The industry`s leading multi-unit, multi-concept

The industry’s leading multi-unit, multi-concept franchisees
L
arge restaurant franchisees post-recession are evolving into
more sophisticated, investor-owned companies that wield
more clout than ever with their franchisor, according to an
analysis of the Franchise Times Restaurant 200, our exclusive annual
ranking of the nation’s largest restaurant franchisees.
Collectively, the Restaurant 200 posted revenue of $23.9 billion in 2011, up
REVENUE IN DOLLARS
posted by top 200
franchisees
3.2 percent from the year before. The companies owned 18,408 units,
up 3 percent, continuing an almost uninterrupted string of growth
for the largest operators in the 20-year history of the ranking,
which is compiled by our sister publication, the Restaurant Finance
Monitor.
The largest operators have long built and bought new restaurants
at a rate faster than other operators because they have more
access to capital and are in demand. These big franchisees also
have a direct line to franchisor execs and thus more influence. The
BURGER KING UNITS
bought by Carrols,
up one spot to 7
largest franchisee, Pittsburg, Kansas-based NPC International, has
1,151 Pizza Hut units, or about 20 percent of the system.
Then there is No. 7 Carrols Restaurant Group, which in April agreed to
buy 278 more units from its franchisor, Burger King, doubling its size.
Read on to learn about all the moves of this year’s top list.
Sponsored by
OF KFC’s SYSTEM
controlled by
No. 1 operator
FRANCHISE TIMES’ RESTAURANT 200
Bought and Sold
Top franchisees change hands at quick clip
T
o get an idea of how active the
nation’s largest restaurant franchisees
have been recently, look no further
than the biggest, the Pittsburg, Kansasbased Pizza Hut operator NPC International.
In recent months, the company obtained
new owners (private equity group Olympus
Partners), it bought 36 more units from Pizza
Hut, and it refinanced a $375 million loan.
And that’s just since November.
That describes the past year and a half
for the companies on Franchise Times’
Restaurant 200 in a nutshell: busy. A remarkable number of the companies toward the
top of our annual ranking of the nation’s
largest restaurant franchisees by annual revenue either made a big acquisition or were
sold.
As this ranking illustrates, we’re in the
midst of a franchisee acquisition boom.
According to the New York-based investment banking firm J.H. Chapman’s annual
restaurant merger and acquisition census,
franchisee transactions rose significantly
last year and represented nearly half of
all recorded deals. “I can’t ever remember
this large a percentage of transactions that
involve franchisees,” David Epstein, principal
with J.H. Chapman, told our sister publication, the Restaurant Finance Monitor.
The boom is being fueled by low-cost
debt and the availability of units. Numerous
franchise systems, including the chains that
dominate the ranking such as Applebee’s,
Burger King, and Yum Brands’ three concepts KFC, Pizza Hut and Taco Bell, have
been selling off company stores to franchisees. In addition, a number of franchisees
have put their operations up for sale, as
owners retire or simply seek the exits after
several years of challenging sales numbers.
The acquisitions boom would ultimately
hit the top company on our ranking, too.
To be sure, NPC is no stranger to buying
and selling. The company was founded in
1962, when an insurance salesman named
Gene Bicknell bought a Pizza Hut restaurant
in Pittsburg, Kansas and worked at night to
grow the business. Bicknell expanded over
the years and went through a few name
changes—eventually becoming National
Pizza Co., and then NPC International. By the
time he sold his interest in the company to
Merrill Lynch in 2006 it had more than 500
restaurants. That was the year after the company claimed the top spot on the Franchise
Times Restaurant 200 as the nation’s largest
restaurant franchisee.
NPC isn’t just acquiring units. CEO Jim
Schwartz said the company is finding a
healthy market for building new Pizza Huts,
mostly delivery and pick-up units in smaller
towns. “Yum’s done a great job providing lower-cost investment opportunities,”
Schwartz said, noting the company has built
27 units in the past nine months.
In 2008, Bank of America took over Merrill
Lynch, and by last year the Charlotte-based
banking giant decided to narrow its focus,
putting NPC on the block. It was good timing. The acquisitions market had returned
in 2010 following a two-year hiatus and, in
the franchisee world, had kicked into gear
last year.
In November, Olympus Partners, the
Stamford, Connecticut-based private equity
firm, agreed to buy NPC for a reported $775
million, or more than seven times the company’s 2011 earnings before interest, taxes,
depreciation and amortization. The earnings
multiple is a way to measure the purchase
price of a business—the higher the multiple,
the higher its value. A multiple of 7x EBITDA
is high for a franchisee, which typically sells
for 4x to 6x earnings.
In this case, there was considerable interest in a company that operates more than
20 percent of the nation’s Pizza Hut units.
“That’s a testament to the track record of the
team and ownership,” Schwartz said, noting
that senior executives and NPC have an average tenure of 17 years.
Olympus is no stranger to franchisee ownership. The company had owned
Top Five Brands
…based on number of franchisees
on FT’s Restaurant 200
Fort Smith, Arkansas-based Yum Brands
franchisee K-Mac Enterprises, the No. 15
company on our ranking, before selling it
to Los Angeles-based private equity firm
Brentwood Associates.
