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The Restaurant Finance Monitor’s Top 200 ResTauRanT FRanchisees
By Jonathan Maze
In a down year, many of the operators on this year’s ranking have seen significant growth, led by NPC International, which grew 22.5
percent thanks to an acquisition of Pizza Hut restaurants from Yum! Brands. Apple American Group likewise took the No. 2 spot on the ranking after it acquired Applebee’s locations in California. Others, like No. 9 Briad Group, are expanding even in the face of a challeng-ing environment. And Tacala, a big Taco Bell operator, shot up the list, to No. 22 from 32, thanks largely to the addition of 69 Sonic res-taurants to its portfolio.
But make no mistake about it, Monitor 200 restaurant franchisees got hit hard last year. On the surface, this year’s ranking shows a thriv-ing group of franchisees. Collectively, the 200 took in $21.8 billion in revenue in 2009, up from $21.3 billion last year and well above the $15.8 billion earned a decade ago. They oper-ate more units, too.
The numbers are misleading, however, because this year’s ranking includes a handful of large operators not included in past years, making this a more complete ranking. In real-ity, many of the franchisees this year reported lower sales. Yum! Brands’ concepts are all struggling with declining sales. Burger King, Wendy’s and Applebee’s are likewise seeing sales declines. When the brand struggles, franchisees often follow suit.
Economy be damnedThat said, one of the things that sets large
operators apart is their willingness to grow even in the face of immense economic challenges. It’s not uncommon to find big, multi-unit fran-chisees continuing to build. JIB Management, No. 28 on the ranking, acquired some of
Foodservice Management’s Jack in the Box locations, and plans to develop Marco’s Pizza in California.
Much as in past years, this year’s ranking is dominated by well-known, limited-service con-cepts. But casual- and family-dining operators continued to have a strong presence—69 fran-chisees operate a casual-dining restaurant, up from the 64 last year, according to our research. And we found 14 operators who had at least one fast-casual brand. Many of them operate Panera Bread restaurants, and in most cases they were secondary brands.
We expect the number of fast-casual brands on the list to grow in future years. For one thing, those chains are more likely to add units now than casual-dining or QSR, thanks to financ-ing concerns. And many large operators have bought into brands like SmashBurger and Capriotti’s as they seek growth concepts.
Going into the wild new yonderAs it is, this year’s operators are already
delving into newer concepts. Names like The Counter, Pinkberry, Space Aliens and Urban Flats Flatbread are among the secondary con-cepts that Monitor 200 operators are developing. And diversification continues to be important among the top operators—101 of the 200 fran-chisees have two or more concepts, and many, three or even four concepts. By comparison, 76 restaurant franchisees operated more than one concept back in 1998.
Who ranks?That being said: NPC International is still
No. 1, as it has been for years, and the rest of the top five is the same, although a two have switched spots.
Yum! Brands once again dominates—24
own Pizza Hut and those operators run 2,786 restaurants, the most on the list. Twenty-two companies operate KFCs, while Taco Bell is also well represented. Burger King has the most franchisees on the ranking with 28, followed closely by Wendy’s at 26 and Applebee’s at 25. McDonald’s has 18. More than two-thirds of the companies on the ranking operate one of these concepts plus Arby’s, Hardee’s or Sonic.
Large multi-unit franchisees are in heavy demand. Franchisors believe large franchisees can get financing more easily, a vital consid-eration in today’s market where financing problems create numerous roadblocks to con-cept growth. They can thus drive growth and can also drive sales through more sophisticated marketing efforts.
Just as important, big operators can be more profitable for the franchisor. “Larger franchisees will often require less in the way of support,” said Mark Siebert, CEO of the franchise con-sulting company iFranchise Group. With a few big operators there are fewer owners to support, and these larger companies often have their own opening teams, training programs, mar-keting staff and site selection team. Some go so far as to design and build their own stores.
This isn’t to say that large franchisees are easy. Many franchisors avoid them, because they can be demanding, especially when they have a high percentage of the brand’s stores. They’re also difficult to attract, because “every franchi-sor and their brother are out there looking for these guys,” Siebert said. That makes it difficult to get in front of them. Smaller franchisors, he said, should let their systems grow before tar-geting large area development agreements.
And while strong multi-unit operators can be immensely beneficial to the system, a strug-gling developer can create issues. If they don’t meet development schedules it can seriously hamper a chain’s growth. When the large fran-chisee has financial problems, the result can be disastrous. That risk became evident in the past year, when some companies that had been on the Top 200 went under.
Where do you find the top U.S. restaurant franchisees? On the Monitor 200 list. Our sister publication, The Restaurant Finance Monitor, compiles a roll call of the largest restaurant franchisees based on sales.
54 September 2010
Top 200 Restaurant Franchisees
By Jonathan Maze
T he transition from making structures out of metal into making sandwiches out of meat was surprisingly easy for Brij Agrawal.
Eleven years after buying his first Subway and selling his Texas machine fabricating shop, he is now one of the sub chain’s largest operators. Agrawal, whose company, VKC, is No. 197 on the Monitor 200 ranking, said that since he didn’t know the restaurant business, he had to fall back on what he did know: hiring good people and training them to do the job.
“I already had a background of how to develop people, so that helped me in a sense,” said Agrawal, whose company operates 73 Subways and is building another eight.
Agrawal’s story demonstrates that restaurant experience isn’t as valuable as common-sense business principles when it comes to success in franchising.
If there is one common trait among the largest restaurant operators, it’s their focus on workers. A large number can list a lower-than-average turnover rate and managers with a wealth of experience.
No. 187This is especially important for franchisees
who have units in far-flung locations. “Our management in Chicago hasn’t changed much in the last four or five years,” said Bob Merullo, president of Mach Robin, an Idaho-based Red Robin franchisee with 34 units from Nevada to Chicago. Nineteen of those restaurants are in Canada.
The company has a flat-management struc-ture and gets the general managers involved in the direction of the company. “They all have a say in what needs to be done to take the com-pany to the next level,” said Merullo, who noted that the general managers communicate regu-larly with one another and with the franchisor.
“General managers have a good way of net-working. They count on themselves more than anything for input and development.”
Mach Robin will aggressively court candi-dates to manage its restaurants, but Merullo prefers developing managers in-house. Currently, about half the managers are pro-
moted from within. “I would like to develop 70 percent, and have the other 30 percent com-ing from outside,” he said, noting that bringing in outsiders “keeps everything fresh.”
Incentives are also important. Bonuses for managers at Mach Robin are tied to produc-tivity and efficiency, “running the business as efficient as possible without diluting the guest experience,” Merullo said. “Because we’re spread out, we need them to run the business like they’ve got a monetary benefit.”
Incentives are a vital part of the equation at Agrawal’s business. And those incentives are paid to everyone from sandwich artists to managers. The company’s real-time, back-end
software system enables it to track each store’s sales daily. When a store breaks a sales record, each employee is sent a $20 gift certificate the next day.
Managers, meanwhile, are rewarded based on consistency and performance. Each manager can earn up to $1,200 in bonuses a month. And the best manager in the system is awarded a new car every year. The managers “do wonders” to try and get that car, Agrawal said. “Once they make up their mind that they want to win the car, they work really hard,” he said. “As a company, it helps us to get better and more efficient.”
