Checkers Wins Big with Multiple Franchise Growth Levers

    Armed with incentives, technology, and a store design fit for the future, the fast-food chain is stacking up franchise agreements. 

    Checkers & Rally’s chicken sandwiches.
    Checkers & Rally’s
    Checkers and Rally's plans to open 60 stores this year.

    The quick-service hamburger segment is very congested—that’s how Robert Bhagwandat, Checkers and Rally’s senior director of franchise development, views the landscape.  

    To him, that means a number of stagnant chains, and more opportunity for his legacy concept to thrive.   

    “Not many brands have the amount of whitespace that we do to offer people an opportunity to put together a strategy on how they can add multiple units to their portfolio right out of the gate,” Bhagwandat says.

    And Checkers has taken advantage. The drive-thru company signed 90 commitments in 2021 and followed up that performance with 21 franchise agreements (representing 43 stores) within the first three months of 2022. Existing operators are reinvesting as well. Falcons Burger recently purchased 30 units from the retiring Joe Hertzman, making it the largest Checkers franchise at 57 total restaurants.

    In terms of openings, the chain plans to debut 60 locations this year. Checkers finished 2021 with 847 restaurants, including 292 under the Rally's banner and 555 for Checkers. The combined total is a net decrease of 13 units, year-over-year. Franchised Checkers restaurants earned $1.13 million in average net sales on average while franchised Rally's stores saw $1.25 million in net sales on average, according to the company's FDD. 

    Bhagwandat attributes the increased development to multiple levers, including an incentive offered to women in which Checkers waives the initial $30,000 franchise fee. The money saved allows operators to further invest in the business, thereby accelerating future growth.

    The idea for the incentive came from Checkers’ strong core of women leadership, Bhagwandat says. The initiative has only been in place for a couple months, but multiple franchisees have opted into the offer. 

    “We looked at some of the gaps as far as where there were opportunities to make some headway in a very heavily male dominated industry,” he says.

    READ MORE: Checkers Pioneers Pivotal Drive-Thru Technology

    In addition to incentives, Checkers is drawing much attention because of recent technological innovation, most notably automated voice ordering technology. At the beginning of 2022, the chain revealed it was partnering with Presto to become the first restaurant to nationally roll out the product. It’s currently operating in about 60–65 stores, but that will grow to more than 320 restaurants by the end of the fall.

    Customers place an order at the menuboard, which is then transcribed and pushed to the kitchen using artificial intelligence, much in the way an employee would take the order. It saves about four hours of manpower, meaning operators don’t have to overstaff to accommodate increased off-premises business.

    According to a national survey from Popmenu, 33 percent of restaurants aren’t operating at full capacity because they can’t find enough staff and 76 percent have adopted new tech to manage through the labor shortage.

    “Labor has been one of the biggest challenges in the marketplace over the last couple of years,” he says. “Artificial intelligence was introduced to help maintain labor since you now have people doing more than they’ve ever had to inside restaurants. Quite honestly, they were getting burned out.”

    Bhagwandat estimates the AI technology is accurate at least 95 percent of the time, if not more, which leads to better customer satisfaction. Guests are able to leave the restaurant without the “frustrating part of having to come back to correct the order,” as Bhagwandat puts it.

    On the top line, this builds into increased frequency and higher revenue. At the store level, it boosts morale among staff, who can focus more on executing other tasks.

    “Going by a drive-thru today, you can see how congested they are,” Bhagwandat says. “Employees are moving at a feverish pace trying to listen to someone through a headset … Why not let the computer do that for you so you can focus on the customer?” 

    Paired with the artificial intelligence is new kitchen equipment to further alleviate pressure. One of the major changes has been switching out old flat top grills for new, clamshell models. The new grill, which has a lid that closes on a hinge much like a clam shell, completes orders faster by cooking burgers evenly on both sides and eliminates the need for employees to monitor and flip patties. Other kitchen upgrades include improved holding units, allowing food, like French fries, to be kept at temperature for longer. This ensures product is coming out of the kitchen fresh and hot.

    Bhagwandat says all of the kitchen upgrades have increased ticket times by about 30 percent.

    “These examples of new kitchen technology improve operations twofold,” the executive notes. “First, there is less stress on the employees, which allows them to focus and streamline their efforts. Number two, there is less waste for the restaurant overall, which means improved margins as well.”   

    READ MORECheckers & Rally's Rolls Into the Future with New Look and Momentum

    Checkers also leans into its standard unit design to attract franchisees. Bhagwandat says the double drive-thru model give the brand a distinct advantage because of consumers’ growing desire for convenient off-premises options.

    Operators can be flexible. For one, they can earmark one lane for e-commerce orders, like third-party delivery, which now mixes 13–14 percent. During the pandemic, two-thirds of company-run locations dedicated one drive-thru lane to off-premises orders. However, if digital channels are slow for franchisees, both lanes can be traditional.

    “Throughput is limited for most companies because when you look at them, they only have one drive-thru lane. They don’t have dual lanes to help take the pressure off,” Bhagwandat says. “We happen to be uniquely positioned to handle e-commerce with the dual drive-thru lanes.”

    Another asset is the economical size of kitchens. At a time when other quick-service chains are looking to shrink square footage while increasing off-premises capabilities, Checkers has a head start, Bhagwandat says.

    “When you look at other players in the drive-through quick-service segment, everyone is definitely working on a new prototype,” he says. “You can come up with the sharpest design in the world, but if you can’t operate within that [smaller design], customers are not going to come to you.” 

    Checkers will rely on both established and new franchisees to meet 2022’s growth goals. Bhagwandat says existing franchisees are responsible for around 60 percent of the new deals. He adds that new franchise partners can turn to existing operators for advice when making business decisions. 

    “It’s very much a family-type atmosphere,” he says. “That’s one of the really nice things about Checkers and Rally’s. Not only is the company looking out for the franchisees’ best interests, other franchisees are looking out for each other’s best interests because they know when other restaurants are successful it helps everyone within the system."