Restaurant Business Future 50, 2006 PDF Print E-mail
2006-08-10
Welcome to the incubator, a narrow slice of the entrepreneur segment where new ideas are being cultivated that will drive relatively unknown restaurants of today into the top 100 of tomorrow.
KEY

.S  2005 Systemwide sales (000)/% change
.U  Total units/% change
.A  Average unit sales (000)/% change

all percent changes vs. 2004
*Technomic estimate

1. Five Guys Famous Burgers and Fries
Alexandria, VA

.S $50,000,000*/194
.U 75*/178
.A $1,000,000*/0

Number 1 with a Burger
Simplicity and a sound infrastructure rocket Five Guys Famous Burgers and Fries to success
For nearly 20 years, the steady stream of people asking Jerry Murrell to franchise his family's Five Guys Famous Burgers and Fries business were told politely but firmly, no. "We had no interest in turning our baby over to other people--and I didn't think it would work anyway," says Murrell, a retired insurance salesman whose wife, Janie, and three oldest sons built the first unit in 1986.

The "five guys," however--the Murrells' sons--thought differently. Given the choice of getting a degree or using their college savings to buy into the family business, each opted for the business and each intended for it to grow. "I thought they were fools," says Murrell. "College is a lot easier than this."

Apparently, the guys knew something Dad didn't. Franchising, launched three years ago, has rocketed the family straight into the high-stakes, fast-growth chain restaurant world. They've barely had time to buckle their seat belts. In 2003, Five Guys had six units clustered near its home base of Alexandria, Virginia. At the end of 2005, it had grown to 75 units and sales of $50 million, according to estimates from Technomic, which compiled the data for The Future 50. By the end of 2006, there will be 108 stores and sales should exceed $100 million. Franchise rights for nearly 1,000 stores to open nationwide over the next few years have been sold.

Five Guys' foray into franchising has been an experience that Murrell admits has been at once frightening, exciting, frustrating and gratifying. Helping to blaze the trail has been Mark Moseley, a retired Washington Redskins kicker. "Mark retired from football and went to work for a franchise development company. He approached our kids at the right time and has since become our director of franchise development. He's never made a cold call; the whole thing just took off."

Building a corporate infrastructure, bringing in people like Moseley and assembling a team of district managers--currently one per eight stores--has consumed the Murrells the past couple of years. "We've plowed a lot more money than we anticipated back into this thing to build an infrastructure," Murrell says. "We don't want to make any mistakes. It wasn't until the end of last year that we felt we were finally getting a handle on things."

Today, the entire family functions as a board of directors. The sons also have assumed responsibility for specific business areas: Jim, 39, Matt, 37, and Chad, 34, oversee and manage restaurant operations and corporate training programs; Ben, 23, manages information systems and assists with the franchisee approval process; and Tyler, 19, oversees the company's bakery operations. Janie continues to do the books, and Jerry oversees strategic development. The family continues to operate eight corporate stores.

The secret to Five Guys' success is its simplicity. The burgers, made from fresh 80/20 ground beef, come in regular (two patties) or "little" (one patty) versions on fresh-baked buns. You can get them with cheese and/or bacon and select from a variety of complimentary toppings--the standards, plus sauteed mushrooms, fried onions, barbecue sauce and others.

French fries are cooked in peanut oil and come plain or with Cajun spices. They're cut fresh in the store exclusively from russet potatoes grown above the 42nd parallel. "They're all grown in states where the nights get cold," Murrell explains. "Those growing conditions create just the right texture."

A large chalkboard in each unit lets customers know where the day's potatoes have come from--typically small, unknown communities in Washington and Idaho. "It started as a joke, but it's become part of our quality message," Murrell says.

Beyond burgers, Five Guys offers kosher hot dogs, a veggie sandwich and a grilled cheese sandwich. All fountain drinks are 24 ounces. While customers wait, they can help themselves to complimentary in-the-shell peanuts. "They've become a signature," says Murrell. "We started offering them so people wouldn't watch us while we cooked their food. The idea stuck."

As the company has grown, Murrell says a challenge has been to keep things simple. Some issues are operational: "We bake all of our own buns," he says. "We use no preservatives and it's hard to get someone else to do that for us." Others are franchise-related: "We have a very simple, quality-driven menu and don't try to be a lot of things to a lot of people," he says. "It can be tough to convince franchisees to stick with the formula."

Murrell and the district managers routinely find themselves discouraging franchisees from trying to cut costs or pay managers on food cost, a practice he contends leads to quality compromises. The company's ban on advertising is another tough sell. "We want franchisees to put their money back into the business, into the employees, not spend it on advertising," he says. "The only form of advertising we've ever done is word-of-mouth. We don't allow grand openings, even in markets where we're not known. We tell franchisees just to open the doors and serve good burgers and fries. The rest takes care of itself."


