At the end of 2019, Zaxby’s ranked fourth among quick-service chicken chains in terms of total domestic systemwide sales. Chick-fil-A ($11 billion) was first, followed by KFC ($4.8 billion), Popeyes ($3.75 billion), Zaxby’s ($1.84 billion), Raising Cane’s ($1.466 billion), Wingstop ($1.4 billion), Bojangles ($1.29 billion), El Pollo Loco ($894 million), and Church’s ($700 million).
By U.S. unit count, however, Zaxby’s was sixth: KFC (4,065), Chick-fil-A (2,500), Popeyes (2,499), Wingstop (1,231), Church’s (1,050), Zaxby’s (904), Bojangles (746), El Pollo Loco (480), and Raising Cane’s (457).
McLeroy says Goldman Sachs will help Zaxby’s achieve what it always aimed at from a distance—to go national. It was attracted to Zaxby’s core differentiators and this runway, as well as ownership history and licensee base. Of the chain’s 904 units at 2019 close, 755 were franchise-run. The brand has grown that side of its business by 77 locations in the past three years.
Notably, Zaxby’s average licensee only runs three locations. And the company allows them to grow as large as they want (as long as they’re compliant and successful). Operators can build legacy wealth and hand stores down through the family. Minimum gross revenues across Zaxby’s base measure $497,882. Maximum is $4.32 million. The number of units above the average figure is 339, or 46 percent, with median gross revenues of $2.1 million.
In total, Zaxby’s expanded by net 86 restaurants since 2016. Georgia, naturally, is the largest market today with 190 stores. North Carolina is next at 97.
McLeroy says Zaxby’s boasts a current pipeline of more than 300 committed units from existing licensees. So not only is Zaxby’s current portfolio sizable—it’s scaling from within.
Zaxby’s model over the years was to spread in concentric circles. Seed a pioneer market, often with corporate stores, scale through franchise growth, and then head to the next state or county. This was mostly the case throughout Zaxby’s existence, minus a group out in Utah.
McLeroy expects to continue along that path, just to pick up momentum. He says there’s “huge opportunity” in Texas. And even north into Virginia. “Grow more in Illinois,” McLeroy adds. “We’re on the border of going back into Ohio. We were in Ohio once before. … We were even thinking about possibly growing in the Washington, D.C. area.”