“They’re really terrific people and are
great supporters of our business and strategies,” Schwartz said of Olympus. “There’s
been no change in how we operate, or in
the senior management. Our job is taking
care of customers every day and executing
our mid-term and long-term strategies.”
Articles by Jonathan Maze
Research by Matt Haskin and Abbi Nawrocki
Wells Fargo Restaurant Finance provides financing to corporate restaurant brands, large multi-unit restaurant franchisees,
experienced commercial real estate investors who own restaurant properties, private equity firms, and other investors in restaurant
concepts. Our loan products include: syndicated corporate senior financing, fixed and floating rate term loans, acquisition facilities,
sale-leaseback financing, bridge/development financing, working capital revolvers, and interest rate swaps.
For more information, visit www.wellsfargo.com/restaurants
42
August 2012
The industry’s leading multi-unit, multi-concept franchisees
Franchise Times’ Restaurant 200: TOP 25
# Company
Revenue
Units Concepts
938,000,000
1151
1
NPC International, Inc.
Pittsburg, KS
2
Apple American Group821,000,000 337 Applebee’s
San Francisco, CA
3
Bridgeman Foods
518,000,000163 Wendy’s
Louisville, KY 124Chili’s
4
Covelli Enterprises
426,000,000
198
Panera Bread
Warren, OH 5O’Charley’s
5
Strategic Restaurants
405,000,000
San Ramon, CA
293
26
6
Boddie-Noell Enterprises386,000,000
Rocky Mount, NC
335
Hardee’s
5
Moe’s Southwest
7
Carrols Restaurant
Group, Inc.
Syracuse , NY
298
8
Harman Management346,000,000314
Corporation 4
Los Altos, CA
9
The Briad Group
327,000,000 71T.G.I. Friday’s
Livingston, NJ 42Wendy’s
10
Doherty Enterprises, Inc.303,000,000 61
Applebee’s
Allendale, NJ 29
Panera Bread
11*Pepper Dining, Inc.
Charlotte, NC
348,000,000
Pizza Hut
Burger King
T.G.I. Friday’s
Burger King
Heartland Food Corp.
Downers Grove, IL
13
Pilot Travel Centers, LLC277,000,000
Knoxville, TN
297,000,000
297
Chili’s
Burger King
165
Subway
47Wendy’s
14 ADF Companies
Fairfield, NJ
267,000,000
285
13
Pizza Hut
Panera Bread
15 K-Mac Enterprises
Ft. Smith, AR
254,000,000
150
32
Taco Bell
YUM! Multi
16 United States Beef Corp.251,000,000
Tulsa, OK
279
Arby’s
5
Taco Bueno
17* JIB Management
Fremont, CA
219
Jack in the Box
29Denny’s
250,000,000
18 Tacala/Boom Foods
242,000,000
Vestavia Hills, AL
160
66
19 MUY Brands, LLC
235,000,000
San Antonio, TX
164
Pizza Hut
48 Long John Silver’s
Taco Bell
Sonic Drive-In
20 Sun Holdings, LLC
233,000,00072
Popeyes
Irving, TX
71
Burger King
21 Thomas and King, Inc.230,000,000 88 Applebee’s
Lexington, KY 6Carino’s
22 D. L. Rogers Corp.
N Richland Hills, TX
229,000,000
198
NPC International hasn’t stopped growing
since it claimed the top spot on the Franchise
Times Restaurant 200, in 2005. It has made
several acquisitions under Merrill Lynch’s
ownership—and sold a few units, too. Olympus Partners
bought the firm last November. By the end of last year it
had 1,151 locations, mostly in the Midwest and the South.
“Gene’s philosophy has been passed through our culture,”
said CEO Jim Schwartz, referring to company founder Gene
Bicknell. “We’ve continued to reinvest in the business. Our
focus has been to take care of the Pizza Hut brand. We’ve
grown by acquiring stores from franchisees, as well as Yum
Brands, and through development activity.
“It’s amazing,” Schwartz added. “Over the years, you acquire
50 here, 50 there, and the next thing you know you’re almost
at 1,200.”
KFC
Taco Bell
300,000,000106
12
50 Here, 50 There
Sonic Drive-In
How we compiled|
the ranking
Franchise Times Restaurant 200 is compiled annually using
a combination of companies’ self-reported information
and estimates gleaned from publicly available documents.
Those documents include annual reports, Securities and
Exchange Commission filings, and Franchise Disclosure
Documents. The ranking is compiled by Franchise Times’
sister publication, the Restaurant Finance Monitor.
The ranking is based on the companies’ prior year revenue
from their operations for which they are a franchisee. It does
not count franchisees’ privately owned, non-franchised
concepts, or concepts for which they are the franchisor.
Nor does the ranking include revenue from other business
operations, such as hotels or real estate interests. In some
cases, where an acquisition took place during the year, we
derive pro-forma revenue 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. In the case of a tie in the
amount of total revenue we give favor to the company
with the most units. We give preference on our ranking to
companies that provide us with their information, rather
than companies for which we have to estimate annual
revenue.
