QSR September 2022

BEST FRANCHI SE DEALS

Zaxby’s NUMBER OF U.S. FRANCHISE UNITS: 765 NUMBER OF U.S. TOTAL UNITS: 911 TOTAL SYSTEMWIDE SALES: $2 billion FRANCHISE AVERAGE-UNIT VOLUME: $2,544,354 FRANCHISE FEE: $35,000 ROYALTY: 6 percent of gross sales RENEWAL FEE: 50 percent of the current franchise fee MARKETING FEE: 4 percent of gross sales TOTAL STARTUP COSTS: $501,700–$950,200 FRANCHISEE INCENTIVES: Veteran discount: 20 percent on initial franchise fee SIZINGUPFROMTHESIDELINES: “The numbers speak for themselves, franchise AUVs at $2.5 mil lion, with start-up costs beginning at $502,000 make for a great ratio that puts them at the top of potential ROI opportunities in food. Strong year-over-year growth, a seasoned leadership team, and solid brand name recognition makes Zaxby’s a strong best fran chise deal contender.” “Strategic investment from Goldman Sachs is a game changer. Ser vant leadership mentality permeates all levels of the organization and offers franchisees a distinct/critical hiring and retention advantage—$2.5 million AUV and year-over-year growth numbers speak for themselves.” “Zaxby’s AUV comes in at $2.5 million per store on a price tag to build of between $501,700 and $950,200. Assuming standard profitabil ity, that is one of the best returns

“ THE NUMBERS SPEAK FOR THEMSELVES, FRANCHISE AUVS AT $2.5 MILLION, WITH START-UP COSTS BEGINNING AT $502,000 MAKE FOR A GREAT RATIO...”

SmoothieKing NUMBER OF U.S. FRANCHISE UNITS: 995 NUMBER OF U.S. TOTAL UNITS: 1,051 TOTAL SYSTEM-WIDE SALES: $602,044,735 FRANCHISE AVERAGE-UNIT VOLUME: $609,753 TOTAL AVERAGE-UNIT VOLUME: $608,723 FRANCHISE FEE: $30,000 ROYALTY: 6% of monthly gross sales RENEWAL FEE: Currently, half of the current initial franchise fee; and $775 renewal upgrade design fee (non-refundable) MARKETING FEE: National: Currently 3 percent of gross sales; with the right to increase the fee to 5 percent of gross sales upon 60 days’ notice TOTAL START-UP COSTS: $320,301–$585,465 SIZINGUPFROMTHESIDELINES: “Smoothie King opened more than 100 units in 2021 and turned in 25 percent growth in sales and 17 percent increases in AUV, with their store average-unit volume reaching $609,753. Perhaps more importantly, the nearly 50-year-old brand made real strides in technology. One of the few brands to charge a technology fee in their FDD, they have developed supply chain technology to fuel a fresh products brand, launched an innovated smoothie subscrip tion service and are planning to implement artificial intelligence technology for their drive-through. They earned a space as one of the Best Franchise Deals for 2022 and their growth and technology adoption bears watching.” THESKINNY: After a year that included north of 100 openings, Smoothie King signed development agreements to debut nearly 100 more already this year. This includes growth markets in the Carolinas, Florida, New York, Ohio, Texas, and Wisconsin. Of late, the brand launched a healthy rewards loyalty program designed to reward customers for living a healthy and active lifestyle. Users have the ability to earn and redeem rewards and receive exclusive offers and online exclusives. Additionally, using a GPS platform, Smoothie King can reward loyalty members when they work out at the gym. The brand’s menu innovation remains at the top of franchisees’ selling points. Menu categories are arranged by purpose, so guests select smoothies based on personal health and wellness goals. There’s a commitment to plant-based and vegan choices as well, with a sizable scope of ingredient add-ins for customization. This year, the company unveiled a new business model with its smoothie subscription program, “Nourish Daily,” which the company said this will provide incremental revenue to franchisees. To the Council’s point, the numbers are difficult to ignore: AUVs lifted 17 percent to $609,753, with the top 25 percent of units report ing over $907,000.

on capital invested among the contenders. With just 765 units nationwide, there is still room for development so the brand is ripe for continued growth without oversaturation.” THESKINNY: Zaxby’s headed toward 2023 with fresh leadership and no short age of runway, as the Council cited. Also, powerful backing

after selling a “significant” stake to Goldman Sachs in fall 2020. Headed into the deal, Zaxby’s grew the franchise side of its business by 77 locations over a three-year stretch. And the company’s average licensee ran just three locations. Today, the brand is helmed by Bernard Acoca, the former leader of El Pollo Loco. He became only the second CEO in Zaxby’s history when he stepped in for founder Zach McLeroy last year. McLeroy, who cre ated the brand in 1990 with Tony Townley in Statesboro, Georgia, transitioned to chairman. In April, Zaxby’s added Sharlene Smith, who previously served as VP of operations for Papa Johns’ North America sector, as COO. A month later, 20-year Zaxby’s vet Michelle Morgan was elevated to the company’s first chief people officer. But this was hardly the last move. Mike Mettler arrived as chief development officer in May after a four-year run at Orangetheory Fitness (he previously worked for Dairy Queen and Domino’s). In the same announcement, former interim chief digital and technology officer Mike Nettles, who clocked time at Panera Bread and Papa Johns, moved into the position long term. Then, Patrick Schwing, formerly Arby’s CMO, came on as chief marketing and strategy officer in June. To put it plainly, Zaxby’s is gearing up.

GUILLOCHE BORDER: ADOBE STOCK / SAIFUL, ZAXBY’S, SMOOTHIE KING

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SEPTEMBER 2022 | QSR | www.qsrmagazine.com