2. Raising Cane's Chicken Fingers
Baton Rouge, LA

.S $46,500*/86
.U 34/78.9
.A $1,750*/9.4

The concept, founded in 1996, focuses exclusively on fresh, marinated, made-to-order chicken fingers and sides

Fishing for financing
Raising Cane's Chicken Fingers

To many, chicken fingers are a ubiquitous menu item considered "special" perhaps only to the 5- to 15-year-old crowd. But to Todd Graves, founder of Raising Cane's, chicken fingers are the Holy Grail. They're the "one love" upon which Raising Cane's was built, and they--along with a simple menu of grilled Texas toast, coleslaw, fries and signature sauce--have taken his company from zero to nearly $50 million.

Fresh out of college with a dream of owning his own chicken fingers restaurant, Graves, together with a friend, put together a business plan and approached financial institutions. They weren't interested, citing his lack of experience, lack of capital and what many saw as a concept too limited to succeed.

Undaunted, Graves set out to quickly change one of those rejection factors: his own finances. He headed to California where he labored 90 hours a week as a boilermaker. Next, he went to Alaska for a gig on lucrative but dangerous fishing boats. He says he slept in a tent on the tundra for a month before convincing a captain to give him a job.

Armed with hard-earned money, he returned to Baton Rouge and this time succeeded in getting a small loan. He bought and renovated a rundown building at the entrance to Louisiana State University, which opened as the first Raising Cane's in August of 1996.

The company's vision now is to be the best chicken-finger QSR restaurant worldwide, says Brad Sanders, vice president of real estate, design and construction. "We now have 42 units in eight states and we'll open 40 more in the next 18 months. And we'll definitely expand internationally."

"In the past five years we've refined how we communicate our culture and values, secured financing for restaurant development, defined and identified brand standards, developed prototype models and implemented systems and processes for operations, HR and training," Graves says. "We've laid the groundwork for growth and are now implementing our next vehicle for it--franchising."  

3. Firebirds Rocky Mountain Grill
Charlotte, NC

.S $30,000*/81.8
.U 12/71.4
.A $3,100*/3.3

In this chain's contemporary-rustic lodges, smoky aromas from a large stone fireplace prime customers for dishes like flame-grilled steaks and rotisserie chicken. Partners Dennis Thompson, Douglas Glendenning, Mark Wattles and Leslie Rudd have opened 12 locations since December 2000 and plan eight more in the next three years. Marketing is largely grassroots: sampling to nearby businesses and hosting events for schools, charities and chambers of commerce.


4. Pollo Campero
Guatemala-based

.S $38,000*/72.7
.U 20/150
.A $2,700*/0

Founded in 1971 by Dionisio Gutierrez and a group of Guatemalan businessmen, Pollo Campero is a leading family-style chicken chain in Latin America.

In 1994, the company launched a franchising program designed to take the concept international, including to the United States. Units now operate in California, New York, Texas and Virginia and are opening soon in Chicago and Washington, D.C. Chicken, the house specialty, comes marinated and fried or rotisserie roasted, in nuggets (Camperitos) and wings. Further U.S. expansion is planned, as is aggressive growth in China, which will see 500 units within the next five years.


5. Cantina Laredo
Dallas, TX

.S $34,500*/53.3
.U 15/87.5
.A $3,000*/7.1

Cantina Laredo takes an upscale approach to South-of-the-Border fare, with dishes such as pork roast with chipotle-wine sauce, and atmosphere several notches up from the corner taco joint. The chain is owned by the Dallas-based company Consolidated Restaurant Operations, which owns eight chains in all, including El Chico and the Spaghetti Warehouse. Cantina Laredos currently number 15, most in Texas. Plans are afoot to expand into the Middle East and eventually Southeast Asia. Five to seven restaurants will open next year, including two in Dubai.


6. It's a Grind
Long Beach, CA

.S $35,175*/48.1
.U 75/44.2
.A $550*/10

With a Starbucks on nearly every street corner, you'd think the chain had the coffee business all sewed up. Wrong. It's a Grind, based in Long Beach, California, plans to open 38 shops by the end of the year, an increase of 50 percent. Marketing director Bob Phibbs says people are looking for an alternative to the omnipresent chain, and that is where It's a Grind comes in. The coffee houses have a homey look with wingback chairs and fireplaces, plus a local owner who might just be running the espresso machine. Owners Marty Cox and Louise Montgomery, a husband and wife team, founded the chain in 1994.


7. Le Pain Quotidien
New York City

.S $28,000*/47.4
.U 17/54.5
.A $1,700*/0

These rustic bakery-cafes, whose centerpiece is a large communal table, sell organic, Fair Trade priced coffee and an increasing number of products from self-sustaining, bio-diverse farms. The brand was founded by Alain Coumont in Brussels in 1990, and the U.S. owners, PQ New York Inc., opened the first stateside store in 1997. The company currently has 20 U.S. units and plans five more this year. They also have 45 international franchise locations from the U.K. to Dubai, Kuwait and Lebanon, and plan 15 more in 2006.


8. Crispers
Lakeland, FL

.S $30,000*/42.9
.U 32/30.8
.A $1,000*/2.6

This Florida chain serving affordable soups, salads and sandwiches is named for the piece of restaurant equipment that keeps salads fresh. A private company whose majority owner is Publix Supermarkets, Inc., Crispers opened its first unit in South Lakeland Florida in 1989. In 2005 Publix made a major equity investment in the chain spurring expansion throughout Florida and soon to other states. All stores are company owned and franchising is not in their immediate plans.


