What's Behind the Growth of Two Chain Restaurants

Despite the economic and emotional rollercoaster of the last few years in the food and beverage industry, chain restaurants continue to be a good business bet.

Food franchises are the foundation of the entire franchise industry—accounting for 36% of the total franchise establishments in the USA and 48% of the annual financial output of the U.S. franchise industry, according to Vetted Biz.

wings and rings
The bar at the Milford location of Wings and Rings. (Photo: Wings and Rings)

And they are continuing to grow. According to the International Franchise Association’s 2022 Franchising Economic Outlook, Table/Full-Service Restaurants and Quick Service Restaurants (QSR) are also expected to continue to resurge from the pandemic, with the franchise establishments improving by 2.5%, and 2.1%, respectively. The National Restaurant Association expects 1.6 million new restaurant jobs to be created by the year 2027.

Wings and Rings, a sports restaurant franchise celebrating its 40th anniversary next year, is just one example of a franchise experiencing growth. The restaurant chain has three upcoming openings in Frankfort, Kentucky; Harlingen, Texas; and Reynosa, Mexico, and it is slated to add another three to five restaurants next year.

Teriyaki Madness (TMAD), a teriyaki franchise that serves rice & noodle bowls with Asian-style proteins and veggies, is also growing. “We’ve had tremendous growth for the past several years as we’ve gained more brand awareness, and after proving our business model, showing that we are pandemic-proof (and recession-resistant), our growth has certainly been more explosive this year,” says Jodi Boyce, CMO of TMAD.

Support Systems

While projected profits are certainly drawing in food franchisees, the support a franchise system offers is also key—especially in an industry where those who go it alone often find themselves wearing multiple hats, if not all of them.

“We have the system in place, we have the processes in place,” says Dan Doulen, director of Franchising and Real Estate for Wings and Rings. “We've really learned a lot throughout the years. And those are all the things that contribute to the continued success of the brand.

“And then also having the vendor relationships, the negotiated prices, a marketing team behind you—all that goes into being able to be successful when you open.”

Marlin McClure, president of JKC Hospitality, says that network of support is what drove him to become a franchisee for TMAD. “The support system of working with a young but proven brand made the difference. TMAD’s culture really sold it for us as new restaurant owners,” he says. “The home office is a family that has been supportive throughout the process.”

Combating Challenges of Cost

Despite the many benefits and supports in place in the franchising model, one of the biggest hurdles for would-be franchisees is funding. “We’ve got all the systems and processes in place including real estate, design & construction, marketing and training, but funding has to happen first and can sometimes be a challenge,” says Boyce.

Doulen agrees and says issues like inflation have affected everyone. “Every industry is dealing with rising costs of raw materials to build, the cost of food products,” he says. “We have great distribution throughout the United States, but we still are affected by some of the costs that have not yet settled down.”

Fortunately, franchises have stepped up to combat these cost challenges with innovative, new programs.

At Wings & Rings, in order to make the investment more accessible to prospective owners, the company has established the Wings and Rings Development Incentive. Under the incentive, new owners entering the system will enjoy no franchise fees and no royalties for the first 12 months of operation. This supports the brand’s continued expansion as it works to add new restaurants in areas with an existing brand presence.

“To help franchisees with that initial investment, we waived our $40,000 franchise fee, and then we waived royalties for the first year. So that's 5% royalties that we are not collecting in that first year,” explains Doulen. “The franchisee is able to not only lower their initial investment, but reinvest that money into construction, marketing, training, staffing, etc.

Doulen says Wings and Rings also extended the offer to current franchisees looking to expand into new locations. “Most of our growth has come with current franchisees opening additional locations,” says Doulen. “For us, continuing to grow our base of multi-unit operators is a great strategy for the brand to continue to grow. But we also have attracted multi-unit operators from outside the brand as well. So, it's been very effective in doing exactly what we were hoping it do—reduce the initial investment for the franchisees and continue to help them grow.”

At TMAD, the franchise has partnered with FranShares, a funding platform that supports existing franchisees looking to expand. FranShares offers partial ownership of multiple franchise locations to retail and institutional investors for as little as a few hundred dollars, creating funding for franchisees.

