14 Restaurant Chains Ready for Lift-Off in 2018
The premium breakfast concept received an investment from Beekman Investment Partners III, LP, in November. The private-equity firm said right off the bat that it wanted to “build on the company’s legacy and accelerate growth.” Another Broken Egg, headquartered in Miramar Beach, Florida, and founded as a franchising company in 2000, has 65 cafes open across the U.S. Earlier in the year, the company also launched a new menu. Beekman is a private-equity firm focused on restaurants and recently partnered with Chris Artinian, a veteran executive who has served as president and CEO of Morton’s The Steakhouse, Smokey Bones Bar & Fire Grill and TooJay’s Deli-Bakery-Restaurant. He assumed the role of president of Another Broken Egg with the purchase. Meanwhile, the company’s management team stayed on board and retained a meaningful equity stake. In other words, this Southern-inspired restaurant, which is known for its signature cocktails and innovative twists, is in great hands
In mid-December, Walk-On’s announced it was selling its catering business to Wayne Stabiler Companies. The idea behind this was that the Cajun chain, once named “The Best Sports Bar in America” by ESPN, wanted to divert its resources to concept growth. It falls in line with past history. Walk-On’s sold its other concepts—The Roux House and Happy’s Irish Pub—in 2014 and 2016, respectively, to focus operations on its budding brand. There are currently 16 locations of Walk-On’s: four in Baton Rouge, two in New Orleans and one each in Lafayette, Houma, Shreveport, Lake Charles, Covington, Broussard and Bossier City, Louisiana, and Lubbock, San Antonio and Tyler, Texas. Other locations are on the books for Alabama, Florida, Louisiana, Mississippi, Tennessee, and Texas. The restaurant has more than 100 commitments in the pipeline, which is pretty rapid growth considering it debuted in 2003. COO and president Scott Taylor had this to say: “I see the brand working in every market across the company. This is really just the beginning.”
A May announcement that Famous Toastery was bringing Jeff Panella on board was a sign of things to come. The breakfast brand’s new chief development officer spent nearly a decade with Wireless Zone, growing the company from around 100 stores to more than 450. Out of the gate, Panella said he was greeted with “so much interest that it’s actually hard to keep up.” There were 22 restaurants at the time and annual sales approaching $30 million, and Panella said 60–65 by mid-2018 was a real target. And this was backed by actual franchises sold, not projections. “The proof is in the pudding right? I’m really excited about it. We’re inundated with requests to join the system, which is fantastic but we’re still early on,” he said. Triple-digit units by 2019? It could happen.
CEO Sam Ballas isn’t an executive who minces words. He believes the 35-unit chicken-wing chain can hit 100 units and beyond by sticking to what’s helped it shine so far: Unit-level economics. “We own that phrase,” he said. “You can’t say it unless you pay me a royalty.” The North Carolina-based chain purposely flew under the radar in recent years as it shored up its system. This past year, it was ready for its close-up, and revealed some eye-popping financials.
Over the first half of 2017, the franchise enjoyed same-store sales growth of 18.5 percent. As unheard of as that may be, its guest count boost of 13 percent is equally impressive. There are more than 60 locations operating or in various stages of development, with 12 stores expected to open by year-end of 2018. Markets include Florida, Georgia, Kentucky, North Carolina, Pennsylvania, South Carolina, Tennessee, and Virginia. The brand is riding the success of what it calls East Coast Wings + Grill 2.0—a design and operating model that is more of an evolution, not a shift from its bread-and-butter system. Aside from a reduced size, Aside from size, the 2.0 design has a reworked interior and exterior for cost effective development. It’s rustic and industrial with a smaller footprint that reduces development costs by about 20 percent.