9. Famous Famiglia
White Plains, NY

.S $38,000*/40.7
.U 51*/82.1
.A $950*/-5.0

Opened in 1986, Famous Famiglia operates units in transportation hubs, malls and shopping centers, colleges and universities, stadiums and busy urban locations nationwide.

We love captive markets
Famous Famiglia

Having immigrated to the United States from Italy with their mother in 1970, Albanian brothers Tony, Paul, John and Giorgio Kolaj spent several years working in pizzerias throughout New York City before opening their own in 1986. The first Famous Famiglia unit exceeded projections and over the next 12 years more New York operations were opened, including in LaGuardia Airport and Yankee Stadium--hallowed ground for the Bronx-raised brothers, says Giorgio, executive vice president.

They expanded slowly, taking years to build an infrastructure and define an expansion strategy. They launched a franchising program in 2002. That strategy centers on securing "captive market locations," such as airports and transportation hubs, upscale malls and shopping centers, colleges and universities, stadiums, amusement parks and toll way plazas.

"We spent years developing this route to market," Kolaj says. "We did so to mitigate risk by diversifying our markets. We also felt that getting into these locations would afford maximum visibility."

The company's expansion has been facilitated by franchise relationships with global leaders such as Compass Group and its Chartwells College & University Dining Services and Select Service Partners airport concessions divisions, ARAMARK, HMSHost and other dominant players in its target segments. "By aligning ourselves with them, we add validity to our brand and our concept," Kolaj says. "And they represent significant opportunities for growth."

Franchise agreements have now been secured for at least 20 stores to be developed throughout Mexico, and growth is targeted in Europe, Canada, the Middle East and Asia.

As the company grows, efforts to maintain quality and consistency are redoubled. To ensure that the pizza crust is the same in Cancun as it is in New York, for instance, New York water is shipped to all remote locations for ingredient use. "It's that important to us. We need to protect the brand," Kolaj says.

10. Oceanaire Seafood Room
Minneapolis, MN

.S $47,000*/40.3
.U 8/14.3
.A $6,250*/11.6

Oceanaire Seafood Room is to seafood what Smith & Wollensky and Ruth's Chris are to steak. "We're a power seafood concept, upscale and very quality focused," says president and CEO Terry Ryan. Founded in late 1998 by Ryan and partners with financing from Clarion Partners, NY, and 200 other shareholders, the company operates restaurants in Atlanta, Baltimore, Dallas, Indianapolis, Minneapolis, San Diego, Seattle and Washington, D.C. Additional units are planned for Miami, Charlotte, Houston, Philadelphia and Orlando. All stores are company owned and operated by managing partners. "Having entrepreneurial partners at the local level is key to our success," he says. "Customers know them as the owners." On the menu, fresh seafood is the star. Sixty percent of the menu is standard, while the balance changes with local product availability and chefs' whims. Per-person checks average $60 at dinner, $22 to $30 at lunch.


11. Sammy's Woodfired Pizza
La Jolla, CA

.S $25,000*/38.9
.U 13/8.3
.A $2,000*/17.6

Sam Ladecki brought the first wood-fired oven to San Diego in 1989, and now his menu goes way beyond pizza to include tapas spanning the globe from Chinese dumplings to mini duck tacos, as well as heaping entree salads, pastas and seafood. Sammy's fosters wide appeal by catering to grownups with a full bar, cozy decor scheme of warm woods and a wide-ranging menu, while still welcoming children to the table with pleasers like the enormous Messy Sundae. Currently there are 10 stores in California and three in Nevada. In addition to Sammy's, Ladecki has three other restaurant concepts.


12. Surf City Squeeze
Phoenix, AZ

.S $39,690/38.3
.U 147/28.9
.A $270/-1.8

Founder Kevin Blackwell created the Surf City Squeeze concept back in 1981. The company today designs, builds and franchises units targeted to markets including premier fitness clubs, upscale shopping centers and university campuses. In addition to U.S. operations, the company now has franchise agreements in place in Canada, Portugal and several Arab countries. Cornerstones of the concept are a "successful location, efficient and appealing design, and a menu that encompasses health and fitness awareness with new nutritional technologies." The company expects to expand to 400 locations within the next five years.


13. Jump Asian Express Cuisine
Columbus, OH

.S $28,500*/35.7
.U 79/16.2
.A $410/2.5

Founded by old college buddies in 1999, the chain plans 100 locations by 2007.

Learning simplicity from Wendy's
Jump Asian Express Cuisine

This quick-serve Asian brand offering 85 entrees, more than 25 of them vegan or vegetarian, has a simple operating system suited to as little as 60 square feet of kitchen space. Targeted to the small irregular areas and low-skill labor found in on-site locations like colleges and airports, Jump's key advantages over similar chains are its exceptionally easy prep and the ability to adapt to virtually any site's cooking platform, including gas ranges, induction ranges, standard woks, steamers or butane burners. The chain plans 100 locations by 2007.