The company has a training facility at com-
pany headquarters connected with its flagship location. The reward system, combined with the focus on training and the opportunities for advancement within the system—a key element common in successful multi-unit franchise companies—result in a turnover rate less than 50 percent, well below typical for a QSR.
No. 9The focus on keeping strong people is vital
to The Briad Group, the New Jersey-based fran-chisee of T.G.I. Friday’s and Wendy’s and the ninth-largest operator on the ranking. It has 9,000 employees and locations from New Jersey to California. CEO Brad Honigfeld surrounded himself with strong executives, including Dave Cahill, his CFO, with whom he has worked with for 20 years. He also gives considerable latitude to COO Rick Barbrick, a former CEO of Avado Brands, which operated Don Pablos and Hops restaurants.
But, he noted, “I think at my level, running a $400 million company, the most important thing is to have a great attorney,” The compa-ny’s general counsel has an office near his and is involved in the day-to-day decisions.
There are other important considerations besides employees, such as automation, Merullo said, which gives managers time to focus on customers. “We try to keep things simple, keep (managers) focused on running great shifts,” he said. “The menu is simplified, the ordering sys-tem is automated. We use technology so we’re able to assist them in the weekly duties.”
Operators also need to make sure they have a good handle on the company’s finances, said Honigfeld. They should pay close attention to their company’s profit-and-loss statements,
“line by line, minute by minute.”This has been especially important in recent
years when the economy has hurt a lot of res-taurants’ revenues. Honigfeld’s company saw its sales fall $40 million last year, which required Briad to focus on cost cutting. “We reduced expenses by $20 million,” he said. The company also changed its advertising and marketing plans in some markets, like California, and Honigfeld said he’s “enthusiastic that we can continue to grow.”
Which brings us to another consideration: Have no fear. Despite those brutal losses, Honigfeld is still building T.G.I. Friday’s.
“We’re going to build three new Friday’s over the next 18 months,” he said. “We’ve built 14 stores over the last 18 months. I’ve put my money where my mouth is. I believe in the brand.”
Top Operators’ TipsPay attention to the company you keep, to keep your companyWe asked a few of the CEOs on the Monitor 200 listing how they run successful restaurants. Here’s what they had to say.
Running a multi-million-dollar company is an assembly line of ideas and actions.
September 2010 55
Restaurant Franchisees Top 200
“Y ou put 20,000 people a week through it,” says Zane Tankel, CEO of Apple-Metro, No. 57 on the Monitor 200 list.
And you locate it on 42nd Street in New York City, smack dab in the middle of 40 movie the-aters and an endless stream of people milling around.
The Applebee’s in Time Square is more than a neighborhood restaurant, Tankel says, “It’s a model for the United Nations.” Over the years the Big Apple Applebee’s has seated a multitude of tourists from around the world and around the diverse neighborhoods in its two-story res-taurant, plus it sports a multi-cultural wait staff that has in the past included an African prince and an Islamic cleric.
Sales average $250,000 to $300,000 a week, jumping as high as $400,000 during the holi-days, Tankel estimates. Which is a good thing, because rent for street-level locations in that area is pricey—about $350 to $400 a square foot. “The blended rent rates were absorbed by the upstairs,” he explains. Which is why the original location had a small downstairs, with a larger dining room on the second floor. With annual sales of $12 million a year, how-ever, Tankel says it made sense to double the square-footage on the first floor when it became available.
It still was risky, especially for a con-cept where the average check is in the teens. Which brings us back to our original question: How do you become the highest grossing unit in the Applebee’s system?
“We kill them (guests) with service,” he says. And they turn tables quickly under the guise of good service. For instance, servers handle just three tables at a time during peak hours. They wear head-sets so they can be alerted when their orders are up, or their tables need to be bussed
—or problems are brewing.
People don’t
like to sit at an empty table, so once the dishes have been whisked away, they are more likely to pay their check and vacate the table for the next paying customer, Tankel explains. That means servers need to keep an eye on the table, making one “last call”—offering refills, another drink or dessert—and then delivering the check.
Checks are picked up as soon as the patron places the bills or the credit card in the folder.
Servers typically want five to eight tables at a time, thinking they’ll make more money, Tankel says, but with fewer tables they’ll get higher
tips—because people tip for good service. It’s just a matter of demon-
strating the payoff to the wait staff, he says. Once they
see the benefits, they get on board.
Here’s the secret formula:• Treat people with
respect. (The “most i mp or t a nt p e r-son” in Tankel’s company are the employees, not the customers.)
• Serve hot food hot and cold food cold.• This isn’t a business for serial vacation-
ers. You can’t just take off to the Riviera when you want, he says. Work side-by-side with your employees so they not only respect you, but they’ll understand the work ethic you expect them to demon-strate.
• Don’t qualify as an “Undercover Boss.” Tankel says he would never be able to pull off that stunt for the reality TV show, because he knows the names of almost all 3,000 employees. “Names are impor-tant,” he contends, adding disdainfully that “Hi, There,” is the most common name for employees (for those of us who have trouble remembering names, that is). Take time to listen to the name when you’re introduced and make an associa-tion you’ll remember, he suggests.
OK, so there’s no “big secret” to the Apple-Metro’s success.
“It’s not brain surgery,” Tankel says. “If every-one knows it, why don’t they do it?” Because there are only 200 spots on the Monitor 200 list. And chances are Tankel knows every name by heart.
—Nancy Weingartner
Apple’s RecordsBusy Times Square location is the ‘United Nations’ of restaurantsHow do you become the highest grossing unit in the Applebee’s system?
Apple-Metro, No. 57 on the Monitor 200 list, recently took a calculated risk and increased the highly desired ground floor space at its restaurant in NYC’s Time Square.
