It wouldn’t be an overstatement to say the restaurant industry is witnessing a great reawakening this spring.
Leading into the week ending April 18, two-year same-store sales were positive for five consecutive weeks, according to Black Box Intelligence. In addition, two-year off-premises comps growth in the quick-service segment has moved upward in the past two months, pushing sales outside the four walls to historic highs.
Rita’s Italian Ice, a 600-unit franchising chain based in Pennsylvania, is feeling the full force of that boom, particularly with warm weather spreading across the country. The majority of locations open in March and close at the end of September, so the U.S.’s restaurant resurgence couldn’t have come at a better time.
The 36-year-old brand was forced to cancel its annual Friday of Spring Free Italian Ice Giveaway scheduled for March 20 due to safety concerns around large gatherings. However, that downside hardly outweighs the strength of stimulus checks, rise in vaccinations, and decline in COVID cases.
Rita’s, which offers more than 60 flavors that are made fresh daily, is ready for the so-called pent-up demand that operators have predicted will come this summer. CEO Linda Chadwick spoke to QSR about the company’s recent performance, it’s ongoing growth strategy, and how it’s pivoted during such unprecedented times.
As the country heads further into spring, how is Rita’s performing in terms of sales and traffic?
Spring is always an incredibly exciting season for Rita’s, and I think that excitement carries even more weight this year due to the pandemic. This spring, there’s so much to look forward to as the warmer weather arrives, vaccines are being distributed, and it has become safer to visit with friends and family—many of which opt for outside activities and a trip to Rita’s. As majority of Rita’s shops operate seasonally, they too are emerging to open their doors and be a part of the excitement. Even during the height of the pandemic our sales remained steady, and this spring our sales, transactions, and check average have all grown positively.
And, we’ve seen a lot of action in the franchise development side as well, as many Americans made the decision to launch a business amid the pandemic. We signed 75 new franchise agreements in 2020—a number we haven’t seen since 2014—so, it’s clear to us that business ownership is on the minds of many.
What are some of the major ways Rita’s has adapted and pivoted in the new environment? What changes do you believe will become permanent?
In a world where convenience, delivery, and off-premise options are king, Rita’s was poised to succeed from the start. This is because the vast majority of Rita’s locations feature walk-up ordering and outdoor spaces to enjoy our frozen treats—that’s how it has always been. Because of this, we were able to quickly adapt to implement social distancing and additional safety measures to keep our guests and teams healthy. However, even though we had a strong foundation to start with, we needed to build out more operational options to stay ahead.
Many Rita’s shops implemented delivery early on, and perfected operations to ensure that the guest experience at home is the same as it is in-person. Shops implemented curbside pick-up, call-ahead ordering, and continuing in 2021 and beyond, drive-thru service is an important component to our growth strategy.
Our franchisees were unbelievably adaptable during this time—and creative. In fact, the creation of a DIY Treat Take Home Kit was the idea that came from a franchisee. This has since been built out into our Good to Go! program and rolled out nationwide this April.
How much has off-premises and digital changed for the brand?
Off-premises dining is growing and the surge in demand for this is evident by our launching of Rita’s Good to Go! program. It’s intended to help our guests enjoy their favorite treats from Rita’s from the safety and comfort of home—or anywhere for that matter. Good to Go! also includes a DIY Treat Take Home Kit, which allows families to take home custard, Italian ice, and toppings to mix and match and “do it themselves.” Our catering and mobile services are increasing in popularity as states begin to open up and safe gatherings begin to take place.
Implementing delivery via digital and supporting it operationally to ensure our guests’ experience is just as good as if they are at our shops was a massive push for the brand, and it has helped support our shop sales growth. And, while we’re regularly working with UberEats, DoorDash, and Grubhub, our online ordering platform will launch this summer.
Is Rita’s in markets with no capacity restrictions? If so, how’re those stores performing versus those with limitations? Are restaurants allowing full seating or instituting their own capacity limits?
The majority of Rita’s shops are walk-ups, so there is minimal impact for our shops. In markets where our franchisees operate walk-in Rita’s locations, those restrictions depend on their municipality—but many of those mandates typically only apply to businesses with full indoor seating. That said, we still encourage discussions between local health departments and our franchisees to ensure that the proper safety measures are being taken.
What type of unit growth is Rita’s expecting this year? What markets is the chain targeting?
We hope to out-pace our 2020 franchise signings to lock in at least 90 new franchise sales agreements. Our franchise development teams are targeting Florida, Georgia, North Carolina, South Carolina, Texas, Maryland, and Ohio for expansion, but we’re certainly not limiting ourselves to these states.
How challenging is the current labor market? Have unemployment benefits or other aspects of the pandemic made it more difficult to hire workers?
We’re finding that franchisees who have dedicated team members have been able to retain their staff with minimal turnover, but we’re seeing a trend of it being more difficult to hire new staff. With many of our locations being seasonal, many of our franchisees onboard their team members early on and have them return each season.
How is Rita’s approaching the federal minimum wage debate and the potential of that coming down the pipe in the next couple of years?
At Rita’s, we know that our people are essential in creating the Rita’s experience that our guests have grown to love for years and years. Our team will follow closely as federal minimum wage is discussed and eventually finalized. The entire country will likely see an increase in the price of goods and services across the board once that’s finalized, but our team will work in an effort to keep any changes in pricing minimal.
How did Rita’s approach vaccinations for employees? Were there any discussions about it becoming mandatory?
Rita’s Franchise Company, LLC does not have a policy with franchisees regarding the mandate of vaccinations. We will continue to abide by CDC guidelines in the operation of our business.
What type of environment do you expect to see in the summer? Do you believe there will be “pent-up demand” from consumers?
As restrictions begin to loosen due to lessening COVID cases and an increase in vaccinations, we’ve already witnessed people taking advantage of the warm weather and beginning to gather safely once again. As usual, we anticipate Rita’s being the go-to summer spot, especially as we’ve worked to add new ways for people and families to enjoy the Rita’s experience no matter where they are. The excitement is two-fold, as our existing, established shops have reopened for a long-awaited season, and as we launch new shops to introduce our frozen treats to communities that may have never tried Rita’s before. For example, we just signed a multi-unit deal to bring the first-ever Rita’s to Kentucky. The first shop will open in Bowling Green and the community is already calling and walking by to ask for an opening date. Rita’s lives in the summer memories of so many people, and our entire team and franchise network can’t wait to help everyone feel a sense of normalcy, even as we all collectively navigate this “new normal.”