Growing Limited-Service Chains Look Long Term
The limited-service restaurant chains among Chain Leader's Top Chains Under 50 Units are investing in people, service and marketing as they get back on track for expansion.
By Maya Norris, Managing Editor -- Chain Leader, 8/1/2008
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| Burgerville credits its professional-development program for inspiring a store manager to create the company's new recycling and composting program. |
Employee Morale
Vancouver, Wash.-based Burgerville is only opening two units this year in Oregon. However, as it prepares to ramp up growth in 2009 with four units in Oregon and one or two in Washington, the 39-unit chain says investing in its people will be key for long-term success.
Burgerville created the Center for Responsible Community Leadership to help managers and executives to develop leadership skills that align with the QSR's eco-friendly business practices, which include using wind power, seasonal ingredients and local sourcing. Participants attend courses at the 4,000-square-foot training facility for two days in the fall and once or twice a month for six months every year.
"The value of our mission and the culture of our company is taught out of that center and really has people look at things very differently when they get that we're up to something more than just selling hamburgers," says Chief Cultural Officer Jack Graves. "That's what guests love about our company. And those are the kinds of things that we teach people the value of in this coursework."
Burgerville hasn't forgotten about its hourly employees. The company recently began offering health-care benefits to hourlies who work at least 20 hours a week. Employees pay $15 a month for a health-care plan that has no deductible.
A healthful meal program is also in test to encourage hourly employees to eat better. The program features nutritious items such as smoked salmon salad with choice of milk, juice or bottled water, a hamburger with no mayo, side salads and fruit. If an employee chooses a healthful item off the menu, it's free.
The Guest Experience
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| As part of its renewed commitment to hospitality, Sirloin Stockade is training its cashiers to greet customers warmly and clearly explain how to order. |
While Burgerville focuses on its employees, Taylor, Texas-based Sirloin Stockade is concentrating on its guests as it tries to ride out the downturn in the economy. Despite eight consecutive years of same-store sales increases, the buffet chain will not open any units in the United States this year, although it continues to open five units a year in Mexico. The company hopes that by renewing its commitment to hospitality in conjunction with the economy improving over the next few years, it can re-energize its U.S. expansion with five units a year in the foreseeable future.
Sirloin Stockade, which has 32 units in the United States and 24 in Mexico, launched its hospitality initiative last year to increase frequency among fringe users who visit the restaurants once or twice a month as well as the weekday business lunch customer who has traded down from casual dining. The company believes service will be key to converting these customers into loyal users.
"Hospitality has been a focus for us because we felt that we had fallen into a pattern of focusing more on the food," says Vice President of Franchise Development Madison Jobe.
To improve customer service, Sirloin Stockade updated training materials, retrained employees who needed to improve their hospitality skills and reinforced its commitment to hospitality at employee and shift meetings.
Based on anecdotal results, the company so far has seen an increase in fringe users and business lunch customers, Jobe says.
Staying Afloat
Wahoo's Fish Taco hasn't been as fortunate. This year sales have been flat for the fast-casual Mexican chain, and it will only open three stores this year in Southern California. But that's not stopping the 54-unit company from preparing for expansion, planning 10 to 15 stores in 2009 in its current markets of California, Hawaii, Colorado, Texas, as well as new markets in Arizona, Oregon and Washington.
Wahoo's is in the process of hiring financial, marketing and franchising executives to support its future growth. "We want to build the team now that can handle 300 stores," says co-founder and Director of Marketing Wing Lam.
In the meantime, Wahoo's is sticking with its original strategy of choosing B locations to keep overhead and fixed costs low-vital to getting through these tough economic times, says Lam.
Marketing Blitz
To keep marketing costs low, the company partners with organizations to build brand awareness. "We try to team up with other people and create a little bit of synergy here and kind of increase the value," Lam says. "So we're trying to pull our resources to get a little bit more creative, get a little bit more bang."
For example, Wahoo's regularly partners with retail stores near its restaurants to purchase radio and print advertising that promote both brands.
The company also works with nonprofit organizations, offering free-meal vouchers to those who donate blood to the Red Cross or run in a Lymphoma and Leukemia Society marathon.
In addition, Wahoo's holds parties at concerts and extreme-sports events. For example, the company threw a VIP backstage party at a few stops on the Warped Tour, a traveling summer music festival. Wahoo's sponsored an online contest that gave winners the chance to attend the parties and hang out with the bands.
"When kids go to these events, they have their cameras and cell phones. They're instantly uploading information," Lam says. "So the viral thing comes out."
While Wahoo's, as well Sirloin Stockade and Burgerville, may not have the expansion momentum of their casual-dining counterparts on the Top 50 ranking, they are using disciplined strategies that reinforce their brand and culture. And they expect those tactics to position them for sustained, long-term expansion.
Top 10 Limited-Service Chains Under 50 Units |
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| Chain, Headquarters | 2007 Sales ($ millions) | Units | Segment |
| Portillo's Hot Dogs, Oak Brook, Ill. | $110.0* | 34 | Sandwiches |
| K&W Cafeteria, Winston-Salem, N.C. | 106.0* | 33 | Buffet |
| Todai, City of Industry, Calif.** | 95.0* | 23 | Buffet |
| Sirloin Stockade,Hutchinson, Kan. | 85.0* | 47 | Buffet |
| Burgerville, Vancouver, Wash. | 62.0* | 39 | Burgers |
| Shakey's, Alhambra, Calif. | 60.0 | 50 | Pizza |
| Fresh Choice, Newark, Calif. | 56.0* | 33 | Buffet |
| Wahoo's Fish Tacos, Santa Ana, Calif. | 56.0* | 47 | Mexican |
| Baker's Drive-Thru, San Bernardino, Calif. | 48.0* | 36 | Burgers |
| Crispers, Lakeland, Fla. | 42.0* | 41 | Salads |
| Source: Restaurants & Institutions' Top 400; *R&I estimate; **domestic units only | |||
© 2009, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.
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