If you believe your company might make the list or we
missed you, or you know another company that should
be listed, contact Abbi Nawrocki at (612) 767-3200; abbi@
franchisetimes.com
Our ranking of the top 200 franchisees is combined with the
second 200 franchisees in a report prepared by the Chicago
consulting firm Technomic.
* Denotes revenue estimate
August 2012
43
FRANCHISE TIMES’ RESTAURANT 200
# Company
Revenue
Units Concepts
23 DavCo Restaurants, Inc.224,000,000 153
Crofton, MD
24 AmRest
Atlanta, GA
Wendy’s
219,000,000 103Applebee’s
25 Quality Dining, Inc.
215,000,000
Mishawaka, IN
114
Burger King
48Chili’s
Franchise Times’ Restaurant 200: TOP 26-200
# Company
Units Concepts
26 JRN, Inc.
161KFC
Columbia, TN 23
YUM! Multi
222
Units Concepts
28*Fugate Enterprises
208
Wichita, KS70
Pizza Hut
Taco Bell
29* Sunshine Restaurant Partners, LLC
Sunrise, FL
153IHOP
30 Cedar Enterprises, Inc.
Columbus, OH
151Wendy’s
31 Interfoods of America, Inc.
143Popeyes
Miami, FL
18
Burger King
32* Kazi Management VI, LLC
St. Thomas, VI
176KFC
25
Burger King
33 The Rose Group
59Applebee’s
Newtown, PA 4
Corner Bakery
$180 Million to $205 Million
27 Southern California Pizza Company
Corona, CA
# Company
Pizza Hut
$150 Million to $175 Million
34*Valenti Management
112Wendy’s
Tampa, FL
17Chili’s
35 Border Foods Companies
Golden Valley, MN
84
80
36 T.L. Cannon Management
Ponte Vedra Beach, FL
61Applebee’s
Taco Bell
Pizza Hut
37 Apple Gold Group
86Applebee’s
Raleigh, NC 6
Burger King
Accidental Franchisor
Brad Honigfeld’s effort to keep his house
may end up being the best thing that ever
happened to his company.
Honigfeld is the CEO of the No. 9 company
on our ranking, the Briad Group, owner of 71 T.G.I. Friday’s
and 42 Wendy’s. In December 2008, Briad was forced to
scramble to find tenants for a strip mall his company built in
New Jersey after most of its would-be occupants wouldn’t
move in due to the credit freeze. Honigfeld had a personal
guarantee on the center—meaning that the bank would
come after him if his loan couldn’t be paid. Briad had to fill
that center, quickly.
So Briad started finding concepts to open in the center.
Honigfeld called Sam Fox, owner of the Arizona-based
Fox Restaurant Concepts, and talked him into letting him
franchise Fox’s upscale burger concept called Zinburger. And
then Briad created a yogurt concept out of thin air called
“Cups.”
The result? Zinburger did $3.9 million its first year, and
now Briad plans to open more such restaurants east of the
Mississippi. But the big story is Cups, which is what you get
when you have Hooters-like staff serve frozen yogurt to
danceable techno music. That first store enjoyed consistently
long lines and generated $2.2 million its first year, a ridiculous
sum for a fro-yo concept. Now Briad expects to have 11 Cups
shops open by the end of the year. It has started franchising
the idea, and expects 50 to 70 next year and plans to take
Cups to Europe and Brazil.
44
August 2012
38 Apple Sauce, Inc.
Crestview Hills, KY
78Applebee’s
39* T-Bird Restaurant Group
La Jolla, CA
56Outback
40 Kaizen Group of Companies
Beaverton, OR
70
Burger King
56Denny’s
41 Carlisle Corporation
Memphis, TN
121Wendy’s
42* Sizzling Platter, Inc.
142
Little Caesars
Murray, UT22Sizzler
43* REE Inc.
73McDonald’s
Beaumont, TX
44* B & B Consultants
Las Cruces, NM
155
45* Western Reserve Restaurant Mgmt
Rochester, NY
103Wendy’s
Sonic Drive-In
$125 Million to $150 Million
46 Casual Restaurant Concepts Tampa, FL
50Applebee’s
47 Pacific Bells, Inc.
Vancouver, WA
84
Taco Bell
12 Buffalo Wild Wings
48* Hamra Management Company
Springfield, MO
47
Panera Bread
28Wendy’s
49* Caspers Company
Tampa, FL
49McDonald’s
50 Metro Corral Partners
Winter Park, FL
28
Golden Corral
The industry’s leading multi-unit, multi-concept franchisees
# Company
Units Concepts
51 Restaurant Management Co.
132
Pizza Hut
Wichita, KS14 Long John Silver’s
52 Apple-Metro, Inc.
Harrison, NY
33Applebee’s
53 BR Associates, Inc.
104 Long John Silver’s
Jasper, IN
35Wendy’s
54 Wisconsin Hospitality Group
Wauwatosa, WI
83
Pizza Hut
38Applebee’s
55 KBP Foods, Inc.
Overland Park, KS
119KFC
30
Taco Bell
56 Quality Restaurant Concepts, LLC
Birmingham, AL
58Applebee’s
57 Friendly Franchisees Corporation
La Palma, CA
64
Carl’s Jr.