The brand has its roots in Asia, where two of its founders, Lewis Rutherfurd and Jim Hawes, classmates at Harvard Business School, started the venture capital firm Inter-Asia Venture Management/Hong Kong in 1972. But it was their third partner, C.E.O. Dan Corrigan, who masterminded the stripped-down, easily adapted operating model. In the 1980s, Corrigan participated in Wendy's turnaround, and it was that chain's simple operating system for serving burgers "256 ways," along with Taco Bell's "kitchen-less" operating strategy, that served as the conceptual model for Jump Asian Express.

Just as Wendy's can easily introduce a new burger with a change of toppings, Jump's operating system can respond quickly to customer demand because its "combine, heat and serve" on-site prep process stays the same for each dish; all that changes is the sauce. Most of the prep is done in Jump's plant, where sauces are made and proteins are trimmed, marinated and 60 to 90 percent pre-cooked. Vegetables are locally procured, cut-to-specification and delivered to each store daily. The only item fully cooked on site is starch: rice or Udon noodles.

The method was developed over a year and a half, more R&D time than many start ups, using the crucial test: can a 17-year-old execute the system consistently and accurately. About a year into R&D there was conflict over the complexity of operations: Rutherfurd fought for a more intricate and visually exciting "finish cook" layout, while Corrigan was adamant that the "same folks who work at Wendy's could be great Asian chefs at a Jump Asian Express."

Simplicity won, and today Jump "cooks" can be trained by watching a video available 24/7 on Jump's private Intranet site.

14. Nothing But Noodles
Scottsdale, AZ

.S $29,000*/34.9
.U 34/13.3
.A $900/5.9

Since their April 2002 start in Albuquerque, New Mexico, this fast casual dining chain specializing in made-to-order noodles and global pasta dishes, gourmet salads and pan-cooked soups has opened 34 locations in 21 states. Owners and founders Todd Welker and Chad Everts plan four more stores in 2006 and at least eight to 10 in 2007, predominately in "end-cap" spaces at the end of retail shopping centers, or on "pad sites," in front of a strong retail shopping anchor. They keep the menu fresh by continually testing "limited time offerings" to replace lower volume items.


15. Tijuana Flats
Maitland, FL

.S $25,500*/34.2
.U 36/44
.A $840*/1.8

This quick service Tex-Mex joint believes "hot sauce = bragging rights," and "Mexican is a culture, not a theme." Brian Wheeler graduated from the University of Central Florida with a marketing degree in 1995 and that same year opened the first Tijuana Flats store, which he began expanding almost immediately in addition to developing his own line of "Smack my Ass and Call me Sally" hot sauces. He created Tijuana Flats Hot Foods Inc. to consolidate the restaurants and specialty products and is now one of the largest distributors of hot sauces in the southeast. There are more than 100 new Tijuana Flats locations in development.


16. Elephant & Castle Pub & Restaurant
Vancouver, BC

.S $27,500*/31.8
.U 11/10
.A $2,600*/8.3

Publicly held English-style pub Elephant and Castle opened its first North American location in Vancouver, British Columbia, almost 30 years ago. E&C offers over 100 beers as well as an extensive menu of favorites from both sides of the pond. President and CEO Rick Bryant has focused expansion plans on opening new restaurants in hotels and high-traffic urban centers rather than suburbs or malls.


17. Daphne's Greek Cafe
San Diego, CA

.S $46,000*/31.4
.U 58/16
.A $850/4.3

Founded by George Katakalidis in 1991, Daphne's offers traditional Greek favorites and signature items in a quick-casual environment. Concentrated in California and Arizona, the chain is positioned for growth in and beyond its home region. Top managers with extensive chain restaurant experience have recently been added, including directors of real estate, HR and food and beverage. Tapping the popularity of the movie My Big Fat Greek Wedding, Daphne's promotes My Big Fat Greek Fundraisers, bringing in community groups for charitable events and donating 20 percent of sales on the day of the fundraiser to the group's chosen charity.


18. Great Wraps
Atlanta, GA

.S $27,750/30.3
.U 84/27.3
.A $400/0

Mark Kaplan and Bob Solomon acquired the 10-year-old Gyro Wraps chain from owner Bob Russo in 1989, re-branding as Great Wraps in 1992. They set themselves apart from other sandwich chains by offering multiple sandwich styles--wraps, flatbread and pita--and premium ingredients like roasted peppers, alfalfa sprouts and hummus. Great Wraps is expanding rapidly through regional developers, with concentration on California, Georgia, Florida and Illinois.


19. Wing Zone
Atlanta, GA

.S $45,000*/26.3
.U 74*/10.4
.A $635*/1.6

In 1991, Matt Friedman and Adam Scott noticed that pizza was the only delivery choice near the University of Florida. This prompted them to conceive Wing Zone in a fraternity house kitchen.