The 29-unit chain, founded in 1986 in Dallas, made waves in October when it announced that L Catterton, a private-equity firm with deep roots in the business, was acquiring the polished casual Mexican brand. Andrew C. Taub, a managing partner in L Catterton’s Buyout Fund, said: “We are delighted to partner with Tom and the company's talented management team to accelerate their expansion." Given L Catterton’s history, the claim shouldn’t be taken lightly. This is the same firm that acquired a significant stake in Velvet Taco last year, and has current investments in Hopdoddy, Mendocino Farms, Noodles & Company, Protein Bar, Punch Bowl Social, Chopt Creative Salad Co., Primanti Bros., Snap Kitchen, Piada Italian Street Food, and Anthony’s Coal Fired Pizza. Past holdings have included Bloomin’ Brands, P.F. Chang’s, First Watch, and now-Darden run Cheddar’s Scratch Kitchen. “Ultimately, L Catterton's willingness to invest in the long-term success of our brand and their alignment with our values makes them the perfect fit to help us execute our growth strategy,” Tom Vogel, president and chief executive officer of Uncle Julio's, said.
Sbe is a lifestyle hospitality company with a robust pipeline for growth. And now it has a leader with some serious industry chops. In September, DineEquity’s former president for international, Daniel del Olmo, was named CEO of Disruptive Restaurant Group and 26-unit Umami Burger. The move was Sbe’s 11th executive placement of 2017 as it preps for major growth. Del Olmo served as president for international at DineEquity from December 2013 until September 13. Sbe said he “will be focused on creating a strategic growth plan by rationalizing sbe's existing portfolio, elevating each brand by further improving every element of the guest experience, implementing new technologies to drive incremental revenue opportunities and operational efficiencies and most importantly, creating and deepening relationships with sbe's most loyal customers and business partners.” This will come through stand-alone units and other hotel, residential, commercial properties, as well as transportation hubs. At the time, sbe said it had 19 restaurants and seven lounges scheduled to open in the next six months and more than 60 venues planned by 2021, including 25 Umami Burgers, 16 Katsuyas, and 11 Cleos.
A restaurant franchise centered on bacon? Sounds like a concept worth betting on. In March, the brand, which started in Greenville, South Carolina, in 2012, opened its second unit in Sugar Land, Texas. That was the first franchised unit of what executives said could trigger widespread expansion. “We have a great restaurant, a great brand, and a great concept that is doing well,” said partner Mike Porter, an entrepreneur with an accounting background in retail. “We think it has, to use a cliché, legs and we can recreate this in other places.” Bacon Bros. is charting a path of three to five new restaurants a year over the next several. The franchise fee is $50,000 and the total investment sits between $739,000 and $1.5 million. A striking feature is the cure chamber where guests can see meat hanging from the ceiling. Barbecue is made daily, and there are satisfying items for bacon lovers, like Bacon Caramel popcorn and Pimento Cheese with bacon jam. Charlotte, North Carolina and Austin, Texas, are two target areas.
This past year was a transformative one for Tony Roma’s. Romacorp’s 45-year-old casual chain hadn’t signed a U.S. franchise in six years, prompting the company to make some real changes. Chief among them: a massive menu overhaul that introduced 35 new items and retracted from about 70 features to 42–44 (again, 35 are new). Tony Roma’s, which has 20 U.S. stores and 142 international locations, also rebuilt its I Drive Orlando location to a fresh prototype that will be showcased in future stores. In fact, remodeling to the new design is a requirement for operators who want to feature the 2.0 menu.
This revamp was so popular that Tony Roma’s six-year drought came to an end in mid-April when it signed a development deal for West Palm Beach, Florida. A week later, T&J Food Groups I, Inc. revealed they would be opening in Tennessee. The brand also inked a deal to break into the Nicaragua market. At its core, the new menu puts the focus back on ribs, where it always belonged, Jim Rogers, the brand’s chief marketing officer, said. Items like Pork-Strami Ribs and Lamb Ribs have been a hit. The new design showcases a massive indoor-outdoor space, private dining rooms, an open dining room, expanded bar with 20 taps of beer and new cocktails, fresh colorful plateware, and updated glassware, including beer goblets. Polo shirts have been replaced by chef coats. There are all new light fixtures. The entire space is crisper, bolder, and more current.