18Denny’s
58 Pizza Properties, Inc.
41
El Paso, TX39
Peter Piper Pizza
Burger King
$100 Million to $125 Million
59 Palo Alto, Inc.
73
Denver, CO39
Taco Bell
Pizza Hut
60 Carolina Restaurant Group
Charlotte, NC
82Wendy’s
61 RPM Pizza, Inc.
Gulfport, MS
127
Domino’s Pizza
62* The Jan Companies
90
Burger King
Cranston, RI 2Popeyes
63 ACG Texas, L.P.
Richardson, TX
62IHOP
It Takes Two
When Atour Eyvazian met Anil Yadav
in 1984, shortly after Eyvazian went to
work as a janitor for a Los Angeles Jack
in the Box, neither had any idea that the
two of them together would become the system’s largest
franchisee. But that’s exactly what happened.
Eyvazian, an Iranian immigrant, rose through the ranks of
Jack in the Box, eventually becoming a regional manager for
the company. Yadav became a franchisee when he bought
his first restaurant in 1989. The two continued their friendship
over the years, and when 10 units became available for sale
in the Sacramento area in 2004, they decided to become
partners.
In 2007, the two bought restaurants in Texas and Eyvazian
moved to Houston to run those restaurants. Since then,
they’ve bought 109 locations in that state. Today, Eyvazian
runs those plus the 10 in Sacramento.
Yadav runs the remaining 100 Jack in the Box restaurants
they own, most of which are in California, plus 29 Denny’s.
Their company, JIB Management, is the No. 17 company on
our ranking. The two partners and their families remain good
friends. When Eyvazian visits the California stores he stays
at Yadav’s house, and vice versa when Yadav goes to Texas.
“We have one of the greatest partnerships anybody could
wish for,” Eyvazian said. “The way our partnership works, he
has a circle and I have a circle. Our resources are different. We
bring different pieces to the table. We’ve become an asset
to each other.”
64 SSCP Management, Inc.
42Applebee’s
Dallas, TX
18
Burger King
65 Concord Hospitality, Inc.
43Applebee’s
Lincoln, NE4
Famous Dave’s
66 Strang Corporation
Cleveland, OH
32
Panera Bread
15Applebee’s
# Company
Units Concepts
67 Apple Investors Group
44Applebee’s
Pomona, CA 17IHOP
75* PJ United113
Birmingham, AL
68 Apex Restaurant Management, Inc.
Pleasanton, CA
66LJS/A&W
54KFC
76 Wendy’s of Colorado Springs
Colorado Springs, CO
69* Pennant Foods
Knoxville, TN
89Wendy’s
77 Pacific Island Restaurants, Inc.
45
Honolulu, HI 38
70 Falcon Holdings, LLC
Westlake, TX
165 Church’s Chicken
78 Frisch’s Restaurants, Inc.
Cincinnati, OH
29
71 America’s Pizza Company, LLC
Lafayette, LA
127
Pizza Hut
79 Gator Apple, LLC
West Palm Beach, FL
41Applebee’s
Taco Bell
Pizza Hut
80 McEssy Investment Co.
Lake Forest, IL
43McDonald’s
72 Desert De Oro Foods, Inc.
68
Kingman, AZ 40
73 Southern River Restaurants
Natchez, MS
49Applebee’s
74 Neighborhood Restaurant Partners, LLC
Duluth, GA
48Applebee’s
Papa John’s
74Wendy’s
9
Golden Corral
Pizza Hut
Taco Bell
Golden Corral
81 QK, Inc.
79Denny’s
Scottsdale, AZ 5
Del Taco
* Denotes revenue estimate
August 2012
45
FRANCHISE TIMES’ RESTAURANT 200
Biggest Risers
New CEO brings fun back for Denny’s franchisee, plus two more move up
The past couple of years have been more fun for Denny’s franchisee
Dawn Lafreeda.
In 2001, Spartanburg, South Carolina-based Denny’s and its CEO
at the time, Nelson Marchioli, told franchisees to stop growing
as it sought to fix its sagging sales. Lafreeda and other operators
acquiesced, and for the next several years, the chain stood still,
enabling rival chain IHOP to speed past it to become the country’s
biggest family dining concept.
But, like many of the companies on the Restaurant 200, Lafreeda
likes buying and developing new restaurants. So
she jumped in head-first when Denny’s started
focusing on growth again in 2010—to the point
where her company, San Antonio-based DenTex Central, is now one of the fastest-growing
franchisees in the country.
Much of that sales growth came thanks to a big acquisition of
a Domino’s Pizza franchisee in Jacksonville and Orlando. NRD
Holdings and its CEO, Aziz Hashim, have made a habit of acquisitions
in recent years, and have stepped up their aggressiveness recently.