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September 2010 57
Restaurant Franchisees Top 200
# Company Headquarters Revenue Units* Concepts Locations Executive
Monitor 200: top 25
1 NPC International, Inc. Pittsburg, KS 845,074,200 1,149 Pizza Hut National James K. Schwartz
2 Apple American Group San Francisco, CA 520,483,866 205 Applebee’s National Gregory G. Flynn
3 Bridgeman Foods Louisville, KY 507,000,000 283 Wendy’s Midwest, South Junior Bridgeman /ERJ Dining, LLC Chili’s
4 Carrols Restaurant Syracuse, NY 384,020,000 312 Burger King East, Midwest Daniel Accordino Group, Inc.
5 Harman Management Corp. Los Altos, CA 378,692,669 325 YUM! Brands West James D. Olson
6 Strategic Restaurants San Ramon, CA 375,595,813 288 Burger King National Jerry Comstock Acquisition Corp. T.G.I. Friday’s
7 Boddie-Noell Enterprises Rocky Mount, NC 364,486,000 349 Hardee’s Southeast William L. Boddie Moe’s SW Grill
8 Covelli Enterprises Warren, OH 335,000,000 155 Panera Bread Midwest, Southeast Sam Covelli O’Charley’s
9 The Briad Group Livingston, NJ 321,011,909 113 T.G.I. Fridays East, West Brad Honigfeld Wendy’s
10 Pepper Dining, Inc. Charlotte, NC 300,000,000 103 Chili’s East, Southeast John McGlone
11 Kazi Management VI, LLC Studio City, CA 280,000,000 276 KFC National Zubair Kazi Burger King Taco Bell
12 Doherty Enterprises, Inc. Allendale, NJ 275,829,000 91 Applebee’s Mid-Atlantic Edward Doherty Panera Bread Chevy’s Fresh Mex El Pollo Loco Johnny Carino’s
13 Pilot Travel Centers LLC Knoxville, TN 269,555,231 257 Subway National James A. Haslam III Wendy’s Arby’s Taco Bell
14 ADF Companies Fairfield, NJ 269,000,000 312 Pizza Hut East, Southeast Don Harty Panera Bread Taco Bell Combo
15 Heartland Food Corp. Downers Grove, IL 267,067,000 258 Burger King Midwest Steve Wiborg
16 AmRest, LLC Atlanta, GA 242,000,000 103 Applebee’s West, Southeast Mike Muldoon
17 United States Beef Corp. Tulsa, OK 237,532,845 282 Arby’s Midwest, South Jeffery Davis
18 Quality Dining, Inc. Mishawaka, IN 237,486,000 163 Burger King Midwest, East Daniel B. Fitzpatrick Chili’s
19 DavCo Restaurants, Inc. Crofton, MD 220,777,000 156 Wendy’s Mid-Atlantic Dave Norman
20 Thomas and King, Inc. Lexington, KY 219,147,096 95 Applebee’s Midwest, Southwest Mike Scanlon Carino’s
21 JRN, Inc. Columbia, TN 217,778,818 201 YUM! Brands Midwest John R. Neal Dick Moore
22 Tacala, LLC Birmingham, AL 217,597,000 232 Sonic South, Mid-Atlantic Don Ghareeb
* Total Units
58 September 2010
Top 200 Restaurant Franchisees
$175 MILLION TO $200 MILLION
26 B & B Consultants Las Cruces, NM 155 Sonic West, South Barbara Stamner
27 Sunshine Restaurant North Miami 147 IHOP South Daniel Enea Partners, LLC Beach, FL
28 JIB Management Fremont, CA 144 Jack in the Box West Anil Yadav Denny’s
29 Southern California Corona, CA 221 Pizza Hut West Jerry Ardizzone Pizza Company
30 Sun Holdings, LLC Irving, TX 149 Golden Corral South Guillermo Perales Popeyes Burger King Denny’s Bennigan’s
# Company Headquarters Revenue Units* Concepts Locations Executive
# Company Headquarters Units* Concepts Locations Executive
Monitor 200: top 25
Monitor 200: top 26-200
23 K-MAC Enterprises Ft. Smith, AR 205,674,402 171 YUM! Brands South, Midwest Sam Fiori Jennifer Kizer
24 DL Rogers Corp. North Richland 203,000,000 172 Sonic South, Midwest Darrell Rogers Hills, TX
25 Interfoods of America, Inc. Miami, FL 201,000,000 196 Popeyes South, Midwest Robert S. Berg Burger King Taco Bell
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September 2010 59
Restaurant Franchisees Top 200
# Company Headquarters Units* Concepts Locations Executive
31 Valenti Management Tampa, FL 130 Wendy’s South, Mid-Atlantic Darrell Valenti Chili’s
32 Cedar Enterprises, Inc. Columbus, OH 132 Wendy’s National Jim Evans Shawn Hiller
33 Kaizen Group of Companies Beaverton, OR 133 Burger King West, South Syed J. Ahmad Denny’s Pierre Labauve Popeye’s Del Taco
$150 MILLION TO $175 MILLION
34 The Rose Group Newtown, PA 64 Applebee’s Mid-Atlantic Harry T. Rose Corner Bakery
35 Border Foods Companies Golden Valley, MN 174 Taco Bell Midwest Lee J. Engler Pizza Hut Sonic Au Bon Pain
36 T.L. Cannon Management Ponte Vedra Beach, FL 61 Applebee’s National Matthew J. Fairbairn
37 Apple Sauce, Inc. Crestview Hills, KY 75 Applebee’s Midwest, South W. Curtis Smith
38 Western Reserve Rochester, NY 111 Wendy’s Midwest, Mid-Atlantic Richard C. Fox Restaurant Mgmt
39 T-Bird Restaurant Group La Jolla, CA 63 Outback Steakhouse West Thomas Shannon
40 Hamra Management Company Springfield, MO 75 Panera Bread National Mike Hamra - CEO Wendy’s
$125 MILLION TO $150 MILLION
41 Caspers Company Tampa, FL 51 McDonald’s South Blake Casper
42 Metro Corral Partners Orlando, FL 27 Golden Corral South Eric Holm
43 Casual Restaurant Concepts Tampa, FL 47 Applebee’s South Franklin W. Carson
44 Apple Gold Group Raleigh, NC 79 Applebee’s South, Southeast Michael D. Olander Burger King Carino’s
45 Friendly Franchisees La Palma, CA 96 Carl’s Jr. West Harshad Dharod Corporation Denny’s Papa John’s
46 Carlisle Corporation Memphis, TN 96 Wendy’s South, Southeast Gene Carlisle
47 Restaurant Management Co. Wichita, KS 154 YUM! Brands National Hal W. McCoy II
48 Wisconsin Hospitality Group Wauwatosa, WI 123 Pizza Hut Midwest Mark Dillon Applebee’s
49 Carolina Restaurant Group Charlotte, NC 84 Wendy’s South, Southeast Quint Graham
50 Sizzling Platter, Inc. Murray, UT 116 Sizzler West, South Ted Morton Little Caesars Red Robin
51 Palo Alto, Inc. Denver, CO 123 YUM! Brands National Robert Alvarado
60 September 2010
Top 200 Restaurant Franchisees
# Company Headquarters Units* Concepts Locations Executive
Financing • Research • Mergers • Tax Issues • Franchising
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Page 11
MARKET WRAP
Max & Erma’s Restaurants, Inc.
Date Filed: October 23, 2009Debtor: G & R Acquisition, Inc.Largest Creditors: GE Capital/FFCA $1,704,000; State of Ohio Department of Taxation $1,100,00; Pennsylvania Bureau of Collections $300,000; State of Michigan Revenue Department $190,000. Secured Creditors: National City Bank, Huntington National Bank, and Park National Bank are owed approximately $16.1 million according to the filing.The debtor was under a Forbearance Agreement and a judgment was obtained by the banks prior to the filing.
SUMMARy:Max & Erma’s was a public company up until July, 2008 when it was acquired by G&R Acquisition, Inc. an entity formed by Gary Reinert, Sr. of Pittsburgh, Pennsylvania. Under the terms of the agreement, G&R acquired all of the outstanding shares of the Company for $4.00 per share in cash. The deal totaled $10 million in cash and the assumption of about $18 million in long-term debt. When Reinert bought the company in 2008, he ackowledged that Max & Erma’s was a turnaround project.
At the time of the April, 2008 merger, Max & Erma’s owned and operated 79 casual dining restaurants in Ohio, Indiana, Michigan, Pennsylvania, Kentucky, Illinois, North Carolina, Georgia and Virginia. The company also franchised 27 restaurants in Ohio, Missouri, Pennsylvania, Michigan, Virginia, South Carolina, West Virginia and Indiana.