Here’s another legacy brand in the midst of a brand overhaul. Actually, you could call this a brand comeback. Quaker Steak & Lube, which has been an iconic chain for more than 40 years, began proceedings for reorganization under Chapter 11 of the U.S. Bankruptcy Code in November 2016. TravelCenters of America then acquired the chain for about $25 million. This turned out to be a perfect fit: The Fortune 500 company is a multi-unit, multi-brand franchisee and franchisor for more than 850 concepts and knew exactly where to start. John Ponczoch, the SVP of foodservice operations for the TA Restaurant Group, said it’s been a tough process, and there’s still work to be done, but Quaker Steak & Lube is undeniably on the right track.
The company poured about $5 million into capital improvements for the brand, which has 16 company and 34 franchised stores across 16 states. Improvements have run the gamut, everything from infrastructure improvements (flooring, fire codes, electrical, and so on) to new chairs, tables, TVs, restrooms, plateware, floors, and sound systems. They refurbished 15 company-owned locations. Internal operations were also boosted through an upgraded POS system. A key early change was the hiring of a corporate chef and corporate beverage manager. Lance Matthews joined the team in April 2016. He clocked time as a global sous chef, senior food buyer, and restaurant manager, and worked for properties including Hotel Del Coronado, Sheraton Torrey Pines, and Pechanga Resort and Casino. Matthews also served in the U.S. Navy. Shannon Salupo took the reins of the beverage program a month later. Her resume features stops at Caesars Entertainment’s Horseshoe Cleveland, Hard Rock Café Cleveland, LongHorn Steakhouse, and Westpark Station. Quaker Steak & Lube also hired Tesser, a San Francisco-based brand strategy and design firm, to help revamp the image—externally, internally, and publicly. A counter-service format design is in the works as well.
Black Bear Diner has two things pretty much everybody loves: giant portions and great prices. It’s why Craig Cunningham, the 104-unit chain’s senior vice president of operations, believes it will thrill guests at its new locations in Midwest City, Oklahoma City, and Katy, Texas. Black Bear Diner was founded in 1995 in Mount Shasta, California. Those locations, of which 37 are company owned and 67 franchised, stretch across eight states (Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah, and Washington). The two new restaurants mark two new markets for Black Bear Diner, and will serve as a test for future growth. Black Bear Diner has a target of 6–8 new stores in 2018. After that, Cunningham says the chain will look at 12–15 or so, which represents 20–25 percent growth, year-over-year. It has also enjoyed 26 consecutive quarters of same-store sales. Black Bear Diner’s goal is to get its corporate/franchise growth to a 50/50 split. This will allow the growing team to monitor its culture very closely. “As I’ve always said in my career, this is a people business and a sales game, and we want to make sure we have all the right people on the bus. We believe that we do,” Cunningham said. “We obviously want to keep the momentum of our sales growth and we believe we’re positioned to do just that.”
Roark Capital Group might best be known for its Buffalo Wild Wings purchase lately, but before that, the company announced a majority stake in the 37-unit chain, which started in 1985 and has since spread to seven states, including Alabama, Colorado, Florida, Georgia, North Carolina, South Carolina, and Tennessee. Roark’s portfolio includes Arby’s, CKE Restaurants (parent company of Carl’s Jr. and Hardee’s), Corner Bakery, FOCUS Brands (Auntie Anne’s Pretzels, Carvel Ice Cream, Cinnabon, McAlister’s Deli, Moe’s Southwest Grill, and Schlotzsky’s), Il Fornaio, Jimmy John’s, Miller’s Ale House, and Naf Naf Grille. Massage Envy and Pet Retail Brands (owner of Pet Supermarket and Pet Valu) are among Roark’s other brands. So yes, this is an exciting move for Jim ‘N Nick’s.