Since the Domino’s deal, it reached an agreement to buy 28 Golden
Corral locations in the Southeast, but the franchisor ended up
buying those restaurants by exercising its contractual right of first
refusal.
“We’re always on the prowl,” Hashim said, adding, “it’s not an
unlimited thing. And we have exited brands
that didn’t fit into our model.”
The purchase of the Domino’s units in Orlando
and Jacksonville was “a bit of a distressed sale,”
as the franchisee had some personal issues and
had to put his company on the block, Hashim
said. Those personal issues kept the operator
from paying enough attention to the business,
so Hashim knew it was a business that could be
turned around.
Den-Tex added 12 units last year, 31 since
2008, and now has 70 restaurants in six states.
Company revenue grew 45.6 percent last year,
and Den-Tex shot up 41 spots on our ranking
to No. 103. “It’s always enjoyable when your
franchisor wants to grow the brand,” Lafreeda
said. “It’s nice to see a new Denny’s on the
corner. I love to build new restaurants. I always
want to be growing.”
Denny’s has been particularly aggressive in
getting operators to build and develop again. In
2010, the company agreed to convert 140 family
dining restaurants in Flying J Travel Centers to
Denny’s, and franchisees like Lafreeda jumped
on board. Since then, the company has sold
some restaurants to operators—Lafreeda
bought six in Chicago last year and five in St.
Louis—and now it’s trying to get operators to
build new units in underserved markets.
Lafreeda, a franchisee since 1986 and now the
company’s second largest operator, credits a
leadership change for her franchisor’s shift in
focus. Marchioli resigned in 2010, and John
Miller, former executive at Dallas-based Brinker
International, became the CEO in January 2011.
“They’ve got a lot of good ideas on the table,”
Lafreeda said. (See related story on page 48.)
In addition, he said, the Domino’s brand is a
good one, and the market is strong. “We could
see there were some opportunities to put some
focus on the business, which he could not do,”
Hashim said, though he noted that distressed
units “take some time” to turn around.
“It’s always
enjoyable when
your franchisor
wants to grow
the brand.”
KBP is quickly becoming one of the biggest KFC
operators in the country at a time when many
of the chain’s franchisees have been struggling.
Last year, Boyne bought 53 KFC units in Atlanta
— Dawn Lafreeda
from the franchisor Yum Brands, giving it 119
KFC restaurants to go with 30 Taco Bells. KBP
has thus gone from 113 on our ranking to 55 this
year. Its revenue grew 84 percent.
Acquisitions helped a number of companies move up the rankings
last year. And perhaps no company vaulted up the list as much as
did Decatur, Georgia-based multi-concept franchisee NRD Holdings.
NRD Holdings debuted at No. 163 on our ranking, thanks to
nearly 70 percent sales growth. Last year, it was the 254th largest
restaurant franchisee and didn’t make the list, meaning it rose 91
spots.
46
August 2012
Both Hashim and Lafreeda are career
restaurateurs who almost literally grew up in the
fast food business. But investors are increasingly
getting involved, and they’re aggressive in
taking advantage of the buyer’s market to make
their companies bigger. One of those investors
is Boyne Capital, a private equity group out of
Miami that owns Overland Park, Kansas-based
KBP Foods.
“We think, as the economy recovers, there will be good opportunities
for growth,” said Derek McDowell, managing director at Boyne. He
added that KFC has a dominant market position, and has made
changes in marketing and advertising that could make it grow
considerably again. “We think the KFC brand is undervalued.”
The industry’s leading multi-unit, multi-concept franchisees
# Company
Revenue
Units Concepts
$90 Million to $100 Million
List Debut
82 Platinum Corral, LLC
Jacksonville, NC
29
Golden Corral
83 BurgerBusters, Inc.
Virginia Beach, VA
82
11
Taco Bell
Pizza Hut
84 Starboard Group
Coral Springs, FL
63Wendy’s
85 Fourteen Foods
Minneapolis, MN
119
86 Luihn Food Systems, Inc.
Morrisville, NC
33KFC
24
Taco Bell
87 Southern Multifoods, Inc.
Jacksonville, TX
59
23
88* Tar Heel Capital Boone, NC
75Wendy’s
89 Rosenfield Restaurants, LLC
Lakewood, CO
82Hardee’s
15
Carl’s Jr.
90 Treadwell Enterprises, Inc.
Springfield, MO
84KFC
2
Ruby Tuesday
91 Paradigm Investment Group, LLC
San Diego, CA
92Hardee’s
1
T.G.I. Friday’s
92 CLP Corporation
Homewood , AL
41McDonald’s
# Company
93 Southern Bells, Inc.
Indianapolis, IN
70
Taco Bell
5KFC
104Emerald Foods, Inc.
Houston, TX
75Wendy’s
94 Meritage Hospitality Group
Grand Rapids, MI
86Wendy’s
105Morgan’s Foods, Inc.