Damon’s Grill, also owned by G & R, filed for bankruptcy at the same time as Max & Erma’s.
Chapter 11 Filing
Landry’s Restaurants, Inc.LNY • NYSE
Common Stock Offering
Spicy Pickle Franchising, Inc.
Date Announced: September 30, 2009Shares Sold: The company sold 22 units for cash in a total amount of $2,200,000. Transaction: Each unit consisted of 769,231 shares of common stock and a warrant to purchase an additional 384,615 shares of common stock at $.19 per share. The warrants expire September 22, 2014. The company issued a total of 16,923,082 shares of common Stock and warrants to purchase 8,461,530 shares. Of the securities purchased, 13,846,158 shares and 6,923,070 warrants were purchased by members of the company’s board of directors.
INCOME STATEMENT
Revenues...............................$3,181,641Net Loss ............................. ($1,363,138)Net Loss Per Share ...................... ($.03)
BALANCE SHEET
Cash ....................................$1,228,844Total Assets .........................$2,909,646Long Term Debt .....................$488,000Shareholders’ Equity ............$3,679,478SUMMARy:Founded in 1999, Spicy Pickle Franchising, Inc. is headquartered in Denver, Colorado and currently has 30 company-owned and seven franchised Spicy Pickle locations in eleven states. Spicy Pickle is a sandwich concept that also serves hot pressed panini and sub sandwiches and salads. Spicy Pickle utilizes fresh focaccia and ciabatta breads baked fresh daily from scratch, high quality meats and cheeses with no preservatives, additives or MSG.
The Company has signed agreements with franchisees to open 60 additional restaurants under the Spicy Pickle Brand.
$2.2 Million Private Placement
Date: November 17, 2009Debt Issuance: $406,500,000 principal amount of senior notesInterest Rate: 11.625%Net Proceeds: $$400,100,000Initial Purchasers: Jefferies & Com-pany, UBS Securities, Inc. and Deutsche Bank Securities, Inc. The notes will be offered and sold to the Initial Purchasers and resold only to qualified institutions. Use of Proceeds: The company plans to use the gross proceeds from the offering and sale of the notes, together with bor-rowings under an amended and restated senior credit facility, to refinance debt, pay related transaction fees and expenses and for general corporate purposes or, if consummated for the proposed acquisi-tion of the company by Tilman Fertitta, its CEO and largest shareholder.INCOME STATEMENT
Restaurant Revenue .........$650,001,318Gaming Revenue ............. $164,902,868Net Income ........................ $24,824,417Net Income Per Share ................... $1.19BALANCE SHEET
Cash .................................. $44,997,852Total Assets ................... $1,567,134,210Long Term Debt .............. $906,077,836Shareholders’ Equity ........ $331,129,724SUMMARy:Landry’s Restaurants, Inc. operates restaurants primarily under the names Landry’s Seafood House, Charley’s Crab, The Chart House, Saltgrass Steak House and Rainforest Cafe. In addition, the company owns and licenses restaurants under the trade name Rainforest Cafe. The company also owns and operates the Golden Nugget Hotels and Casinos in downtown Las Vegas and Laughlin, Nevada and the Kemah Boardwalk in Kemah, Texas.
OTCBB • SPKL
Page 1
November 20, 2009
OUTLOOK
Inside This Issue
© 2009 Restaurant Finance Monitor
Finance Sources ..........................................................
....2-3
Finance News .........................................................
........4-5
GAAP Changes ..........................................................
..... 10
Market Wrap ...........................................................
........ 11
Kick the Can Down the Road
Self-help authors from Benjamin Franklin to Stephen
Covey have put their unique spin on achieving personal and
business success. Unfortunately, the themes in many business
motivation books are often repetitive from book to book and
studying them can be drudgery. Some books take a complex
route to solve the simplest of problems. Others restate the
obvious.
I’ve noticed that CEOs and business process “wonks” are
suckers for self-help business books. They gobble up the latest
theories hoping to jump-start their businesses. The bestselling
books often become “playbooks” for business transformation.
If the CEO reads the book, then the vice presidents must read
them, too. The employees are next and often endure frequent
changes in business strategy brought on by the techniques
and buzzwords espoused in the book. Once a CEO adopts
one of these books as a “game-changer,” it is only a matter of
time before a new motivational framework is presented to the
workforce to affect culture change.
Over the years, some of the more famous self-help books have
become bibles of the corporate world. Ken Blanchard taught
his disciples the basics of managing people with the One
Minute Manager. It caught on quickly with corporations and
the result was that weekly staff meetings became noticeably
shorter. Jack Welch of GE popularized the “Six Sigma” strategy
for improving product quality and customer satisfaction.
Six Sigma became so important for big corporations that
Six Sigma for Dummies was introduced for managers who
couldn’t grasp the complicated process outlined in the original
book. In Search of Excellence author Tom Peters advocated
aligning the corporation with the customer to achieve broader
organizational goals. The age-old business adage of doing
what’s best for the customer was repackaged by Peters as
“listening to the customer.” He sold over six million copies.
In his bestseller Good to Great, Jim Collins researched 1,435
good companies and determined 11 of them were actually great
companies. According to Collins, the great company CEOs set
aside their big egos to focus on the higher calling of building a
great company. Presumably, the other 1,424 CEOs remained
egomaniacs and their companies suffered greatly.
The Art of War is still popular with many hard-charging
CEOs. I once knew a CEO who loved the Art of War so much
that he implored his vice presidents to act as though they were
Israeli commandos and “take no prisoners.” It didn’t dawn on
him that the book was written by a Chinese general during the
6th century BC and not by an Israeli commando at Entebbe.
I always wondered what he really wanted his employees to do.
Surround the local Sysco house and demand more rebates?
There are so many self-help business books and popular
business strategies out there right now that most people have
a hard time keeping them straight. Just as soon as one self-
help book becomes the rage and takes hold in a corporation,
another one comes along to take its place.
Do any of these books really work? And, do they work during
an economic and financial system meltdown when all rules
get thrown out the door?
I’ve always been skeptical about the themes and even more
skeptical about some of the authors. I am, however, willing to
forgo my skepticism and offer a new self-help book to those
operating in the restaurant business. If the past two years
are any indication of the new business strategy I see being
promulgated in restaurant America today, then my new self-
help business book, Kicking the Can Down the Road: Waiting
For The Economy To Turn, is sure to be a bestseller.
Many businesses have put all of their eggs into the “slash
expenses” and “hope the economy improves” baskets. And
it’s not just restaurants. Kicking the can down the road is the
theme of way too many U.S. businesses right now. It’s also
the theme of many banks and landlords, too. Businesses were
so shell-shocked by the financial meltdown of 2008 and what
they now perceive to be anti-business antics of Barack Obama
and a Democratic Congress, that they can’t think straight.
The main component of each and every business plan in 2009
contained these marching orders: Do what it takes to reduce
costs in order to survive. Reduce headcount.. Check. Cut
portion size and find cheaper ingredients. Check. Increase
labor productivity. Check. Cut back on capital improvements.
