Industry News | March 9, 2010

Fast-Casual Looks to Buy Quick-Serve Units

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Shane’s Rib Shack is launching a real estate buy-back option for existing quick-service franchisees who own a quick-service restaurant and the real estate, but would rather move to a leasing model.

The move comes from the recent strong sales of the chain's free-standing units.

Despite the success of Shane's original free-standing “Shack” in McDonough, Georgia, the company's previous ownership opted for strip center environments which have historically generated results, but have also struggled in the difficult economic environment.

“There’s not a franchisee out there in any concept who would tell you we are in a dramatic economic recovery, yet our new free-standing unit model is ‘crushing it,’” says Shane Thompson, Founder and President, Shane’s Rib Shack.

“Of course, we give a great deal of credit to our franchisees; however, these numbers are so strong that we have come to the conclusion that free-standing real estate speaks to the brand’s ideal environment.”

Recent free-standing openings with drive-thrus, conversions from quick service restaurants, are generating sales 30 to 50 percent higher than other store formats. To support its “BBQ-FSU” strategy, parent-company Petrus Brands is launching a real estate buy-back option for existing franchisees who currently own a quick service restaurant and the real estate, but would rather move to a leasing model.

Petrus Brands, in collaboration with a real estate development partner, will step in and convert the brand to a Shane’s Rib Shack and acquire the real estate. The cost to convert existing real estate is significantly lower and takes less time to construct as compared to other quick-service concepts. When using this model, Shane’s is able to keep costs low because of its flexibility with store design. Shane’s embraces the philosophy that each location should have its unique characteristics much like the Original Shack.

“This strategy couldn’t be better timed given the combination of ideal real estate deals, strength of our FSU model and quick-service operators who are frustrated with smaller revenues and overburdened corporate franchises,” says Chris Morocco, chief executive officer of Petrus Brands.

“While we are also seeing positive numbers on those free-standing units with drive-thrus, we see the drive-thru as a bonus to our catering and take-out and less a critical component of the FSU success.”