a sweet spot from a demographic standpoint, as non-Hispanic consumers are looking for more 8avor and spice, dsays Steve Carley, presi - dent and CEO of El Pollo Loco, Inc. based in Costa Mesa, Calif. Its menu also serves Hispanics who are looking for more traditional food. El Pollo has carved out a space in that 8ourishing niche with an offering emphasizing freshly prepared meals centered on its fresh, natural, hormone-and antibiotic-free chicken grilled over an open 8ame. The company 9s mar - keting pulls in more families than the young males lured by some other Mexican food chains. That leads to higher average ticket prices and higher pro7tability per location, Carley says. The company has approximately 420 locations and will be looking for franchisees with existing franchising and food industry experience to assist with further growth. Carley says their service and product both help them stand out from the crowd. dWe straddle fast food because we have fast food service and a drive through, yet our food quality is equal to or better than casual, dhe says. dThat 9s important to franchisees who want to be proud of the food they serve. d Asian fare also has been a strong and steady performer in franchising. Genghis Grill, based in Dallas, has built a 37-unit chain using the Mongolian barbeque format. CEO Al Bhakta says the format may not have any connection to Mongolia, but consumers do connect with the idea of a build-your-own Asian stir-fry. dWe 9re a growing concept de- spite the economy, dBhakta says. cOur same store sales are up double digits. d Consumers like the exhibition aspect --food is cooked on a large grill in full view of diners --the moderate prices and guests 9 ability to design dishes that 7t any taste or diet, including vegetarian, Bhakta says. cWe provide a real niche dining experience, dhe says. dIt 9s high quality and it 9s not very expensive. d Franchisee requirements are also welcoming. cIt 9s an easy concept to operate, dBhakta says. dOur training program is only a three-week format and our unit economies makes a lot of sense. We build the stores for less than $500,000 including franchises fees and working capital. And our average unit volume is $1.4 million. d Every now and then a whole new niche opens up in food franchising. One of those is Buffalo chicken wings. Jim Flynn, president and CEO of Wingstop, based in Richard - son, Texas, says the 425-location franchise has maintained relatively robust growth in 2009, with approximately 60 new locations scheduled to open by year-end. The simplicity of the menu is one of the major appeals, he says. cIf you take wings, fries, and beverages, you 9ve got 92 percent of oursales, dhesays. dSowe 9reabletosellfranchis estopeople with no restaurant experience. d Eighty percent of a typical Wingstop 9s meals are takeout, which means a small store footprint and low occupancy costs. And that adds up to attractive unit economics. Wingstop 9s appeal to consumers is based on the taste of the wings. Flynn notes that Wingstop has won top honors at the National Buffalo Wing Festival held each year in Buffalo, N.Y. cIn the cities that we 9re in, it 9s continuously named the best wings around, d he says. Currently, Wingstop has only a couple of eateries in the Northeast, but Flynn plans to crank up expansion to about 100 units a year, and the region where Buffalo wings were born is high on his target list. Another regional food item that has plenty of appeal to peo- ple in other places supports Philly Pretzel Factory. Marty Ferrill, vice president of operations for the 120-location Philadelphia-based franchise company, says the concept is uncomplicated. cWe 9ve taken a product that people grew up with in Philadelphia getting from a corner store or street vendor and put that into a retail environment, d he says. Philly Pretzel Factory has sought to improve on the time- tested regional snack by ensuring its pretzels are always fresh-made --still warm from the oven, in fact. The pretzels are also economical --three sizable, fragrant pretzels for $1.50. Many of Philly Pretzel 9s franchisees are former custom- ers, and they have a tendency to be new to franchising and food, because the business involves little complexity. cWe don 9t have a hundred-item menu and we don 9t do a lot of prep, d Ferrill says. cOur niche is Philly soft pretzels and we focus on that. d Over the next few years, Ferrill says the company hopes to open another 50 or 60 locations, sticking mainly to the East Coast. Inc As Seen In: November 2009 3 Every now and then, a concept comes along that can make a claim to true uniqueness. Edible Arrangements, which sells fresh fruit attractively arranged in a manner reminis- cent of 8oral bouquets, can do that. Founder Tariq Farid owned three 8ower shops before opening the 7rst Edible Arrangements in 1999. Today, the Wallingford, Conn., fran- chiser has approximately 900 locations, and there are plans to open another 400 in the next couple of years. The product may be a little unusual, but Farid says fran- chisees have no trouble getting their arms around the fact that Edible Arrangements locations are run similarly to quick-serve restaurants, but the average ticket is far higher, hovering around $75. Farid also has plunged into online ordering. cIt 9s really paying off, d he says. cWe 9re deliver- ing 50 to 60 percent of the orders to franchises through our website. That makes it easy for franchisees. d Edible Arrangements may represent a possible future direc- tion for food franchising, one that 7nds ways to bridge with other industries. That combo is part of the franchise 9s lure for franchisees,Farid says. dWe have the appeal of 8owers,the look of 8owers, and the feeling you get when you get 8owers. At the same time, the consumer knows it 9s food and you can eat it. That is a big advantage we have when it comes to selling franchises. Someone who 9s been in the gift industry can see the opportunity and someone who 9s been in the food industry can see the advantage of getting into the gift industry. d

less