“They are an ideal partner for us to reach our expansion goals, while remaining true to our extremely high quality standards,” said Nick Pihakis, who along with his father, Jim, founded the chain. Brian Lyman, the chief operating officer of Jim ‘N Nick’s Bar-B-Q and a 12-year veteran with the brand, was promoted to president with the move. Phil Hickey, a 35-year industry veteran, will become chairman of Jim ‘N Nick’s. He was the former CEO of RARE Hospitality and is currently the chairman of Miller’s Ale House. RARE Hospitality operated LongHorn Steakhouse before its acquisition by Darden Restaurants in 2007.
Bar Louie began its West Coast expansion this past summer with two openings in the Los Angeles area. But that was just the tip of the growth iceberg. Bar Louie, which has more than 125 locations across 26 states and the District of Columbia, plans to debut in San Diego County, Los Angeles County, and key cities in Northern California over the next five years. Specifically, Bar Louis is charting a five-year plan that includes 59 locations and 4,000 new jobs under Robert Levyssohn, the director of real estate for the West. Here’s the outline: San Diego can host up to eight stores; LA County and Orange County another 32.
And while Southern California will be Bar Louie’s California hotbed, the company could land in Northern cities such as San Francisco, San Jose, and Sacramento. The growth will be a combination of corporate and franchised locations. Bar Louie started in Chicago’s River North in 1991. It’s known for a four-revenue stream approach to dining—lunch, happy hour, dinner, and late night. Back in 2014, Bar Louie executives told FSR the company planned to hit 200 units by 2018 and that sales had grown 13 percent to $131 million. There were just 80 units at the time. Earlier this year, the company announced Tony Wehner, a former executive at Logan’s Roadhouse, was stepping into the COO role at Bar Louie. Wehner also held leadership positions at Chili’s, Red Lobster, and On the Border
Raymond Griffin hardly expected this when he opened his 15-seat, 850-square-foot restaurant in Frisco, Colorado. Griffin left a six-figure job in Lafitte, Louisiana, a town about 25 miles south of New Orleans, and began road tripping to Durango, Colorado. He only made it Frisco, a city that averages 175 inches of snow a year. Griffin stuck around and opened his Cajun restaurant in 2010 without any real experience. It was a quick hit. And the ability to figure out a way to make gumbo travel has been key. In November, The Lost Cajun announced new ownership for Texas locations in Midland and Odessa.
The restaurants will be owned and operated by Blaine and Lori Law, who less than four months ago signed a development agreement for a total of five restaurants throughout west Houston. This new agreement brings the couples’ total commitment to seven stores. New agreements across Texas have been popping up all year, everywhere from San Antonio to Houston. Its first metro Denver location was announced last November. There are currently 12 stores open in four states (Colorado, South Carolina, Tennessee, and Texas) with six more units coming soon. The goal back in 2016 was to hit the 50 mark by 2021. “When I opened this store I didn’t know what food cost was. I didn’t know what labor cost was. I didn’t know anything about operating a restaurant,” he says. “The only things I knew was how to produce good food and how to give great service. Those two things right there I truly believe with all my heart if you do those two things first, all the other things will fall in place,” Griffin said.
Here’s another chain emerging out of the casual dining fog. Bennigan’s 40th anniversary in 2016 turned out to be a year to remember. The chain, which was founded by Norman E. Brinker in 1976 and has 150 units open, under development or under contract, experienced 6 percent same-store sales growth in 2016—a nearly mythical jump in today’s casual dining lexicon. In the past six years, Bennigan’s has appreciated average unit volume growth in excess of 35 percent. This past year, the chain was building restaurants in Sacramento, California, Lexington, Kentucky, Jackson, Tennessee, and Monahans, Texas, as well as international locations in Qatar and Bahrain. Bennigan’s debuted a new prototype, which drove guest check and frequency, and poured resources into its core—Monte Cristos to ribs to customer service. “We still have a lot of the signature favorites that everyone knows and loves. And that’s what’s built an emotional connection to the brands that makes the pent-up demand around the world very strong,” said Paul Mangiamele, CEO of Legendary Restaurant Brands.