With a $500 investment for a phone line and printed flyers, their business was born. Within the first week, Wing Zone was a hit. Three weeks later, their first Wing Zone storefront opened near the university. The business boomed. After graduation, the partners opened a second location in Gainesville and then expanded to Tallahassee; Atlanta; Athens, Georgia; and Columbia, South Carolina. With six stores up and running, the WZ Franchise Corporation was founded and, in 1999, company headquarters moved to Atlanta. The company has expanded rapidly through franchising and now has more than 100 units.


20. Sandella's Cafe
West Reading, CT

.S $45,360/26
.U 162/17.4
.A $280/1.8

Sandella's Cafe is a quick-service sandwich restaurant concept designed to fit quickly and easily into existing operations and co-branded situations in colleges and universities, travel plazas, corporate cafeterias, hospitals, theme parks, airports and museums. The company's objective is "to build a globally recognized cafe that dominates the upscale sandwich industry worldwide." All menu items can be made in four steps or less, with no scratch preparation required. Menus are flexible and operators can choose from among 80 recipes for wraps, paninis, quesadillas and sandwiches on Sandella's proprietary flatbread; noodle and rice bowls; salads and soups; and beverages including gourmet coffees and smoothies.


21. Nick-N-Willy's World Famous Take-N-Bake Pizza
Lonetree, CO

.S $27,000*/25.6
.U 62/17
.A $475/5.6

Nick-N-Willy's offers two concepts to franchisees: the Take-N-Bake Outlet is carryout only, while the Take-N-Bake Restaurant adds baked pizzas and a dine-in option. Gourmet toppings include house-dried herbs, smoked chicken, artichoke hearts and six different cheeses. Keith McQuillen and Terry Jones opened the first restaurant in 1988 in Boulder, Colorado, and sold their chain to Richard Weil, a graduate of the University of Houston's Hotel and Restaurant Management school, and Scott Adams, a former Quizno's exec, in 2001. There are current and upcoming locations in over 20 states and two Canadian provinces.


22. Tropical Smoothie Cafe
Destin, FL

.S $50,000*/25
.U 150/18.1
.A $375*/2.7

A tropical, health-oriented fast-food oasis serving up signature smoothies, plain or supercharged with up to 12 nutritional supplements. Customers can choose from among low-fat smoothies, weight-gain smoothies, meal replacement smoothies, memory boosting "smart" smoothies, dessert smoothies and nondairy smoothies. Rounding out the menu are gourmet wraps, specialty sandwiches and salads. Now operating in 27 states, plus five units in India, the company was founded in 1997 as Tropical Smoothie by Eric and Delora Jenrich. As of mid-2006, the 200th unit had opened and the company is on target to have 500 stores open by the end of 2007.


23. Locos Grill & Pub
Athens, GA

.S $30,000/25
.U 26/8.3
.A $1,200/20

In 1988, two University of Georgia students, Hughes Lowrance and Jamey Loftin, invested $10,000 in an existing Athens, Georgia, convenience store to sell sandwiches, milk, toilet paper and other basics to college students. Today they offer more than 90 dishes from appetizers to entrees. All 10 sandwiches that started Loco's remain on the menu, including "The Damage" and the vegetarian "Mousetrap," and several have been trademarked including "The Biggest Thing We've Got" and "Redneck Deluxe Burger." The chain goes through 1.5 million pounds of chicken wings each year. Franchising began in 1997 and the company now has 26 locations throughout the southeast.


24. Montana Mike's Steakhouse
Hutchinson, KS

.S $29,100/23.8
.U 20/25
.A $1,600/6.7

Since 1998, Montana Mike's has prospered in B and C niche markets by offering large portions of naturally aged steaks hand cut in house, at moderate prices. Today they have 20 restaurants and are seeking growth with a new 7,000-square-foot, ground-up construction modeled after a rustic mountain lodge. Owned by Tom Ford, Terry Harstad, Steve Schmidt and Doug Freiling, the restaurants are part of Stockade Companies, LLC, which also owns the buffet-style Sirloin Stockade and Coyote Canyon chains.


25. Figaro's Pizza
Salem, OR

.S $31,000/21.6
.U 105/7.1
.A $290/11.5

Each Figaro's makes pizza dough from scratch daily, to be baked on site or sold in "take and bake" oven-ready trays. Founded in 1981 by Al DeBacker and Corkey Gorley and sold twice since then, it was bought by the current owners Steve Weber, Carol Berger, Ron Berger and Bill LeVine in 2001. The brand began franchising in 1986, and is now opening 30 to 40 stores per year. Franchisees may operate carryout, dine-in or delivery store models.


26. Black Bear Diner
Mt. Shasta, CA

.S $47,000/20.5
.U 28*/21.7
.A $1,850*/2.8

A homey atmosphere, friendly service and hearty portions of home-style comfort foods are the cornerstones of the Black Bear Diner. Founded by Bruce Dean and Bob and Laurie Manley in Mt. Shasta, California, in 1995, the company is approaching 30 units in California, Nevada, Oregon, Arizona and Colorado.