Check. Put the squeeze on the landlords. Check. Work the
banks for extended terms. Check. Hoard cash. Check.
52 BR Associates, Inc. Jasper, IN 161 Long John Silver South, Midwest Robert Ruckriegel Wendy’s Denny’s Grandy’s
$100 MILLION TO $125 MILLION
53 Jan Companies Cranston, RI 99 Burger King South, Mid-Atlantic Nicholas Janikies Popeyes Krispy Kreme
54 Synned Dallas, TX 55 Applebee’s South Sunil Dharod Burger King
55 Quality Restaurant Birmingham, AL 56 Applebee’s South Fred Gustin Concepts, LLC
56 Pacific Bells Inc Vancouver 85 YUM! Brands Midwest, West Tom Cook
57 Apple-Metro, Inc. Harrison, NY 32 Applebee’s East Zane Tankel Chevy’s
58 Pizza Properties, Inc. El Paso, TX 74 Peter Piper Pizza South John T. Hjalmquist /QSR Burgers, LLC Burger King
59 Wendy’s of Colorado Springs Colorado Springs, CO 84 Wendy’s National Richard W. Holland Golden Corral Qdoba
60 Scarbrough Management San Ramon, CA 79 Burger King National William L. Scarbrough Chili’s On The Border
61 LeVecke & Company Guadalupe, AZ 119 Hardee’s Midwest, South Jason LeVecke Carl’s Jr.
62 Strang Corporation Cleveland, OH 53 Applebee’s South, Southeast Donald W. Strang III Panera Bread
63 Pennant Foods Corp. Knoxville, TN 91 Wendy’s West, South Mike Cardinal
September 2010 61
Restaurant Franchisees Top 200
# Company Headquarters Units* Concepts Locations Executive
64 MUY Brands, LLC San Antonio, TX 110 YUM! Brands South Jim Bodenstedt
65 Pacific Island Honolulu, HI 89 Pizza Hut National Greg Dollarhyde Restaurants, Inc. Taco Bell YUM! Multi
66 By the Rockies Denver, CO 142 Carl’s Jr. South, Midwest Steve Rosenfield Hardee’s
67 Tar Heel Capital Boone, NC 75 Wendy’s Southeast James C. Furman
68 ACG Texas, L.P. Plano, TX 58 IHOP South Joseph E. Langteau
69 Duke & King Acquisition Corp Burnsville, MN 93 Burger King Midwest Rodger Head
70 Concord Hospitality, Inc. Lincoln, NE 47 Applebee’s Midwest, South Larry Bird Village Inn Famous Dave’s
71 Frisch’s Restaurants Inc. Cincinnati, OH 35 Golden Corral National Craig Maier
72 RPM Pizza Gulfport, MS 135 Domino’s Pizza South Glenn A. Mueller
73 Falcon Holdings, LLC Westlake, TX 153 Church’s Chicken Midwest, Mid-Atlantic Aslam Khan - CEO
$75 MILLION TO $100 MILLION
74 Luihn Food Systems, Inc. Morrisville, NC 53 YUM! Brands South, Southeast Al Luihn
75 The Bistro Group Cincinnati, OH 36 T.G.I. Friday’s Midwest, Mid-Atlantic James Rieger McAlister’s
76 Southern Multifoods, Inc. Jacksonville, TX 78 YUM! Brands South Larry Durrett
77 Morgan’s Foods, Inc. Cleveland, OH 92 YUM! Brands Midwest, Mid-Atlantic Leonard Stein-Sapir
78 BurgerBusters, Inc. Virginia Beach, VA 98 YUM! Brands Mid-Atlantic, South Tassos Paphites
79 MRCO, LLC Brentwood, TN 85 YUM! Brands South, Southeast Farzin Ferdowsi
80 V&J Holding Inc. Milwaukee, WI 133 Pizza Hut Midwest, Mid-Atlantic Valerie Daniels-Carter Burger King Auntie Anne’s
81 McEssy Investment Co. Lake Forest, IL 42 McDonald’s Midwest Ernie Masucci
82 CLP Corporation Homewood, AL 43 McDonald’s South James Black
83 AppleCreek Management Co., Inc. Duluth, GA 40 Applebee’s South William F. Palmer
84 Paradigm Investment Group Rancho Sante Fe, CA 89 Hardee’s South Don Wollan T.G.I. Friday’s
85 Both, Inc Virginia Beach, VA 20 Golden Corral South, Mid-Atlantic Houston Odom
86 QK, Inc. Scottsdale, AZ 69 Denny’s West, South Robbie Qualls Del Taco
87 Southern Bells, Inc. Indianapolis, IN 69 YUM! Brands Midwest Craig Fenneman
88 PJ United Birmingham, AL 113 Papa John’s National Douglas Stephens
89 The Twins Group Bannockburn, IL 105 YUM! Brands Midwest, South Nick Kallergis
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September 2010 63
Restaurant Franchisees Top 200
90 Kessler Group Inc Rochester, NY 68 Friendly’s Mid-Atlantic Laurence Kessler Burger King
91 Austaco, Inc. Austin, TX 76 Taco Bell South Dirk Dozier
92 Stanton & Assoc., Inc. Jackson, MI 64 Wendy’s Midwest Mark Behm Biggby Coffee
93 Daland Corporation Wichita, KS 94 Pizza Hut National William J. Walsh Jr.
94 Emerald Foods, Inc. Houston, TX 76 Wendy’s South Donald L. Feinstein
95 Austin Sonic, Inc Austin, TX 64 Sonic South Jerry Conway
96 Patterson & Associates, Inc. Louisville, KY 52 Wendy’s Midwest, South James Patterson
97 Apex Restaurant Mgmt., Inc. Pleasanton, CA 94 Long John Silver’s/A&W West, South Tabbassum Mumtaz
98 Goldco, Inc. Dothan, AL 63 Burger King South Frederick Beilstein IV
$50 MILLION TO $75 MILLION
99 Benton Properties, Inc. Springdale, AR 64 Sonic South Pete Esch
100 Mancha Development Corona, CA 72 Burger King West Vince Eupierre Company Denny’s Coco’s
101 WKS Restaurant Corp. Lakewood, CA 57 El Pollo Loco West Roland C Spongberg Denny’s Corner Bakery Café
102 JDK Management Co. Bloomsberg, PA 47 Perkins National John Klingerman Quaker Steak Houlihan’s
103 Apple Core Enterprises, Inc. Minot, ND 33 Applebee’s Midwest, West Myron Thompson Village Inn Space Aliens Badlands Grill House
104 MarLu Investment Group Sacramento, CA 74 Church’s Chicken West, South Tony Lutfi Jack in the Box Arby’s Little Caesars
