Zaxby's is emerging from the pandemic with strong sales due to key initiatives executed in concert with its entrepreneurial licensees. The fast-casual brand known for its chicken fingers, wings and signature sauces, is waiving $5 million in fees for licensees as part of a three-pronged COVID-19 recovery strategy that also includes shifting its business model to drive-thru only and adding affordable, family-friendly menu items for people sheltering at home.
"At Zaxby's, our licensees are family," says Zach McLeroy, Zaxby's CEO and co-founder. "They're entrepreneurs with skin in the game and heart for the brand. I can't say enough about their flexibility, resilience and grit during these unprecedented times."
Specifically, Zaxby's provided $5 million in financial relief to licensees hit hardest by the COVID-19 pandemic through a royalty abatement program. In addition to suspending royalty fees for certain licensees, Zaxby's has removed marketing fund contribution fees for all of its 487 licensees across 759 locations in 17 states.
Furthermore, Zaxby's has instituted a lump-sum retention bonus of $1 per hour worked for restaurant employees of 146 company-owned stores through June 16, as well as up to $1,000 in appreciation pay for general managers. The bonus program is in addition to a wage increase of $1 per hour from April 13 until June 7.
On the operations side, Zaxby's made a hard pivot to focus on its already robust drive-thru business, as licensees responded quickly to the temporary closing of their dining rooms. Depending on the location, licensees allocated additional staff to support drive-thru, curbside pick-up and order-ahead, keeping average wait times steady at four minutes despite a 35.6 percent spike in drive-thru traffic.
"The relationship between the licensees and Zaxby's Franchising has never been stronger," says Tripp Clayton, licensee and chairman of the Zaxby's Advisory Council. "We immediately shared insight and ideas from the front lines of our restaurants and quickly collaborated to make critical decisions that ultimately led to a sustained positive impact on our business."
Zaxby's recently launched a new menu option designed to meet the needs of families sheltering at home. Zax Family Packs include 20 Chicken Fingerz or 30 boneless wings with shareable sides to feed four people starting at $24.99. The LTO has been well received, and at a time when industrywide sales were dropping, Family Packs contributed to a 22.5 percent increase of overall average check.
"We are doing everything possible to support our licensees financially and strategically as we recover together from the devastating impact of COVID-19," said Tony Townley, Zaxby's chief strategy officer and co-founder.
These proactive initiatives have enabled Zaxby's to recover faster than many of its peers, posting some of its best year-over-year comp sales in company history over the last two weeks, despite most dining rooms still being closed. Zaxby's dining rooms will continue to reopen in waves, pursuant to federal, state and local guidance across its footprint.