A franchising program was launched four years ago. Prior to that time, most of the chain's growth happened through a licensee affiliate relationship with SunWest Restaurant concepts, which converted a number of old Jerry's restaurant locations to Black Bear Diners, according to Bob Manley. "Now that we've established our own franchising company, we're at a transition point. We have to decide whether to add the infrastructure to grow quickly and go national, or to stick with our growth pattern of adding fewer than 10 stores per year. We recently hired some people to help us work through that process."


27. The Keg Steakhouse & Bar
Richmond, BC

.S $32,500*/20.4
.U 14/16.7
.A $2,500*/1.0

This chain of Canadian steakhouses is pushing 35 years. The first Keg Steakhouse & Bar opened in 1971 in Vancouver, British Columbia, by entrepreneur George Tidball, and the chain has grown slowly and steadily ever since. Now the restaurants number 93, of which only 15 are in the United States. However, the company plans to focus growth on this side of the border, where steak, once bedeviled, is now very much back in vogue. The Keg has been named one of the "50 Best Employers in Canada" in Report Business magazine four years running. In 1997, Vancouver businessman David Aisenstat purchased the chain.


28. Maui Wowi Hawaiian Coffee and Smoothies
Greenwood Village, CO

.S $35,000*/18.6
.U 342/12.5
.A $110*/10

This fast-growing chain got its start when founders Jeff and Jill Summerhays set up a smoothie booth at the Utah State Fair in 1983, before smoothies were called smoothies. In 1999, they hooked up with Michael Haith, a consultant on food for special events and began franchising. Haith is now the owner. Until 2002, Maui Wowis were all mobile units. Since then the chain has grown to 159 locations. Fifty more stores are in construction. They cater 620 events annually. Next up? A line of apparel.


29. Sticky Fingers RibHouse
Charleston, SC

.S $42,000*/18.3
.U 16/6.7
.A $2,700*/1.9

The first Sticky Fingers opened in March of 1992 by lifelong friends Todd Eischeid, Jeff Goldstein and Chad Waldorf, all recent college graduates who had made a pact to eventually start a business together. "We opened our first restaurant with zero money and absolutely no idea of what were doing," Goldstein admits. The trio learned quickly, and subsequent units were opened in the Charleston area and later throughout the state and the region. Each unit is run by managing partners, most of whom started as servers, cooks or dishwashers. The restaurants specialize in hickory-smoked Memphis-style barbecue served in a fun, friendly atmosphere.

30. Mama Fu's Asian House
Atlanta, GA

.S $32,275*/16.3
.U 23/27.8
.A $1,575*/1.6

The chain's fictitious namesake is a bit bossy on the Web site, but you can't argue with her rules: no MSG and everything in a wok. The first Mama Fu's was opened in 2004 in Atlanta by Raving Brands, a company that owns a list of chains, including Planet Smoothies and PJ's Coffee. This fast-growing chain of informal, inexpensive pan-Asian noodle houses counts 20 to date, with another 10 in the works. They are centered in the Southeast. The menu covers the vast breadth of Asian cuisines, from wonton soup to Vietnamese crunchy noodles. However, the Asian theme does not carry over to the music, which is pan-American funk.


31. Haru Sushi
Miami, FL

.S $26,500*/15.2
.U 7/40
.A $4,375/1.7

Barbara Matsumura opened the first Haru Sushi on Manhattan's Upper West Side in 1995. Shortly after she opened a second location in 1998, Benihana Inc. acquired an 80 percent stake in the chain, with Matsumura staying on board until 2005. There are now six locations in Manhattan and one in Philly. Unlike Benihana's other concepts, Haru offers delivery and takeout, which now accounts for about 45 percent of sales. Spring 2007 will see a restaurant opening on Wall Street, with possible expansion into New York's bedroom communities, as well as other large East Coast cities by 2009.


32. Rotelli's
Baton Rouge, LA

.S $32,000/14.3
.U 38/22.6
.A $940/1.6

Joseph Bilotti, a former commercial pilot with long experience in the food industry, opened his first Rotelli's Pizza and Pasta in 1999. This is pasta the old way: baked ziti, rigatoni with broccoli and penne alla vodka. The voluminous menu priced in the mid-teens also includes classic Italian fare such as frutti de mare and veal Marsala. The restaurants may have the menu of an old-style Italian cafe, but you won't find any plastic grape vines or wax-splattered Chianti bottles about. Most of the chain's 31 restaurants are in Florida. Another nine are expected to open by the end of the year.


33. Stonewood Tavern & Grill
Ormond Beach, FL

.S $50,000*/13.6
.U 17/13.3
.A $3,100/1.6

An upscale casual dinner house touting oak-grilled meats and seafood, there are units throughout Florida and recent expansion in North Carolina. Co-founders Doug Sullivan and Steve Papero had worked together in restaurants while in high school, nearly 30 years ago, and on and off through the years in various chain restaurants. In 1999, the two--joined by another partner, Gale Lemerand, described as their key mentor-investor--launched Stonewood. In addition to Stonewood Tavern & Grill, their umbrella company, Stonewood Holdings, has launched a casual breakfast concept, Peach Valley Cafes, and a lifestyle magazine called Casual Flavors. The magazine, available at the restaurants and via free subscriptions, covers food, wine and travel and has a circulation of 100,000.


