Top 10 Full-Service Franchise Opportunities
Full-service restaurants account for 5 percent of all franchised establishments in the U.S., notes Rick Bisio, franchise consultant and author of The Educated Franchisee. And while opportunities abound, full-service restaurants remain a capital-intensive venture. "Only the hotel industry is more expensive to franchise," he says. "However, it's a highly scalable model. With money and management capability, you can build an empire."
To help identify the best values, FSR turned to leading franchise advisors and analysts for their insights and granular perspectives. What we learned is that the best franchise for one could easily be a poor choice for another restaurateur. Individual resources, capabilities, and business objectives weigh into the decision and value is a relative qualifier—often associated merely with ROI, but better defined by the managerial expertise of the franchisor, the support offered franchisees, the strength and timeliness of the brand, and the ingenuity and applicability of the business model.
The 10 restaurant brands identified here represent value propositions that include a mix of established, expanding, and emerging concepts.
Wild Wing Cafe
The secret sauce for this growth-minded concept is a unique business model that focuses on quality food and live music—an entertaining and engaging departure from the sports bar genre that has defined virtually every other wing brand.
Franchisees also benefit from a stellar management team that includes Bill Prather, who was named CEO last year.
"Several major artists have performed on our stages and we provide a great venue for up-and-coming artists," says Prather. "We mostly focus on local artists, but we have a talent agent who puts together an entertainment package for our entire system."
Wild Wing Café recently introduced a new prototype and operational improvements such as moving the bar closer to outdoor patios, and an ergonomic focus in the kitchen to improve the efficiency of labor and energy resources.
Alamo Drafthouse Cinemas
Not your typical beer-and-popcorn movie night, Alamo Drafthouse Cinemas shows first-release viewings of blockbuster hits accompanied by chef-driven menus. For this summer's release of The Great Gatsby, guests enjoyed a four-course meal with beverage pairings inspired by Fitzgerald's classic.
"Our venues are like eight little restaurants—one for each screen," says Derek Dodd, director of franchise. "The basic menu is about 80 percent core items that are in every location, but there's also a focus on the local area—the beer list especially is localized."
An Austin-based R&D chef drives consistency in the core menu and company-wide specials like the Gatsby meal, while local chefs bring creativity to menus at each unit. Mixed drinks are served where local laws permit.
The big challenge is service, with as many as 850 people served in a 90-minute window. And service also has to be subtle. During the movie, talking is taboo so servers respond to messages posted on little flags at guests' chairs.
A great franchise for movie lovers and those who want to deliver an experience that is equally committed to entertainment and food, Alamo Drafthouse Cinemas has opened three locations this year and has six franchises under development including expansion into New York City and San Francisco. Revenues in 2013 are projected to reach $91 million.
Black Bear Diner
While most casual-dining chains have been virtually forced into hibernation—as consumers increasingly opted for the more economical quick-serve and fast-casual options—Black Bear Diner has continued to perform far above the industry norm. In fact, year-over-year sales showed a robust 17 percent increase in 2012, topping $119 million, compared to a modest 4.6 percent average growth rate among the top 10 casual-dining restaurant chains.
Hearty portions of tasty comfort foods, priced to please, are the signature trademarks of Black Bear Diner's success, and the company remains committed to a measured growth strategy. States that are high on the list for expansion include Arizona, California, Colorado, Idaho, Nevada, and Utah.
Buffalo Wild Wings
For the firmly established wings brand, 2012 was a banner year with revenues topping the $1 billion mark for the first time.
Buffalo Wild Wings added 62 company-owned stores last year, and projects it will open 100 units—a combination of company-owned and franchises—in North America this year.
Franchise agreements have been inked to take the brand international, with locations in Mexico, the Middle East, and Puerto Rico. Ultimately the company envisions 1,700 locations in North America alone.
It really doesn't matter which came first, the Canadians have shown that eggs can outshine every other breakfast dish and do it across all dayparts.