Cleveland, OH
59KFC
9
YUM! Multi
95 Austaco, Ltd 77
Austin, TX
96 The Bistro Group
Cincinnati, OH
30
5
97 Daland Corporation
Wichita, KS
100
Dairy Queen
Taco Bell
YUM! Multi
Taco Bell
T.G.I. Friday’s
McAlister’s Deli
Pizza Hut
Neighborhood Restaurant Partners,
based in Duluth, Georgia, debuted
at No. 74 on our ranking after
buying 40 units from Bill Palmer, the
Applebee’s franchisee who actually founded the chain in
1980 before selling the brand to W.R. Grace & Co. Not finished,
Neighborhood in May bought the No. 46 company on the
ranking, Casual Restaurant Concepts, owned by longtime
franchisee Franklin Carson.
Neighborhood is owned by Atlanta-based Argonne Capital,
which has jumped head-first into franchising in recent
years—it’s a huge operator of IHOP, for instance, owning two
of its franchisees on our ranking: No. 29 Sunshine Restaurant
Partners, which operates 153 units in Florida and Georgia,
and No. 63 ACG Texas, which operates 62 units in that state.
Argonne didn’t limit itself to franchisees: In March it bought
Chattanooga-based burger chain Krystal.
Revenue
Units Concepts
106*
Both Inc.
19
Virginia Beach, VA
Golden Corral
107Mancha Development Co.
35Denny’s
Corona, CA34
Burger King
108Hospitality Restaurant Group, Inc.
Traverse City, MI
40
15
Taco Bell
Pizza Hut
$70 Million to $80 Million
$80 Million to $90 Million
109Retzer Resources, Inc.
Greenville, MS
35McDonald’s
40Applebee’s
110* Stanton & Associates, Inc.
Jackson, MI
63Wendy’s
100Kessler Group, Inc.
Rochester, NY
48Friendly’s
21
Burger King
111Gala Corporation
Costa Mesa, CA
18Applebee’s
7
Famous Dave’s
101Neighborhood Hospitality/
Woodland Group, Inc.
Hazard, KY
40Applebee’s
112MarLu Investment Group
Sacramento, CA
46
21
Church’s Chicken
Jack in the Box
113Benton Properties, Inc.
Springdale, AR
63
Sonic Drive-In
98 V&J Holding, Inc.
Milwaukee, WI
65
37
99* AppleCreek Management Co., Inc.
Duluth, GA
Pizza Hut
Burger King
102J&B Restaurant Partners
Ronkonkoma, NY
59Friendly’s
8
Taco Bell
103Den-Tex Central, Inc.
San Antonio, TX
70Denny’s
114Food Management Investors, Inc.
23Applebee’s
Minot, ND2
Space Aliens
* Denotes revenue estimate
August 2012
47
FRANCHISE TIMES’ RESTAURANT 200
# Company
123DORO, Inc. 64Hardee’s
Eau Claire, WI 5
Taco John’s
Waitress Makes Waves
The oil bust in Texas in the
late 1980s was good for Dawn
Lafreeda.
The Orange County, California
native started working as a waitress at Denny’s when she
was 16 years old. She continued working at Denny’s through
college, even when she took another job selling accounting
software. In 1984, Denny’s decided to sell a restaurant in
little Globe, Arizona, a former mining town of 7,500 east of
Phoenix.
The restaurant was called Hobo Joe’s, and Denny’s initially
planned to convert it before deciding the town was too small
to support a 24-hour restaurant. Lafreeda bought Hobo Joe’s.
She was just 23.
Two years later, Lafreeda got her big break when four stores
in West Texas were put up for sale after the oil bust there hurt
the local economy. “I grew up in Orange County,” Lafreeda
said. “That was a little bit of a culture shock,” moving to West
Texas. “After several months I called Denny’s every week
telling them, You have to sell me a Denny’s in a bigger city.”
Eight months later, Denny’s did, selling Lafreeda a store in
San Antonio. Today, Lafreeda’s company, Den-Tex Central, No.
103 on our ranking, owns 70 restaurants and is the chain’s
second-largest operator—and she still has that restaurant
in Globe, though it’s now called Judy’s Cookhouse.
# Company
Revenue
115FourCrown, Inc.
Oakdale, MN
124*
Hallrich, Inc. 82
Kent, OH
Pizza Hut
125* JDK Management Company/ K Investments Ltd.
Bloomsburg, PA
40Perkins
3
Quaker Steak
126Kades Corporation
Pasadena, TX
29McDonald’s
127Janus 1 Unlimited, Inc.
Houston, TX
31McDonald’s
128Team Schostak Family Restaurants
62
Livonia, MI3
Burger King
Del Taco
129Original Bread, Inc.
Wichita, KS
32
130Romulus, Inc.
Phoenix, AZ
37IHOP
Panera Bread
131AB Enterprises
14
Burger King
Redding, CA 12Applebee’s
132Carisch, Inc. 68Arby’s
Naples, FL
133* Bros. Management, Inc.
Knoxville, TN
26McDonald’s
134* Las-Cal Corporation
Las Vegas, NV
65
Taco Bell
135* Stine Enterprises, Inc.