34. Winger's Grill and Bar
Atlanta, GA

.S $31,965/13.3
.U 34/13.3
.A $1,000/0

Eric and Scott Slaymaker were no newcomers to franchising when they opened Winger's in 1993. The brothers already owned T.G.I. Friday's and Tony Roma restaurants when they decided to try their own. The brothers opened the first Wingers in Provo, Utah, in a 1940s Pullman car. The menu was, likewise, small, and upgraded chicken wings from an appetizer to an entree. The menu and restaurant buildings have grown, as have sales, says Eric Slaymaker. He expects to add another five restaurants to the chain's current 36 in the next year.


35. Alonti Market Cafe
Houston, TX

.S $26,500*/12.8
.U 33*/6.5
.A $825*/3.1*

Gourmet grocery store owners Cecile and Al Pepi moved from New York to Austin in 1974. They opened a Market Cafe there, and the sandwich counter was such a hit, it took over the store. Alonti focuses on from-scratch cooking. Al Pepi passed the torch to his son and namesake in 1991. The stores now operate in Houston, Dallas, Fort Worth, Chicago and New York.


36. Philly Connection
Atlanta, GA

.S $39,400*/12.6
.U 130/8.3
.A $315*/3.3

This fast-growing Atlanta-based chain promises customers "heaven on a roll" with a menu of Philadelphia-style cheesesteaks, hoagies and other specialty sandwiches. Established in Atlanta in 1984, major growth through franchising didn't get underway until the early 1990s, after menu modifications, design prototypes, supply networks and other operational infrastructures were established. Today, the company has more than 200 units operating in six Southern states. Since 1996, franchisees have had the option of incorporating a Philly Connection Ice Cream Parlor into their operations.


37. Port City Java
Wilmington, NC

.S $28,100/12.4
.U 67/8.1
.A $435*/1.2

Known for roasting their own coffee, Port City Java has an "all day approach" to sales, serving smoothies and juices from a fresh juice bar and paninis from a panini grill, along with coffee and on-site baked pastries. Founded in Wilmington, North Carolina, in March 1995 by the current chief operating officer Don Reynolds, the company began roasting coffee in October 1995 and started franchising in 2003. A new Tallahassee, Florida, unit is co-branded with Gold's Gym.


38. Tully's Coffee
Seattle, WA

.S $46,000*/12.2
.U 107/12.6
.A $450*/3.4

Tully's Coffee is a specialty roaster and retailer offering a selection of whole bean and brewed coffees, espresso-based beverages, teas, juices, pastries and baked goods. Company-owned and licensed stores operate in Washington, Oregon, California and Idaho, and a wholesale division distributes products via office coffee services, foodservice distributors and supermarkets.

A well-timed sales boost
Tully's Coffee

Tully's Coffee is often referred to as Seattle's "other coffee company." Launched in 1992 by real-estate developer Tom Tully O'Keefe, Tully's might be an underdog but its one-two punch of quality product and creative merchandising is driving strong growth.

"The message that we communicate is twofold," says John Dresel, president and chief operating officer. "First, we're all about quality. Second, even though we're serious about quality, we don't take ourselves too seriously. We're a fun place."

Tully's fun side shone through in a merchandising campaign that ran for 12 weeks last year in Seattle and San Francisco. "We needed something dramatic to draw renewed attention to our offerings and to reenergize our own associates," Dresel says.

Dubbed "Tully's 3:21 Wake-Up Call," the campaign was designed to boost afternoon sales of Tully's blended summer beverages.

By "owning" the exact time of 3:21 p.m., it garnered attention and boosted afternoon sales. Highlights included:
  • Bands playing reveille at 3:21 for one minute daily outside Tully's stores while staffers handed out coupons.
  • On-board drink sampling on city buses, starting at 3:21.
  • Street teams passed out coupons valid for 30 minutes.
  • Vespa scooters towing 3:21-branded trucks and mobile billboards.
  • Opt-in email blasts at 3:21 p.m., with printable coupons.
  • Radio ads that aired daily at 3:21 p.m. 

  • 39. Snappy Tomato Pizza
    Florence, KY

    .S $28,000*/12
    .U 75/13.6
    .A $400*/1.3

    Each of these northern Kentucky-based pizza shops makes fresh dough daily and bakes most pies in house, although they are testing an "Oven Ready--we make it, you bake it" concept. Legend has it founder Bob Rotunda started the company in 1978 on winnings from a horse named Snappy Tomato. The enterprise was sold several times in the '80s and was purchased in 1993 by The Deters Company. The chain has opened over 40 locations in the last four years, with nine more under construction. Franchisees can choose from three concepts: high volume, quick service delivery/carryout; full sit-down restaurant with buffet and delivery/carryout service; or low startup cost convenience store suited to smaller areas.