Eggspectation—now with nine locations in Ontario and Quebec, plus five U.S. units divided between Virginia and Maryland, and three in India—has turned eggs into a gourmet, upscale delicacy.
This emerging concept is poised for global expansion, with a culinary team that is committed to identifying new trends and developing diverse menus characterized by quality and variety. The restaurants include a warm café environment and an engaging bar that contributes to the impressive $1.6 million average unit volume.
A solidly established brand with 188 locations as of June, Famous Dave's is in 34 states and one Canadian province. The company owns 53 locations and the remaining 135 are owned by 47 franchisee groups.
Victor Salamone, vice president of development and franchise sales, tells FSR the brand could easily grow to 400 or 500 locations. "We have our eye on the Southeast, and there are existing partners who are building out the brand in the Pacific Northwest and along the West Coast," he says. "The international arena is also fixated on American brands—we opened our first international location in Winnipeg, Manitoba, and just opened a restaurant in Puerto Rico. That's the wild card relative to how many restaurants could be added—it [varies] based on the interest emerging from outside the continental U.S."
While the vast majority of Famous Dave's are full-service restaurants, the company recently introduced a quick-serve concept that allows franchisees to take advantage of real estate opportunities with smaller footprints.
Putting customers in charge to build their own gourmet burgers has proven a powerful recipe for success for the brand that has emerged as a definitive role model in its niche. However, Craig Albert, co-CEO, says they knew a different tactic was needed to be equally popular with both genders.
"We knew the concept would appeal to men, but we wanted women too, so we added 'build your own salad' and guests choose the protein, greens, and toppings for their salads."
Regardless of innovations added to the menu—'build your own cocktail' could be next—Albert says the company will remain true to being the ultimate burger restaurant.
Alcoholic beverage sales account for about 9 percent of total revenues, which seems a little low given the brand's edgy appeal to Millennials with its loud music, low-hanging jeans, and uber-hip persona. Albert would like to see beverage sales grow to 15 percent of sales, but never at the expense of the brand's family friendly focus.
Shula's Steak House
With a nod to its namesake's leadership on the football field, Shula's is all about executing the best play for each circumstance.
"We look for the right locations and partners," explains Dave Shula, son of the legendary Dolphin's coach and president of Shula's Steak House. "Some locations can handle a higher check average than others, so we match the concept to the location."
Concepts at the upper end—Shula's Steak House and Shula's on the Beach—deliver average checks in the low $70s. Shula's 347 brings an average check of $37, Shula's Bar & Grill rings in at a $28 average, and Shula's 2 follows closely with average tabs of $27.
After 24 years in the business, Shula's Steak House has made a winning name for itself as an upscale restaurant. By mid-2013, there were 35 units including 14 Shula's Steak House locations, nine Shula's 347 Grill units, one Shula's on the Beach, four Shula's Bar & Grill sites, two Shula's 2 restaurants, and five of the company's fast-casual concept, Shula Burger.
The biggest challenge the company faces, according to Shula, is finding great locations at reasonable purchase prices.
The Greene Turtle Sports Bar & Grille
Fleet-footed brands in the race to sports-bar dominance best watch their backs: The Green Turtle has accelerated expansion plans.
Its initial foray out of an established Mid-Atlantic comfort zone: Long Island, New York—where the first of 10 units opened this spring. Both system-wide unit count and revenues grew nearly 20 percent in 2012, and approximately 30 units are under development this year. Jacksonville, Florida, is high on the radar as The Greene Turtle continues its purposeful march into new regions.
Beef 'O' Brady's
A neighborhood sports pub with an Irish twist, Beef 'O' Brady's seeks business-savvy franchisees who are involved in their local communities—wherever that happens to be.
In 2012, the company announced expansion into the Middle East—where communities are just as engaged in sports and family fun as in middle America. Of course there are subtle differences—camel racing for one, and neither alcohol nor pork is on the menu. This year, at least 15 new locations are expected in domestic as well as international markets.