FAYETTEVILLE - The owners of fast-casual restaurant chain Slim Chickens are aiming high.
They hope to have 50 commitments for new franchises by the end of the year and intend to eventually take the chain national with a target of 600 stores across the U.S.
“It’s a lofty goal,” said Tom Gordon, president of Slim Chickens and one of the chain’s founders.
To make that goal a reality, the company has hired Sam Rothschild, a fellow with some chops when it comes to franchising. Rothschild once was chief operating officer for the Hooters chain and most recently worked for Applebee’s as executive vice president for franchise operations.
Chicken is the only meat on the chain’s menu, which includes tenders, wings, sandwiches and wraps, salads, and a wide variety of dipping sauces.
“I don’t know anybody that knows this brand that doesn’t love it,” Rothschild said. “We’re confident we can extend this across the country.”
Today, the chain has 13 operations in Arkansas and Oklahoma, with a 14th restaurant under construction in Fayetteville on Wedington Drive, expected to open in June. Nine of those stores are company owned and five are franchise units.
Gordon and his business partner, Chief Marketing Officer Greg Smart, opened the first Slim Chickens restaurant in Fayetteville in 2003. A former partner, Ryan Hodson, is no longer with the organization. He sued the pair and settled with them nearly a year ago.
Slim Chickens competes in the fast-casual segment. Fast casual restaurants aim for an enhanced dining experience compared with fast-food joints. While fast-casual restaurants don’t have a wait staff, servers generally take the patrons their food, doing so quickly, and the operators strive for a comfortable atmosphere, usually with music, big-screen TVs and catchy graphics.
According to information provided by Chicago-based Technomic, Inc., a research and consulting firm focusing on food and food service, limited-service chains among the top 500 U.S. restaurant chains grew sales by 3.8 percent to $193.3 billion in 2013. Limited service chains include fast food and fast-casual concepts.
Fast-casual restaurants comprised 14 percent of those limited-service sales, accounting for about $27 billion for 2013, up by 11 percent from 2012. Revenue at the top 10 fast casual chicken chains, which include Zaxby’s, Wingstop and Raising Cane’s Chicken Fingers, saw sales of nearly $3.6 billion and growth of 12 percent in 2013 compared with the year before. When looking at the total industry, beyond the top 500 chains, fast-casual sales totaled about $35 billion in 2013.
“Fast casual chains overall are growing faster than the overall industry, so it’s a good place to be right now,” Mary Chapman, director of product innovation at Technomic, said in an email.
Chapman noted that Slim Chickens faces regional competition from chicken chains like Zaxby’s, which is No. 1 by revenue among fast-casual chicken chains, and No. 5 Raising Cane’s. She said like those chains, Slim Chickens has a relatively small menu, which makes operations easier. Additionally, Chapman said, smaller menus mean operations costs tend to be lower, making the stores more attractive to franchisees.
Slim Chickens’ Gordon said once the chain’s expansion goals were established, it was apparent they had to go outside of the organization to make the rapid growth happen. That’s where Rothschild, the new chief operations officer, came in.
“We knew we didn’t have the skill set to do 30 stores a year or more,” Gordon said.
Rothschild said the plan is to move into markets where they can find a franchisee who is interested in three or more units. He said Slim Chickens has signed deals for franchises in the Kansas City, Kan., market; Omaha, Neb.; east and west Texas; and Iowa, as well as for more stores in Oklahoma. The company plans to double in size, with to close to 30 stores in operation by the end of 2015.
Slim Chickens’ strategy calls for the chain to grow geographically outward from its core in Arkansas and Oklahoma, but Rothschild said they would be interested if the right franchisee came along and the size of the deal was workable. The company also plans to continue to add corporate locations, primarily in the Arkansas region.
Robert Stassen is an associate professor in the department of marketing at the Sam M. Walton College of Business at the University of Arkansas at Fayetteville. Stassen, who studies franchising, said Slim Chickens has some key things that appeal to franchisees - a good name, good signs and a format that’s easy to replicate.
He said the fact that Slim Chickens still intends to continue to build and operate corporate stores is another good selling point for potential franchisees.
Over the past decade, Gordon said, Slim Chickens has developed a solid operation on the strength of its fresh, hand breaded product supplied by Springdale-based Tyson Foods Inc.
That’s part of what helped convince Rothschild to come on board.
“I tasted the product and thought instantly, ‘Wow, this is really good,’” he said.
Business, Pages 69 on 04/20/2014