New Barbecue Franchise Set to Enter Florida via Pembroke Pines

March 14, 2012

New Barbecue

New Barbecue Franchise Set to Enter Florida via Pembroke Pines

For Jack Flechner, business is all about timing. So it was only a matter of time before he found the second career he was hoping for as a restaurant entrepreneur.

Flechner set aside his career as a real estate attorney in 2005, just as the market collapsed, to launch his new effort. Hoping to ride the popular wave of gourmet burger concepts, he joined a few colleagues to invest in three Five Guys Burgers and Fries locations in Florida.

While he liked the concept, the territory he purchased was limited. In September, he sold out and bought into a small Louisiana-based barbecue franchise.

With a new team of partners he calls “experts at raising capital overseas,” Flechner signed an agreement with VooDoo BBQ & Grill to develop 26 restaurants throughout Florida. The first is expected to open in Pembroke Pines by summer.

The deal is the largest in the restaurant chain’s 10-year history and will nearly double its number of existing or planned locations, according to Chad Tramuta, senior director of franchise development.

VooDoo has 12 locations in Louisiana. The company also plans growth in the Carolinas and Texas.

Unlike the gourmet burger business, which has become one of the fastest-growing fast-casual segments, the barbecue segment offers vast opportunity, said Darren Tristano executive VP of Chicago-based Technomic, a food industry research company. He noted that most barbecue joints are typically mom-and-pop operations.

“There hasn’t been a lot of innovation or growth in this category, so this is a good opportunity for a chain like VooDoo to be able to grow,” he said. “[VooDoo] has a name that is memorable and an offering that’s broad enough to include burgers and salads and items that eliminate the veto vote.”

Flechner, whose territory includes all of Florida except the Panhandle, hopes to have four restaurants open by the end of the year.

His initial franchise fee investment was about $400,000. That does not include leases, buildout or equipment, Tramuta said.

While most barbecue concepts feature a down-home, country atmosphere, VooDoo has a New Orleans feel and flavor, he noted.

“Most people think of barbecue as sloppy, Southern smokehouse,” Tramuta said. “We are bringing a new look and feel to the barbecue arena.”

Most barbecue joints feature baked beans, coleslaw and french fries, but today’s consumer is looking for more Tristano noted.

“They want new flavors and profiles,” he said.

VooDoo BBQ & Grill took note of that, Tramuta said. Its ribs come competition-style, with sauces on the side, and the menu includes a wide range of choices, including salads, burgers, chicken wings and seafood. There’s also traditional New Orleans fare, such as po’boys and gumbo.

The broader menu should prove to be a recipe for success, Tristano said. “It opens the door to give [customers] more reasons to return.”

THE DETAILS:

VooDoo BBQ & Grill

* Franchise fee: $35,000

* Total investment: $340,500 to $625,000

* Royalty fee: 5 percent of gross sales

* Location size: 2,400 to 3,000 square feet

View the full article on South Florida Business Journal


A SMASH HIT

March 14, 2012

Steak 'n Shake

Varied Menu Brings Sizzling Growth for Denver-Based Smashburger

Smashed ground beef is proving to be a winning concept for Denver-based Smashburger.

With 143 locations opened nationwide since its inception in 2007, Smashburger is one of the fastest-growing restaurant chains in the U.S.

Commitments from newly signed franchisees will bring the store total to 450 by 2014.

But that number is small fries to Smashburger chief executive Dave Prokupek, who said the business “easily” could reach 2,000 to 3,000 outlets in the next 20 years.

“No one has ever really grown this fast in the first five years,” he said during a recent lunchtime interview at the Tabor Center Smashburger, gripping a napkin in one hand and in the other a grilled chicken sandwich with goat cheese and spinach.

Gourmet grilled chicken in a joint named after a burger?

That’s part of the Smashburger appeal, analysts say. In what the industry defines as the “better burger” niche within the hamburger hierarchy, Smashburger is wooing customers with a diverse menu ranging from customizable burgers to chicken sandwiches and salads to innovative sides such as flash-fried mixed vegetables.

Its largest competitor in the “fast casual” subset of the better-burger category is Five Guys Burger and Fries, a national chain with six times as many U.S. restaurants.

“But Smashburger is different because they have a broader menu. They don’t just have burgers and fries and hot dogs,” said Darren Tristano, executive vice president of Chicago-based restaurant consulting firm Technomic.

Recently, Forbes magazine listed Smashburger as No. 1 among its top 100 “Most Promising Companies.”

The Smashburger name derives from the cooking process, in which raw Angus beef meatballs are placed on a grill and smashed into patties by a cook wielding a hand-held steel paddle.

The cook keeps pressure on the patty for 10 seconds, causing it to sear and lock in juices while it continues cooking for another three minutes.

According to Prokupek, starting with a loosely packed meatball instead of a pre-formed patty makes the burger less dense and allows it to better express flavor.

“I eat a lot of burgers, and I would describe this as a very good burger,” said customer David Jasper at the downtown Denver outlet. “They’re juicy and they’re tasty. And you can get in and out of here pretty quick.”

Customers order at the counter, then are served tableside within about five minutes.

The average check is $8. A typical restaurant grosses $959,000 a year.

Although Smashburger is privately owned and not required to report financial information, it recently disclosed to analysts that 2011 sales were $118.7 million, a 72 percent increase from $69 million in 2010. Most of the growth was from opening new outlets. Same-store sales increased 3 percent in 2011.

Smashburger was founded by Denver-based private equity firm Consumer Capital Partners — that same company that until last month was a principal owner of the struggling Quiznos chain. Consumer Capital ceded its Quiznos ownership in a financial restructuring that gave control to New York hedge fund Avenue Capital Group.

Analysts and Smashburger insiders say the hamburger chain is entirely unaffected by the Quiznos financial problems and restructuring.

“Smashburger is growing much smarter than (Consumer Capital) did with Quiznos,” said restaurant analyst John Gordon of San Diego-based Pacific Management Consulting Group.

While many of Quiznos’ franchisees are one-store mom-and-pop operators, Smashburger is focused on high-volume, multi-store franchise investors, Gordon said.

Initial franchise fees are $40,000 per store, plus royalty payments of 5 percent to 6 percent of gross sales and a marketing fee of 2 percent.

The current mix of Smashburger restaurants is 58 percent owned by franchisees and 42 percent corporate-owned.
Prokupek said that going forward, growth will come primarily from new franchises. Smashburger projects that by 2014, 72 percent of its 464 units will be owned by franchisees.

The chain recently announced an international expansion plan with proposed franchise locations in Calgary and Edmonton, Alberta; Costa Rica and undisclosed countries in South America and the Caribbean; and Middle East locations, including Bahrain, Kuwait and Saudi Arabia.

Franchisee David Whisenhunt opened his first San Diego restaurant in 2010. He now has eight in operation and has the rights for an additional 18 in the area.

“It’s a brand-new brand that’s still catching on,” he said, “but I think the potential is huge.”

View the full article on The Denver Post