105 Team Schostak Livonia, MI 62 Burger King Midwest William M. Angott Family Restaurants Del Taco
106 Meritage Hospitality Group Grand Rapids, MI 73 Wendy’s Midwest, South Robert E. Schermer O’Charley’s
107 AB Enterprises Redding, CA 36 Burger King West Joseph Wong Applebee’s Logan’s Roadhouse Marie Callendar’s
108 Desert De Oro Foods, Inc. Kingman, AZ 77 Taco Bell West Krystal Burge LJS Pizza Hut Express KFC
109 Gala Corporation Los Alamitos, CA 27 Applebee’s West Anand D. Gala Famous Dave’s Del Taco
110 First Sun Management Corp. Clemson, SC 51 Wendy’s South, Southeast Joseph J. Turner, Jr.
# Company Headquarters Units* Concepts Locations Executive
64 September 2010
Top 200 Restaurant Franchisees
111 R & L Foods, Inc. San Antonio, TX 59 YUM! Brands South Richard Breakie
112 High Plains Pizza Liberal, KS 76 Pizza Hut South, Midwest Kent Colvin
113 Platinum Corral, LLC Jacksonville, NC 24 Golden Corral South, Mid-Atlantic Billy Sewell
114 J&B Restaurant Partners Ronkonkoma, NY 40 Friendly’s Mid-Atlantic Joe Vitrano Taco Bell
115 Zancanelli Management Overland Park, KS 69 KFC National Gary Zancanelli
116 Restaurant Management Group Kingsport, TN 72 Hardee’s National Jack Mangan Little Caesars
117 RGT Management, Inc. Collierville, TN 69 YUM! Brands Midwest, South Sean Tuohy
118 Carisch, Inc. Wayzata, MN 71 Arby’s Midwest, South George Carisch Gerald Carisch
119 Apple J, LP Greenville, SC 32 Applebee’s South, Southeast Art Everson
120 Janus 1 Unlimited, Inc Houston, TX 31 McDonald’s South Paul Adams
121 Koning Restaurants Miami, FL 62 Pizza Hut South Al Salas International
122 Hospitality Restaurant Traverse City, MI 72 YUM! Brands Mid-Atlantic Marty Lobdell Group, Inc.
123 Trigo Hospitality St. Joseph, MI 52 Pizza Hut Midwest Joyce L. Lunsford Panera Bread Sonic
124 Dolan Foster Enterprises, LLC Pleasanton, CA 62 Taco Bell West Paul Luce
125 McDonald’s Franchise/Kilian West Bend, WI 35 McDonald’s Midwest Steve Kilian
126 Midland Food Services, LLC Independence, OH 86 Pizza Hut National Charles D. Hudson
127 B & G Food Enterprises, LLC Morgan City, LA 51 YUM! Brands South Gregory Hamer, Sr.
128 Fowler Foods, Inc. Jonesboro, AR 62 YUM! Brands South, Midwest Chris Fowler
129 LDF Food Group, Inc. Wichita, KS 42 Wendy’s South Larry Fleming
130 Ansara Restaurant Group, Inc. Farmington Hills, MI 26 Red Robin Midwest Victor Ansara Big Boy
131 Apple Corps, L.P. Witchita, KS 25 Applebee’s Midwest David Rolph
132 Oerther Foods, Inc Orlando, FL 25 McDonald’s South Gary Oerther
133 Hallrich, Inc. Kent, OH 81 Pizza Hut Midwest Anthony Szambecki
134 Cotti Foods Corp Rancho Santa 55 Taco Bell West Peter Capriotti Margarita, CA
135 Den-Tex Central, Inc. San Antonio, TX 48 Denny’s South Dawn LaFreeda
136 Bari Management Glendale, CA 52 Burger King West, South Ralph Cimmarusti
137 Twoton, Inc. Lancaster, PA 39 Burger King Mid-Atlantic William L. Harrington
138 Hunt Enterprises Inc Hauppauge, NY 27 McDonald’s Mid-Atlantic Peter Hunt
# Company Headquarters Units* Concepts Locations Executive
September 2010 65
Restaurant Franchisees Top 200
139 Bros. Management Inc. Knoxville, TN 26 McDonald’s South Tom Cochran
140 DORO, Inc. Eau Claire, WI 59 Hardee’s Midwest Jon J. Munger Taco John’s
141 DRM, Inc. Omaha, NE 71 Arby’s Midwest Matt Johnson
142 Romulus, Inc. Phoenix, AZ 32 IHOP National Christopher Milisci
143 The Bailey Company, LLP Golden, CO 58 Arby’s West Geoffrey Bailey Good Times
144 Mirabile Investment Corp. Memphis, TN 48 Burger King South Joseph W. Mirabile Popeyes
145 U.S. Restaurants, Inc. Blue Bell, PA 36 Burger King Mid-Atlantic Steven M. Lewis
146 OCAT, Inc. Modesto, CA 38 Taco Bell West David Olson YUM! Multi
$25 MILLION TO $50 MILLION
147 S-Group Companies Sandusky, OH 33 Wendy’s Midwest, Mid-Atlantic John Stock
148 Whit-Mart, Inc. Charleston, SC 27 Applebee’s National Gary P. Whitman
149 H & K Partners Milwaukee, WI 44 KFC Midwest Peter Helf YUM! Multi Brands
150 RLC Enterprises, Inc. Northbrook, IL 60 YUM! Brands Midwest Iris Cohn
151 Verlander Enterprises El Paso, TX 21 Village Inn South Jim Gore /El Apple & Bakery Ventures Applebee’s Corner Bakery Café
152 LeHigh Valley Restaurant Group Allentown, PA 17 Red Robin Mid-Atlantic James Ryan
153 Metz Group Dallas, PA 17 T.G.I. Fridays Mid-Atlantic Jeff Metz Krispy Kreme Ruth’s Chris Steakhouse Wolfgang Puck Express
154 C&R Management Co West Jordan, UT 23 McDonald’s West Charles Sparrer
155 Wendco Group Pensacola, FL 38 Wendy’s South Roger W. Webb
156 Lunan Corp. Chicago, IL 57 Arby’s West, Midwest Gregory Schulson Sbarro
157 Thomas 5 Ltd. Dublin, OH 33 Wendy’s Midwest Pamela T. Farber
158 Wesfam Restaurants, Inc. Huntsville, AL 27 Burger King South Rich Wyckoff
159 Carlon Company Brookfield, WI 24 Panera Bread Midwest John Walch
160 Frandeli Group Los Angeles, CA 66 Papa John’s National Doug Pak
161 Bullard Restaurant Group Raleigh, NC 37 Burger King Southeast Clif Bullard Smithfield Chicken Moe’s Friendly’s Ice Cream
