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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


# 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


$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



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


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


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



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


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



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


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


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


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.


64 September 2010


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


September 2010 65


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


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


66 September 2010


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


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


Order online at www.technomic.com/franchise, or for more information contact Cody Aguillard at 312-506-3862 or [email protected].

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:


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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