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Long John Silver’s
The longtime leader in the quick-serve seafood segment, Long John Silver’s has an unquestioned market niche, which makes the concept an attractive option for many franchisees.
“Seafood provides great diversification to those franchisees operating in other quick-serve segments such as burgers and pizza,” Long John Silver’s director of asset strategy, Doug Heinrich, says.
A fully franchised system under the Yum! Brands banner, LJS values the input of its franchisees, which recently led the brand to place a renewed emphasis on standalone locations over cobranded units.
In addition, franchisees have the ability to join the Unified Foodservice Processing Co-op (UFPC), which allows participation with all other Yum! Brands in volume pricing on equipment, food, and other services.
Word on the Street: “Long John Silver’s is perhaps the least touted brand in the Yum portfolio, but it is a clear winner in the quick-serve seafood segment,” Allen says. “The Yum purchasing cooperative provides tremendous advantages and economies of scale for all of its brands, including LJS.”
Popeyes Louisiana Kitchen
Though Popeyes often falls under KFC’s shadow, the Atlanta-based purveyor of Cajun-styled chicken remains a compelling draw for franchisees. In 2008, Popeyes’ U.S. sales topped $1.55 billion for an estimated AUV near $1 million, more than rival KFC.
Financial incentives abound at Popeyes, which seeks to alleviate some out-of-pocket start-up costs. Qualifying prospective franchisees can receive a waiver for the company’s $30,000 franchise fee and reduced royalties during the first year.
And though restaurant financing often limits its coverage to hard assets, such as building costs and land plots, while leaving franchise fees unfunded, Popeyes’ development incentive program allows franchisees to open a restaurant in any of the expanding target markets.
Such enticements, Popeyes vice president of development Greg Vojnovic says, are among “the strongest development incentive programs offered by any franchised company.”
Word on the Street: “Popeyes is a good deal because the build-out cost is reasonable for a drive-thru, stand-alone building,” Tran says. “The price points are attractive to price-conscious consumers; and there are opportunities to thrive in B locations and not just A locations.”
Culver’s
Culver’s director of development Tom Goldsmith acknowledges the reality of his operation’s hefty franchise costs, cautioning that Culver’s isn’t for entrepreneurs light in the pocketbook.
“Most affordable, we’re not,” Goldsmith says.
After securing more than $640 million in U.S. sales in 2008 for an AUV nearing $1.7 million, the Wisconsin-based company has proved that the following for its ButterBurgers and frozen custard runs deep.
Goldsmith cites the fact that all expiring franchises have renewed and none have closed as a testament to the in-demand product mix as well as the company’s supportive environment, which includes “hands-on involvement” and real-estate ownership.
Culver’s is looking to expand beyond its Midwestern roots while continuing its positive-unit and revenue-growth trend.
Word on the Street: “Culver’s has a strong density of restaurants in its core market and has done a good job of growing in a sort of concentric circle approach versus a scattergun like many growing franchise companies,” Allen says. “The downside of a Culver’s is the incredibly high start-up costs … which puts it out of reach of many of today’s restaurant-industry investors.”