162 RoHoHo, Inc. Charleston, SC 57 Papa John’s South, Southeast Philip L Horn, Jr. Jersey Mike’s
# Company Headquarters Units* Concepts Locations Executive
66 September 2010
Top 200 Restaurant Franchisees
163 Northcott Company Chanhassen, MN 25 Perkins National Paul Kerwin Houlihan’s
164 Shamrock Co, Inc. Hinsdale, IL 34 Taco Bell Midwest Stephen McGue KFC KFC/TB
165 Spokane Food Services, Inc. Spokane, WA 19 McDonald’s West Mark Ray
166 Kades Corporation Pasadena, TX 26 McDonald’s South Ken Kades
167 RedKing Foods, LLC Minnetonka, MN 36 Burger King Midwest Jim Reddin
168 The Saxton Group Dallas, TX 26 McAlister’s Deli South Kelly Saxton Pinkberry
169 Retzer & Retzer, Inc Greenville, MS 30 McDonald’s South Michael Retzer
170 Missoula Mac, Inc Poynette, WI 42 McDonald’s Midwest John Orr
171 L & K Hodge McKinleyville, CA 64 Papa Murphy’s West, Midwest Larry Hodge
172 DiPasqua Enterprises Winter Park, FL 85 Subway South Peter DiPasqua Jr.
173 Hart Restaurant Management Corpus Christi, TX 40 Burger King South Robert Hart
174 Bartlett Management Services Clinton, IL 43 KFC Midwest Robert Clawson YUM! Multi
175 Primary Aim, LLC Zanesville, OH 29 Wendy’s Midwest, Mid-Atlantic Ben Thompson
176 Brodersen Management Corp. Glendale, WI 35 Popeyes Midwest, South John Brodersen
177 Adams & O’reiley Inc Naples, FL 20 McDonald’s South Michael Adams
178 Pizza Hut of Southern Wisconsin Madison, WI 34 Pizza Hut Midwest Richard Divelbiss
179 Benton Enterprises, Inc Austin, TX 20 McDonald’s South Mike Benton
180 Century Fast Foods, Inc. Los Angeles, CA 33 Taco Bell West Robert Brunson
181 WMCR Co. Alpena, MI 43 YUM! Brands Midwest Timothy E. Fitzpatrick Taco Bell Long John Silver
182 Rawson Foodservice, Inc Rocky Hill, NJ 21 Wendy’s Mid-Atlantic Stephen Baclini
183 Wendy’s of Montana Billings, MT 23 Wendy’s Midwest Sam McDonald
184 Waterloo Restaurant Vancouver, WA 12 Romano’s West Barry McGowan Ventures, Inc. Macaroni Grill
185 GZK, Inc. Dayton, OH 44 Arby’s Midwest Neil M. Kaufman Lee’s Famous Recipe
186 RREMC West Palm Beach, FL 33 Denny’s South, Southeast John Metz - CEO
187 Mach Robin, LLC Sun Valley, ID 15 Red Robin West, Midwest Chris Stephens
188 Haljohn San Antonio, Inc San Antonio, TX 21 McDonald’s South John Bohling
189 Pizza Hut of Arizona Tucson, AZ 36 Pizza Hut West Pat McConaughey
190 Quantum Leap Eau Claire, WI 15 T.G.I. Fridays Midwest Tom Larson Restaurants, Inc. Green Mill
# Company Headquarters Units* Concepts Locations Executive
September 2010 67
Our annual Monitor 200 research is done by Franchise Times’ sister publication, The Restaurant Finance Monitor. To gather the research, questionnaires, phone surveys, and in some cases, a review of public documents such as annual reports and 10Ks was used. We sincerely thank the companies that responded to our surveys, as most of the Top 200 companies provided us with their data.
Our report consists of ranking companies according to revenue generated by a company’s franchised restaurants. If the company also operates a restaurant concept not franchised, or is the franchisor of another concept, we do not include that number in the overall revenue or unit total. In cases where an acquisition took place during the year, we derive pro-forma revenues in calculating the company’s
ranking.For companies that did not respond to
our survey, we confirmed the number of units operated by the company, and then estimated the revenue based on reported chain averages. In the case of a tie in the amount of total revenue, we settled in favor of the company with the most units.
If you believe your company might make the Monitor 200 list and we’ve missed you (or you know of another company that should be listed), contact Abbi Nawrocki at 612- 767-3200 to be included in the 2011 ranking.
The Monitor 200 report is combined with a Second 200 report prepared by Technomic Inc. The entire Top 400 report can be purchased by visiting our Web site at www.restfinance.com.
About the Monitor 200
Page 7
THE TOP 25# COMPANY
REVENUE MAJOR CONCEPTS SENIOR EXECUTIVES
1 NPC International, Inc.$845,074,200 1149 Pizza Hut James K. Schwartz - President/CEO
Pittsburg, KS
Troy D. Cook - Exec. VP/CFO
2 Apple American Group520,483,866 205 Applebee's Gregory G. Flynn - CEO
San Francisco, CA
Lorin M. Cortina - CFO & EVP
3 Bridgeman Foods/ERJ Dining, LLC507,000,000 162 Wendy's Junior Bridgeman - President
Louisville, KY
121 Chili'sTroy Hanke- CFO
4 Carrols Restaurant Group, Inc.384,020,000 312 Burger King Daniel Accordino - President
Syracuse , NY
Paul Flanders - CFO
5 Harman Management Corp.378,692,669 134 KFC
James D. Olson - President
Los Altos, CA
122 KFC/A&W James Jackson - CFO
6 Strategic Restaurants Acquisition Corp. 375,595,813 271 Burger King Jerry Comstock - CEO
San Ramon, CA
17 TGI Friday's Steven Grossman - CFO
7 Boddie-Noell Enterprises364,486,000 340 Hardee's William L. Boddie - President
Rocky Mount, NC
9 Moe's SW Grill David Schmitt - Controller
8 Covelli Enterprises
335,000,000 150 Panera Bread Sam Covelli - President
Warren, OH
5 O'Charley's Bob Fiorino - CFO
9 The Briad Group
321,011,909 71 TGI Fridays Brad Honigfeld - President/CEO
Livingston, NJ
42 Wendy's David Cahill - CFO
10 Pepper Dining, Inc.300,000,000 103 Chili's
John McGlone - CEO
Charlotte, NC
Gary Sachs - CFO
11 Kazi Management VI, LLC280,000,000 235 KFC
Zubair Kazi - CEO
Studio City, CA
22 Burger King Brian Burr - President
12 Doherty Enterprises, Inc.275,829,000 61 Applebee's Edward Doherty - President
Allendale, NJ
25 Panera Bread Jerry Marcopoulos - CFO
13 Pilot Travel Centers LLC269,555,231 151 Subways James A. Haslam III - President
Knoxville, TN
47 Wendy's Mitchelle Steenrod - CFO
14 ADF Companies
269,000,000 296 Pizza Hut Don Harty - CEO
Fairfield, NJ
11 Panera Bread Michael Lubitz - CFO
15 Heartland Food Corp.267,067,000 258 Burger King Steve Wiborg - CEO
Downers Grove, IL
Joel Aaseby - CFO
16 AmRest, LLC
242,000,000 103 Applebee's Mike Muldoon - President
Atlanta, GA
Trish Farley - Controller
17 United States Beef Corp.237,532,845 277 Arby's
Jeffery Davis - CEO
Tulsa, OK
5 Taco Bueno Brett Pratt - CFO
18 Quality Dining, Inc.237,486,000 116 Burger King Daniel B. Fitzpatrick - CEO
Mishawaka, IN
47 Chili'sJohn C. Firth - President
19 DavCo Restaurants, Inc.220,777,000 156 Wendy's Dave Norman - President
Crofton, MD
Charles McGuire - CFO
20 Thomas and King, Inc.219,147,096 89 Applebee's Mike Scanlon - President
Lexington, KY
6 Carino's David Smith - CFO
21 JRN, Inc.
217,778,818 178 KFCJohn R. Neal - President
Columbia, TN
14 KFC/TB Dick Moore - CFO
22 Tacala, LLC
217,597,000 159 Taco Bell Don Ghareeb - CEO
Birmingham, AL
69 SonicJoey Pierson - CFO
23 K-MAC Enterprises205,674,402 131 Taco Bell Sam Fiori - President
Ft. Smith, AR
22 KFC/TB Jennifer Kizer - CFO
24 DL Rogers Corp.
203,000,000 172 SonicDarrell Rogers - CEO
North Richland Hills, TX
Brooks Wright - CFO
25 Interfoods of America, Inc.201,000,000 160 Popeyes Robert S. Berg - Chairman/CEO
Miami, FL
18 Burger King Steve M. Wemple - President/COO
Page 1
Volume 21, Number 5 • Restaurant Finance Monitor, 2808 Anthony Lane South, Minneapolis, MN 55418 • ISSN #1061-382X
May 20, 2010
OUTLOOK
The Top 200 Franchisees are Inside this Issue
© 2010 Restaurant Finance Monitor
Finance Sources ........................................................