Phoenix, AZ
71
Jack in the Box
136* Fourjay L.L.C
North Little Rock, AR
49Wendy’s
Units Concepts
137Ansara Restaurant Group, Inc.
Farmington Hills, MI
22
5
Red Robin
Big Boy
58Wendy’s
138* Austin Sonic, Inc.
Austin, TX
56
Sonic Drive-In
139KC Bell, Inc. 61
Wichita, KS
Taco Bell
116Goldco, LLC 63
Atlanta, GA
Burger King
117* Killian Management Services
West Bend, WI
36McDonald’s
140DiPasqua Enterprises
Winter Park, FL
101Subway
118High Plains Pizza
Liberal, KS
82
141RGT Management, Inc.
Collierville, TN
53
7
119WKS Restaurant Corp.
Long Beach, CA
50
El Pollo Loco
3Denny’s
142Apple Corps, L.P.
Witchita , KS
25Applebee’s
120B & G Food Enterprises, LLC
Morgan City, LA
57
20
121* Restaurant Management Group
Kingsport, TN
42Hardee’s
35
Little Caesars
Pizza Hut
Taco Bell
YUM! Multi
$60 Million to $70 Million
122First Sun Management Corp.
Clemson, SC
48
Units Concepts
August 2012
51Wendy’s
Taco Bell
Long John Silver’s
$50 Million to $60 Million
143Howley Bread Group, Ltd.
Westlake, OH
23
Panera Bread
144Dolan Foster Enterprises, LLC
Pleasanton, CA
60
Taco Bell
145Verlander Enterprises, LLC
10
Village Inn
El Paso, TX10Applebee’s
The industry’s leading multi-unit, multi-concept franchisees
146*
Hunt Enterprises
Hauppauge, NY
26McDonald’s
147LDF Food Group, Inc. Wichita, KS
42Wendy’s
148Cotti Foods Corp.
Rancho Santa Margarita, CA
61
149William Tell, Inc.
Salt Lake City, UT
18Applebee’s
8
Famous Dave’s
150J.S. Ventures, Inc.
Wichita, KS
25Applebee’s
151LeHigh Valley Restaurant Group
Allentown, PA
19
152RLC Enterprises, Inc.
Northbrook, IL
50
Taco Bell
11KFC
153GB Restaurants
Chandler, AZ
37Denny’s
154*
Oerther Foods, Inc.
Orlando, FL
22McDonald’s
155Fowler Foods, Inc.
Jonesboro, AR
36KFC
16
YUM! Multi
156*
Diversified Restaurant Holdings
Southfield, MI
22 Buffalo Wild Wings
157DRM, Inc.
Omaha, NE
69Arby’s
158Serazen, LLC
Orange, CA
66
Taco Bell
Red Robin
Papa John’s
159* Mirabile Investment Corp.
45
Burger King
Memphis, TN 5Popeyes
160* Miller Apple, L.P
Bay Harbor, MI
21Applebee’s
2
Sonic Drive-In
161The Bailey Company, LLP
57Arby’s
Golden , CO 1
Good Times
162S-Group Companies
Sandusky, OH
33Wendy’s
163NRD Holdings, LLC
23
Domino’s Pizza
Decatur, GA 20Checkers/Rally’s
164BMW Management, Inc.
Temecula, CA
24Sizzler
165* Koning Restaurants International
Miami, FL
61
166* Parrish Foods
Dallas, TX
24McDonald’s
Pizza Hut
167MetzGroup
12
Dallas, PA
3
T.G.I. Friday’s
Krispy Kreme
168* OCAT, Inc.38
Modesto, CA
Taco Bell
Moving Down
KFC’’s tough year hits select franchisees
This has been a tough few years for KFC. The Kentuckybased chicken chain, which is enjoying stunning growth
in China, has been struggling in the United States. In 2011,
those struggles led to a 4.3 percent decline in the number
of restaurants, and a 5.2 percent fall in estimated sales,
according to the Chicago consulting firm Technomic.
This has come home to roost with many of the chain’s
largest franchisees. Twenty-three franchisees on our ranking
operate the concept, and many are struggling.
Cleveland-based Morgan’s Foods fell from No. 89 to No. 105
after its sales fell 8.5 percent. The reason: KFC forced the
company to close 12 of its 81 units because they didn’t meet
the franchisor’s remodeling requirements. It closed another
unit and now has 68 units, nine of which are cobranded with
KFC’s sister concept, Taco Bell. And KFC’s largest operator, Los
Altos, California-based Harman Management, fell from No.
4 to No. 8 on our ranking following a sales decline of nearly
17 percent last year.
But none had a tougher year than Kazi Management, the
Studio City, California, operator of both KFC and Burger King.
In 2008, Kazi was the 11th largest franchisee in the country,
with revenue nearing $300 million. It was also KFC’s second
largest operator.
But Kazi put four companies into bankruptcy protection
last year, and those four operated about half of Kazi
Management’s 235 KFCs. Those companies operated
restaurants in Florida, Maryland, New York and Michigan.
