Web Exclusive | January 2015 | By Sherri Daye Scott

Third Time’s a Charm

Legendary Houston brand Frenchy’s Chicken is making a third attempt at franchise growth.
Legendary Texas based quick service restaurant Frenchys looks to grow.
Frenchy's has been a Houston icon for 46 years. image used with permission.

Every city has its hole-in-the wall spots that locals and foodies swear by. In Houston, family-owned Frenchy’s Chicken is on that list. The 46-year-old chicken brand’s Scott Street location is an institution. Its Creole-seasoned chicken is a “best of” winner in several publications year after year. Houston expats make stopping at Frenchy’s a priority when they return home. Houston native Beyonce sings about it.

“I am a Frenchy’s man,” says Houston councilman Jerry Davis, a former Chick-fil-A executive. “Whenever guests visit from out of town, they ask about the Museum District, the Medical Center, and Frenchy’s.”

Even with its legion of fans and hometown support, Frenchy’s has struggled to expand beyond its original Scott Street store; two previous attempts to franchise the brand failed. But its luck might soon change. With a dedicated franchise development arm and a replicable business model in place, the brand is growing again—albeit at a measured pace, says owner Percy "King" Creuzot III.

For Frenchy’s, “measured” means restricting its franchise sales to locations in the greater Houston area. Since 2013, eight franchisees have opened 18 stores. The chain is on track to open another 30 this year.

“I want to take care and nurture what we have started here,” Creuzot says. “We need to have a little more under our belt when it comes to franchising – be sure everything works in our franchising model – before we start looking at other markets.”

Creuzot’s caution is founded in the two previous franchise failures. The first was an aggressive expansion push in the mid-1980s, when more than 20 Frenchy’s franchises operated throughout the Texas Gulf Coast. When oil prices dropped in 1986, both company-owned and franchised stores suffered.

“Back when we were franchising in the ’80s, you had to have a cook and a full kitchen. Our new model eliminates the need.”

“The economy went to heck in a hand basket,” Creuzot says. “Entire neighborhoods were drying up. People were leaving Houston in droves.”

By 1989, the chain was down to 10 units, and Frenchy’s founder, Percy "Frenchy" Creuzot Jr., was forced to declare bankruptcy.

“We had a lot of stores that my dad had opened himself,” Creuzot says. “He expanded at the wrong time.”

Despite the setback, the Creuzot family held onto its original location and its foodservice manufacturing company, Frenchy’s Sausage Co. The manufacturing company today supplies retailers like H-E-B, Fiesta Foods, Foodtown, and Sellers Bros. with frozen and refrigerated products, such as its signature Frenchy's Creole Hot Sausage and Auntie’s Rice Dressing. The company also supplies Creole products and ingredients to several Houston-area restaurants.

Frenchy’s tried its hand at franchising again in 2005. Former Houston Texan cornerback Aaron Glenn approached the Creuzots about partnering. A limited licensing development deal for 10 restaurants was signed with Glenn’s company Glennrock Foods. Eight opened, but due to a variety of factors, including the Glennrock team’s inexperience as operators, all eventually closed.

But Creuzot is confident results will be different this time around.

“We’ve really got it nailed down kind of tight,” he says. “We partnered with an experienced franchise consultant and have gotten the co-sign from people who have been involved with other franchises.”

The new Frenchy’s franchise model calls for proven experience owning or operating a restaurant, a net worth of at least $1 million, and liquid assets greater than $500,000. Rather than prepare side items in-house, franchisees can rely on Frenchy’s U.S. Department of Agriculture–inspected commissary, which cuts down on labor costs and space requirements.

“Back when we were franchising in the ’80s, you had to have a cook and a full kitchen,” Creuzot says. “Our new model eliminates the need. All you need is a fry cook. All you need are the basics.”

While the commissary model solves some problems, it presents others by limiting how far Frenchy’s can expand. Creuzot says the company can produce the product but does not yet have a distribution system in place to take it outside of Houston.

When the time comes to grow outside Houston, Frenchy’s would be wise to abandon its commissary model in favor of partnering with a co-packer like Todd’s Foods Enterprises (PF Chang's, Cheesecake Factory) or Cuisine Solutions (Panera Bread) that specialize in making custom food for chains, says Dan Rowe, CEO of franchise development consultancy Fransmart.

“It used to mean a commercial kitchen option would want you to compromise and use the specs of the products they were already making. But in the last decade, co-packers [and] custom kitchens have emerged as the smartest alternative,” Rowe says. “The slightly higher food cost is offset with lower labor costs, and the overall investment in a better long-term solution for guest satisfaction and profit.”

In the meantime, Frenchy’s continues to turn would-be franchisees down on an almost weekly basis while working with new and existing franchisees to find the right locations in Houston—which is easier said than done.

Though Houston is statistically the fastest-growing metropolitan area in the U.S., it lacks the density of other hot markets.

“In Houston, we work with real estate professionals who also work with Chipotle, Five Guys, and Starbucks,” Rowe says. “From what we gather from them, the volumes in Houston are just average. The market seems oversaturated, but like any markets, the best 20 percent are doing 80 percent of the revenue.”

It remains to be seen whether a revived Frenchy’s franchise model will put it among the best 20 percent. But Councilman Davis is optimistic.

“Frenchy’s has a quality product,” he says. “Their service is friendly and efficient. They have a chance to capture the city—bite by bite.”

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