Emerging Concepts | April 2010 | By Judy Kneiszel

Dickey’s Barbecue Pit

2009 left the 69-year-old smoked-meat concept leaner, meaner, and poised for growth.

Dickey's Barbecue Pit began franchising in 1994 and offers slow-marinated barbec
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Dickey’s Barbecue Pit, the Dallas-based purveyor of slow-cooked meats and down-home sides, has been in business since 1941. But company president Roland Dickey Jr. singles out 2009 as “quite a journey,” one that left Dickey’s leaner, meaner, and poised, once again, for growth.

The World War II–era barbecue chain began what Dickey calls “passively franchising around Dallas” in 1994. About 10 years later, the company began promoting Dickey’s for national growth.

“We opened four a year, then 12 a year, then 20,” Dickey says. “By 2008 we were selling 10–12 a month with that same number opening every month. But September of 2008 was the last month we sold any. It stopped in October. If we hadn’t had the economic meltdown, we would have opened 62 new stores in 2009, but two thirds of them lost funding.”

Dickey says the company went through six months without selling a single franchise. Same-store sales, he says, were down between 2 and 4 percent for about eight months. October through December of 2009 saw flat sales, but in January, Dickey’s began to track positive sales once again.

“We have low-price-point comfort food, which sells in a bad economy,” Dickey says. “Some customers are buying sandwiches when they used to buy platters, so the check average went down about a buck. But our check average is around $9.75 per person, and customer counts haven’t been down, so we were not as hard hit as many chains.”

Dickey says the silver lining of the slow economy was that he and his team went back to the stores to refine, trim fat, and cut costs.

“We used that time wisely,” Dickey says. “We were able to reduce startup costs from about $450,000 to $175,000.”

He says they did this by completely reengineering the kitchens, allowing new restaurants to acquire second-hand equipment. The total footprint of new restaurants was reduced from 2,200 to 1,800 square feet, and conversions rather than new construction became the norm.

Dickey’s Barbecue Pit

President: Roland Dickey Jr.

HQ: Dallas

Year Started: 1941

Annual Sales: Undisclosed

total units: 142

Franchise Units: 134

www.dickeys.com

“We’ve gotten a lot of remodel permits, which is cheaper than building new,” Dickey says. “And because of the economy there is an abundance of space available. We’ve taken over space once occupied by Starbucks, Quiznos, and a lot of independent restaurants. We’ve really become specialists in doing conversions.”

Dickey says that while the barbecue chain can build a store for about the same price as a small franchise like a smoothie store, it makes up to triple the revenue of those types of businesses.

“We’re in a comfortable spot right now,” he says. “We’ve made improvements and now we’ve gotten franchise sales starting up again. We had a few months of selling one or two, then we were up to three, and now we’re selling six a month.”

There was a time when Dickey’s concentrated growth efforts in Texas and the South, but that evolved with technology.

“We had grown in continuous markets,” Dickey says. “But today the No. 1 way to advertise franchise sales is on the Internet, and if you are on the Internet, you are all over the country.”

Dickey says the chain has some multistore owners, and would like to have more. Multistore franchisees, he says, demonstrate the strength of a concept, because “no one buys misery twice.”

But people definitely buy barbecue more than once. The type of barbecue consumers prefer depends on where they live. In Dickey’s Texas stores, beef is boss.

“In Texas, brisket is half of what we sell and everything else on the menu is the other half,” he says. “In the rest of the states, pork is half of everything we sell.”

Dickey says that for 55 years, pork wasn’t on the menu, but in today’s market, they love selling it.

“The margins are lower on beef and you get a better yield on pork,” he says. “Pork has been priced very well for restaurants over the last eight months.”

They love it so much that on Mondays in January and February, Dickey’s offered its big barbecue pulled pork sandwich, which regularly sells for $5, for just $1, with a limit of two per customer. The promotion was so successful that stores that normally serve a total of 400 customers a day were selling 900 of the sandwiches a day.

“It’s insane,” Dickey says of the promotion. “People line up out the door for these sandwiches.”

He says that during the promotion, staff were trained to up-sell drinks, sides, and desserts. Two thirds of the sandwich-crazed customers complied, ordering a drink or one of Dickey’s many sides, which include coleslaw, potato salad, Caesar salad, barbecue beans, macaroni and cheese, baked potato casserole, baked potato, and waffle fries.

As for the secret to barbecue success, all Dickey will reveal is that the meat—whether it’s the brisket or pulled pork, marinated chicken breast or pork ribs—is cooked “low and slow with lots of love,” and that method hasn’t changed in 69 years.