......2-5
Monitor 200 Issue...................................................
.... 6-14
Analyst Reports .......................................................
........ 16
Market Wrap...................................................
................19
Dr. Victor Calanog, National Real Estate
Researcher, to Present at November Restaurant
Finance & Development Conference at Bellagio
Make plans to attend our 21st Restaurant Finance &
Development Conference which will be held at the Bellagio
in Las Vegas on November 8-10, 2010. With credit markets
healing and restaurant valuations stabilizing during the past
year, this year’s conference provides an excellent opportunity
to make and maintain valuable financing and deal contacts.
In a digital age, it remains important to keep your financial
knowledge current and maintain face-to-face contact with
individuals who work the capital side of the business.
We are pleased to announce that Dr. Victor Calanog, PhD,
director of research at Reis, Inc., a national provider of real
estate performance and analytic data, will provide conference
attendees with a number of development strategies based on
his assessment of vacancy and lease rental rates around the
country. Dr. Calanog is a prodigious researcher and his unique
assessments of real estate market conditions have appeared
in national publications like the New York Times, the Wall
Street Journal and Financial Times. He joins Michael
Barone, Senior Fellow of the American Enterprise Institute
and national comedian and impressionist Frank Caliendo,
on the conference program.
The Restaurant Finance & Development Conference
is the place to look for capital, find deals and restaurant
opportunities, make excellent business contacts, or simply
get up-to-speed on what’s going on in the restaurant industry.
Restaurant lenders and investors will preview their 2011
programs—you need to meet them! The conference provides
the most comprehensive finance, development, valuation,
accounting, operating and deal information in the restaurant
business. You need good information in this environment to
succeed and the conference is the place to find it.
Program information will be available in July. Register on-line
at www.restfinance.com. Don’t wait until the last minute to
register as we are expecting another sold out event this year.
For more information, call us at 800-528-3296.
The Law of Unintended Consequences: Franchising,
Lending and the Rise of the Mini-Melmans
Consider the unintended consequences of various management,
banking, franchise and political decisions.
Private equity sponsors, activist investors and CEOs in the
restaurant business have taken to franchising for it seems
like a “risk-free” deal, especially if you’re the franchisor. The
franchisor in this example collects royalties and fees, keeps
its own capital expenditures low by not building stores, and
passes off the investment, commodity and sales risk to the
franchisee and his lender. The franchisee signs a contract and
personally guarantees the payments. What’s there not to like
about this kind of business arrangement?
No business remains risk-free forever. Here’s what could happen
in the future. Franchisees might quit building and buying stores
and their lenders might quit lending to franchise systems that
“talk the talk” but don’t “walk the walk” with the franchisees.
You don’t think that could happen to franchisors who’ve given
up on building units? Consider this: The grumbling I hear from
franchisees and lenders about how they take all the risk in the
franchise equation is the loudest its ever been in my career. What
would happen to this beautiful business model if franchisees just
quit developing in systems until the franchisor started building
and operating stores again? And, what would happen if the
restaurant lenders said they wouldn’t finance a restaurant concept
if the franchisor wasn’t in the trenches, too, operating company
stores alongside the franchisees? __________________
Too many restaurant franchisors subscribe to the “no company-
store thesis,” despite what we believe is an opportune market
to buy back franchise stores. If a restaurant franchisor won’t
make a market in their own stores, then who will?
Franchisors that won’t buy back franchisees will see more
concentration in large, existing multi-unit franchisees. Recently,
66 Jack in the Box restaurants were auctioned off in California
after a franchisee failed. The winning bidders were two of the
chain’s larger franchisees who outbid all others to acquire the
stores. With the “zors” on the sidelines, large multi-unit franchisees
are the only ones with the wherewithal to buy stores. Some say
private equity will step in and buy franchisee stores. Forget it.
Once their lawyers read the standard franchise contract, the PE
folks won’t want to be on the “zee” side. Franchisors may live to
regret their shortsightedness.
Continued on page 15
Restaurant Franchisees Top 200
Order online at www.technomic.com/franchise, or for more information contact Cody Aguillard at 312-506-3862 or caguillard@technomic.com.
2010 Top 400 ResTauRanT FRanchise RepoRT
► Contact name, address
► Regions of operation
► Sales ranking
► Franchise growth analysis
► In-depth overview
► Beyond Franchise Monitor 200
This newly updated report helps readers develop sales and marketing strategies and identify growth opportunities. Leveraging the Restaurant Finance Monitor 200 and the Technomic Future 200, coverage encompasses sales of approximately 10% of the total restaurant industry. Content includes:
Technomic/Restaurant Finance M
onitor TOP 400
Identification.
Analysis.
Trends.
Profiles.
2009
RESTAU
RA
NT FR
AN
CH
ISE CO
MPA
NY REPO
RT
TOP 400RESTAURANT FRANCHISE
Technomic/Restaurant Finance Monitor
C O M PAN Y RE P O R T
200
2007
Food industry information you can count on.
2010
68 September 2010
Top 200 Restaurant FranchiseesSponsors:
# Company Headquarters Units* Concepts Locations Executive
191 Apple Arkansas, Inc. Texarkana, TX 18 Applebee’s South Alan Smith /El Chico Restaurants of AR El Chico
192 C & P Restaurant Company Macon, GA 24 Captain D’s South Allen M. Peake Cheddar’s Mike Chumbley
193 Huse, Inc. Bloomington , IN 38 Arby’s Midwest Thomas R. Browne
194 Mountain Range Tempe, AZ 24 Denny’s West Robert Gentz Restaurants, LLC William Cox
195 The Bloomin Apple Mount Pleasant, SC 19 Applebee’s Midwest Kevin Allardice
196 Cleveland Restaurant Independence, OH 19 T.G.I. Fridays National Ross Farro - CEO Operations Baja Fresh The Counter
197 VKC I, LP Sugar Land, TX 72 Subway South Brij Agrawal
198 PFC/Classic Dining Crystal Lake, IL 30 Denny’s Midwest Darrell Imler Ruby Tuesday
199 Janjer Enterprises, Inc. Silver Springs, MD 29 Popeyes Mid-Atlantic Jerome Friedlander
200 Premier Restaurant Orange Village, OH 40 YUM! Brands Midwest, South Thomas Arnold
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