McClure was the first TMAD franchisee to utilize the new partnership to open their new Mooresville, N.C. location. “FranShares was looking for TMAD franchisees with multi-unit management experience and a plan to grow the brand,” says McClure. “[My partner] Brandi and I have over 40 years of experience managing multi-unit restaurants and developing leaders. The FranShares partnership was the perfect vehicle to help our company grow much more rapidly.”

teriyaki madness franshares
The McClures and a FranShares rep at the grand opening of the Mooresville Teriyaki Madness. (Photo: Teriyaki Madness)

The Mooresville location had actually been on the McClures radar for a while. “When we became Teriyaki Madness franchisees and signed for three locations, we intended to open the Mooresville location first, but early on in the process, we had the opportunity to take over the Charlotte location,” said McClure, in a press release. “We immediately saw success and had such a great experience that we knew we wanted to expedite our expansion, and the partnership with FranShares is what allowed us to expand quickly, without waiting for a [Small Business Administration] SBA loan to come through.”

With an initial investment of $12 million, FranShares will help other TMAD franchisees to expand as well. “FranShares is allowing TMAD shop owners to expand faster and more efficiently with simple funding and less wait time,” says Boyce. “We are initially focusing on our experienced, successful shop owners to work with FranShares so they can expand into multiple units in their territories.”

TMAD also recently partnered with Benetrends Financial to offer TMAD prospective and current franchisees faster and easier funding through access to $30 million in SBA funds. TMAD is one of only five franchise systems accepted into this program, which allows TMAD owners to use the money as needed to help with openings, maintain staffing, and expand their businesses as they see fit.

Combating the Labor Shortage

Aside from challenges around funding, the other big hurdle facing franchisees is finding talent. While there’s no easy solution to the labor shortage, the biggest piece of advice from franchises is to find people who are in it for the long haul.

“We looked for team members who wanted a career and an opportunity to grow with us,” says McClure. “Hire the best people, invest in their development, and keep them engaged. If your team is happy, they will make sure your guests are happy. Always give back to your community. They are the reason for your success.”

Making sure your people fit your culture is also important. “Making Wings and Rings a place that employees want to work is part of what we continue to do. Even when we bring on new franchisees, they really have to fit that culture—wanting to bring people together, wanting to bring families together,” says Doulen. “They'll hire the right people, and those people genuinely want to stay and work there.”

Meeting Customer Expectations

Going hand-in-hand with service is the guest experience, and franchises are focusing in on this as customer expectations return to where they were pre-pandemic.

“We are working with our training teams and shop owners to ensure guests get a great experience every time—from accurate (and craveable) bowls, to speed of service and clean dining rooms,” says TMAD’s Boyce. “We have a lot of technology in place to enhance the convenience that guests demand today, and we are working with the shops to deliver food quickly and even with a smile.”

Convenience and speed continue to rank amongst customer priorities. Datassential recently reported that 51% of consumers said “more convenient” food options are driving their visits to restaurants.

wings and rings chicken wings
A selection of wings from Wings and Rings. (Photo: Wings and Rings)

In order to accommodate this demand, Wings & Rings has turned to its off-premise offerings, which still continue to make up a good percentage of casual dining—a projected 22% in 2024 compared to 19% in 2019, according to Datassential.

“We created what's called a valet pickup. And what that does is for people who have ordered either online, called an order in, or ordered on their phone, they drive up and we come right out of the kitchen and bring the food out to them,” explains Doulen. “They can move along and go about their busy day.”

Doulen says this also makes third-party delivery pickups easier as well, which benefits the restaurant. “If our processes are tight in getting the food to them, then they're going to get a better quality product.”

 

Plan to Attend or Participate in the 2024 Vibe Conference, February 26 – February 28, 2024

To learn more about the latest trends, issues and hot topics, and to experience and taste the best products within the on-premise beverage community, plan to attend the Vibe Conference at Town & Country in San Diego, California. Visit VibeConference.com.

Contact us now to secure your program for 2024:

Donna Bruns, Sales & Sponsorships, (for companies A-L), Email: [email protected] Phone: 936-522-6932

Fadi Alsayegh, Sales & Sponsorships, (for companies M-Z), Email: [email protected] Phone: 440-454-0239

Connect and follow Questex’s Vibe Conference and community at Facebook and LinkedIn.