Growth Strategy: Maid-Rite's Rite of Passage
With new ownership in place, Iowa's Maid-Rite is taking its signature sandwich national.
By Deborah Silver -- Chain Leader, 11/1/2003 12:00:00 AM
 Maid-Rite President and CEO Bradley Burt says, "Not everyone has a wonderful job, marriage or life, but for the brief period our customers are in Maid-Rite, it should be a positive experience." |
Just over two years ago, Bradley Burt, owner of a marketing consulting firm in Des Moines, Iowa, knew two basic facts about Maid-Rite Corp., the quick-service chain based in town: Its loose-meat sandwich—the Maid-Rite—had a cult following in the Midwest where it sold, and the company was on the market.
Today Burt owns the 74-unit operation, along with 13 other Iowa investors, and is its president and CEO. “The product and brand recognition were already there,” says Burt, who had no prior restaurant experience. “With a stronger brand identity and uniform operating procedures in place, I realized the growth potential was enormous. I bought the company as quickly as I could.”
The QSR has been a Midwest presence since 1926, serving Maid-Rites, a few other sandwiches and ice-cream beverages. It also claims to be one of the first quick-service restaurants to sell franchises and offer walk-up and drive-up service.
Offensive Strategy
Burt’s first priority was to strengthen operations for the company’s then 82 franchisees. “When I came on board, the franchisees functioned like a loose-knit federation,” he says. “There was no common training, purchasing, advertising, anything.”
Burt immediately terminated 17 underperforming stores and set up a distribution system, promotional and advertising support, and vendor relationships to secure pricing discounts. In addition, he established policies for service and cleanliness, and created marketing, menu-development and quality-standards committees.
“Before we took over, Maid-Rite was in the 16th century of fast-food dining and franchising,” says Burt. “We’ve moved it into the 21st century.”
With a professor from nearby Drake University, Burt developed Maid-Rite University. This extensive training program is geared toward franchise owners and managers, creating training manuals, employee handbooks, a Web site and a hot line to handle questions. “At the core of success is education,” Burt says. “If we educate our people—educate, not train—they’ll be better able to serve our customers.”
School to Work
The 10-day course at the school, located at company headquarters, combines classroom and on-the-job instruction. In addition to covering standard restaurant management issues, such as hiring and firing practices, cooking and purchasing, the program emphasizes the Maid-Rite philosophy of customer service, cleanliness and community relations. Each day’s work, whether in a restaurant or the school, is followed by an evening review session. After graduation, franchisees are one to two months away from opening their own units.
The company follows them through that period, as well. Maid-Rite believes in “quiet openings” so staff can continue on-site training just prior to and during a store’s opening days. “It’s easier for employees to work out the bugs slowly without a lot of hoopla around them,” Burt says. “We prefer people find out about a new Maid-Rite by word of mouth.”
Plans for the 77-year-old chain have entailed some design retooling. New units have a more retro look, including black-and-white tile floors, white tile walls with a red band and neon signage. Franchisees now select from four designs. Units range from 1,550 square feet with seating for 57 to 2,180 square feet with seating for 101. Counter stools, booths and a community table remain part of the mix.
Singular Sensation
What also remains is the product that inspired new ownership to invest in the first place: the loose-meat sandwich credited to Maid-Rite’s first owner, Fred Angell. Legend has it, Angell put the first one together in the 1920s in his butcher shop in Muscatine, Iowa. His creation, a ground-beef sandwich, kettle cooked and simmered for hours in spices, is scooped on a bun, topped with mustard, pickle, relish and onion, and served with a spoon to pick up the pieces of meat that fall on the plate. The meat mixture is delivered frozen to units, where it is steamed in its sealed package while it defrosts in the microwave. The sandwiches can be served plain or with cheese, bacon or chili.
“Midwesterners who grew up eating Maid-Rites know there’s nothing like them,” Burt says. “Those who have moved away tell us they don’t feel like they’re home until they’ve had a Maid-Rite. They plead with us to open up a restaurant near where they live because no other food satisfies the craving.”
This object of devotion does not, of course, stand alone on the menu. While about 45 percent of Maid-Rite’s sales are from loose-meat sandwiches, it has always had other fare such as chili and corn dogs. However, upgrades to some items—a larger center-cut pork-loin sandwich, fresh-cut french fries, hand-dipped ice cream for malts and shakes, and gourmet coffee—have been made. New products include chicken and fish sandwiches, Caesar and Greek salads, and mini doughnuts.
Fresh-baked buns and all-beef hot dogs will soon be available systemwide. The company is testing cinnamon rolls for the morning hours and fresh-baked cookies for the afternoon. “The rolls and cookies give us the business-meeting crowd,” says Burt. “Part of our philosophy is to extend dayparts to get units up to $1 million annually in sales.”
Toward that end, Maid-Rite is offering all franchisees a co-branding option with Salt Lake City-based TCBY. According to Burt, Maid-Rite has high customer traffic during lunch and dinner hours, whereas TCBY does most of its business from mid-afternoon to late evening. “We don’t cannibalize each other,” he says. In addition, setting up a 100-square-foot TCBY in a Maid-Rite unit only costs a $10,000 franchise fee plus $28,000 for equipment, because site, labor, walk-in coolers and point-of-sale equipment are already in place. “Maid-Rite franchisees should generate 50 percent pretax profit from every TCBY sale,” Burt says. By December, four co-branded units will be up and running, two in Iowa, one in Kansas and one in Nebraska.
Another advantage to bringing TCBY on board is its status as a healthful dessert alternative, which fits in with Maid-Rite’s new marketing campaign centering on the health aspects of its products. The chain uses oil with no cholesterol and no trans-fatty acids, and its signature sandwich contains only 347 calories. “When you kettle cook, a lot of the grease you typically get is removed,” says Burt.
Outward Bound
With systems and revamped menu in place, Maid-Rite is taking its ambitious show on the road. It recently signed a 19-unit development deal for Kansas City, Kan. and Mo. Currently in eight states, the company is working with potential franchisees in Phoenix, San Diego, Las Vegas, Dallas and Topeka, Kan. Maid-Rite is also targeting population centers in Colorado, Indiana, Michigan, Ohio, South Dakota and Utah, and communities in those states with less than 25,000 residents.
Last year, eight new Maid-Rites opened, 10 more are scheduled to come on line by year-end, and about 30 next year. The only company-owned units will be the two currently in place. By 2015, Maid-Rite expects to open more than 1,000 units worldwide, including Western Europe and Asia.
“It will certainly be our pleasure to camp out next to the top burger or chicken chains,” Burt says. “We have no competitors, so we plan to go everywhere and anywhere.”
Future of Franchising
Whether Maid-Rite can achieve its far-reaching goals is the big question. The fast-food industry continues to struggle in the current economic climate. “This is likely not the best time for lofty growth plans, particularly for an unknown commodity, which Maid-Rite certainly qualifies as in most of the world,” says Joe Buckley, restaurant analyst with Bear Stearns in New York.
However, according to the International Franchise Association in Washington, D.C., franchising conditions in the United States are good these days. Corporate downsizing has glutted the marketplace with experienced businesspeople looking to set up shop. In addition, IFA President Don DeBolt explains that investors are reluctant to put their money into volatile stocks, low-return equities and bonds, and low-interest rate banks. So franchises with solid financial records and proven ROIs are an attractive investment.
As a result, franchising is expected to increase by about 5 percent next year. “Fast food has been in a state of flux, but franchise investors are out there looking for opportunities,” DeBolt says.