Kazi was forced to close 32 restaurants last year during court
proceedings, and as a result the operator is a lot smaller. At
the end of last year, it operated 176 KFC units and 25 Burger
King units in Hawaii. Kazi, No. 20 last year, is No. 32 this year.
It will be even smaller next year: In February, the remaining
restaurants in those states, 113 units in all, were sold to a pair
of companies for $56.2 million.
A few of the other systems that dominate the list also had
tough years, including Miami-based Burger King. Last year,
Jan Cos. was No. 43 on the ranking. The Cranston, Rhode
Island-based company operated 97 Burger Kings and two
Popeyes. It closed seven restaurants and has fallen to No. 62.
Then there is Duke & King. In 2009, the Minneapolis-based
company operated 95 Burger Kings and was the 63rd
largest operator on our ranking. Last year the company
was dissolved. After going through bankruptcy court, its
restaurants were sold, mostly to two of Burger King’s largest
franchisees: No. 12 Heartland Food Corp. out of Downers
Grove, Illinois, and No. 5 Strategic Restaurants, based in San
Ramon, California.
The good news: Same-store sales at both Burger King and
KFC have turned positive this year.
169* West Quality Food Service, Inc.
65KFC
Laurel, MS1Checkers
* Denotes revenue estimate
August 2012
49
FRANCHISE TIMES’ RESTAURANT 200
Dumpster Diving
The largest franchisees have
all sorts of sophisticated tools
at their disposal to do market
research when they want to buy
new concepts or enter new cities. Then again, some of them
aren’t above a little Dumpster diving.
John Brodersen, president of the 33-unit Popeyes operator
Brodersen Management, based in Glendale, Wisconsin,
had to find a way to determine the strength of the market
when he decided to buy some units in Detroit. So he visited
numerous KFC and Church’s restaurants there, and kept
asking staff which store was the busiest in town.
Brodersen had to risk some funny looks. But, “by the end
of the day, you have the five busiest KFCs in town,” he said.
Brodersen couldn’t do this when he decided to build units
in Puerto Rico later—because he didn’t know Spanish—so
instead he visited Church’s Chicken units there, set himself
up in the dining room, and counted customers and cars. He
cleaned tables, dug through some trash, and collected 500
receipts in a week. “I figured out they were doing $1.4 million”
a year,” he said. The average Church’s in the United States
does $700,000.
Later, when he hired many of those Church’s managers to
run his Popeyes restaurants there, Brodersen discovered that
his customer counting strategy was almost entirely accurate.
# Company
Revenue
Units Concepts
Units Concepts
178* J & S Restaurants, Inc.
Cleveland, TN
42Hardee’s
179Shamrock Co, Inc.
24
Taco Bell
Hinsdale, IL11KFC
180Brodersen Management Corp.
Glendale, WI
33Popeyes
181RREMC, LLC 35Denny’s
West Palm Beach, FL
182Primary Aim, LLC
Zanesville, OH
29Wendy’s
183PFC/Classic Dining
Crystal Lake, IL
31Denny’s
1
Ruby Tuesday
184* Thomas 5 Ltd.
Dublin, OH
31Wendy’s
185RedKing Foods, LLC
Maple Grove, MN
36
Burger King
186Ryan Restaurant Corp.
8Applebee’s
Billings, MT7
Famous Dave’s
187* R & L Foods, Inc.
San Antonio, TX
16
9
188Rawson Foodservice, Inc.
Rocky Hill, NJ
21Wendy’s
189Ocedon Restaurant Mgmt.
Denver, CO
52
Burger King
190* GC Partners, Inc.
Winston-Salem, NC
11
Golden Corral
191* Lunan Corporation
Chicago, IL
45Arby’s
192* RoHoHo, Inc.
Charleston, SC
52
YUM! Multi
Taco Bell
Papa John’s
$35 Million to $40 Million
$40 Million to $50 Million
170* C&R Management Co.
West Jordan, UT
# Company
26McDonald’s
171C & P Restaurant Company, LLC
12
Captain D’s
Macon, GA7Cheddar’s
193Wendy’s of Montana
Billings, MT
23Wendy’s
194H & K Partners
Milwaukee, WI
37KFC
7
YUM! Multi
172Restaurant Partnership of Central Texas
Houston, TX
21Applebee’s
195L & K Hodge 62
McKinleyville, CA
T.G.I. Friday’s
39Wendy’s
196Tricorp Food Services, Inc.
Chesterfield, MO
12
173Wendco Group
Pensacola, FL
197Mach Robin, LLC
Sun Valley, ID
14
Red Robin
198Pizza Hut of Arizona
Tucson, AZ
36
Pizza Hut
199Century Fast Foods, Inc.
Los Angeles, CA
32
Taco Bell
200Peak Interests, LLC
Golden, CO
45
Pizza Hut
174VKC Group 84Subway
Sugar Land, TX
175Northcott Company
Chanhassen, MN
20Perkins
4Houlihan’s
176* JAX, LLC
15
Charlotte, NC
177U.S. Restaurants, Inc.
Blue Bell, PA
34
Golden Corral
Burger King
Papa Murphy’s
* Denotes revenue estimate
50
August 2012