    40. TooJay's Original Gourmet Deli
    West Palm Beach, FL

    .S $33,500*/11.7
    .U 23/4.5
    .A $1,500*/3.4

    The two Jays in the name are native New Yorkers Jay Brown and Mark Jay Katzenberg. The twosome opened their first New York-style deli in West Palm Beach in 1981. Since then they have garnered a long list of awards and a devoted following for their Killer Cake, which includes four kinds of chocolate. Like a mom-and-pop deli, the chain's 23 restaurants dish up classic fare, from potato pancakes to heaping corned beef sandwiches. Unlike a classic deli, the restaurants serve all three meals, offer to-go food and cater.


    41. Up the Creek
    Duluth, GA

    .S $33,500*/11.7
    .U 13*/30
    .A $2,900*/0

    When Bill Palmer, co-creator of the Applebee's Neighborhood Grill and Bar, went fishing for a new concept, he landed an under-served niche--casual seafood. The chain riffs on a fishing lodge, thus the woody interior, rods and vintage photos on the wall and a 400-gallon aquarium. At first the chain served most of its catch deep fried, but have added more blackened and grilled fish over time. Palmer's company owns seven restaurants in its home state of Georgia and has six franchises in other Southern states. Four to six restaurants will open in the coming year, including a franchise in North Dakota.


    42. Stoney River Legendary Steaks
    Alpharetta, GA

    .S $26,000*/10.6
    .U 7/16.7
    .A $4,020/2.7

    O'Charley's Inc. acquired the four-year-old, two-unit Stoney River chain from founders David Rowe and Pierre Panos in 2000 and expanded steadily to reach a total of seven units by 2005. The emphasis is on service, aged steaks and four dozen wines by the glass, but the upscale mountain lodge atmosphere and price point just below that of the premium steakhouse chains convey an image that's accessible to a wider range of diners. Stoney River currently has locations in Illinois, Ohio, Georgia, Kentucky and Tennessee.


    43. Wahoo's Fish Tacos
    Santa Ana, CA

    .S $48,000*/10.3
    .U 40/5.3
    .A $1,225*/2.1

    Ed and Mingo Lee and Wing Lam opened the first Wahoo's Fish Taco in 1988 in Costa Mesa, California, in part because they craved the grilled fish tacos they'd enjoyed on surfing trips to Mexico. They created a casual QSR concept that blends Mexican, Brazilian and Asian flavors in a Hawaiian surf-shack environment. The concept struck a chord and in 1990 partner Steve Karfasidis was brought in to help it grow through franchising. Today Wahoo's operates in California, Colorado, Texas and Hawaii.


    44. Port of Subs
    Reno, NV

    .S $48,500*/9
    .U 146/5
    .A $340*/1.5

    Port of Subs, a 30-year-old QSR mainstay in the Reno and Las Vegas markets, is positioning itself for fast growth in new markets where it is less well-known. First, an updated logo and store prototype debuted last year. Second, a "sliced fresh" campaign was launched, promoting the fact that all meats and cheeses are freshly sliced in-store by "master slicers." Owner John Larsen, who purchased a single-unit sub shop in 1975, changed the name to Port of Subs and grew the business to 10 stores in 10 years, began franchising in 1985. By the end of 2005, the company had 146 units in six Western states, 20 of which were company owned. It is positioned to grow to more than 200 stores in the next four years.


    45. Vocelli Pizza
    Pittsburgh, PA

    .S $50,000*/8.7
    .U 112*/5.7
    .A $450*/3.4

    Founded in 1988 by Harry Ablak and his sons, Varol and Seckin, Vocelli Pizza serves a variety of gourmet, Italian-style pizzas, made-to-order strombolis, panini subs, salads and wings. Franchise growth over the past five years has been aggressive, and system-wide sales have doubled. Going forward, the chain projects a 30-percent annual growth rate. Its marketing plan maintains a sharp focus on "great taste, diversity of products and convenient delivery." The company's message is communicated and reinforced through an extensive media campaign, including TV, radio, print and local store marketing.


    46. Larry's Giant Subs
    Jacksonville, FL

    .S $35,000*/8.7
    .U 94/6.8
    .A $385*/1.3

    Homesick for New York deli sandwiches, brothers Mitchell and Larry Raikes opened their first shop in Jacksonville in 1982. Now there are 100 restaurants and counting. At each, you'll find an encyclopedic list of submarines (hot or cold), hoagies, deli sandwiches and Philly cheese steaks. The decor emphasizes the details: custom-made tabletops lacquered with New York posters, slick metal chairs with the logo etched in and a huge gorilla, the company's mascot.


    47. Zero's Subs
    Virginia Beach, VA

    .S $26,000/8.3
    .U 58/9.4
    .A $475*/2.2

    In 1967 Gene Schmidt opened Zero's Subs as a fast food alternative catering to tourists in Virginia Beach and was joined in the business shortly thereafter by his brother John and their cousin Martin Palacios. They began franchising in 1989. Zero's has a co-branding relationship with Dairy Queen. There are stores throughout Nevada, Arizona and the Southeast, and additional locations in China and New Zealand.


    48. Quaker Steak & Lube
    Sharon, PA

    .S $47,273/7.8
    .U 13/8.3
    .A $3,636/-0.5

    Launched in 1974 in a converted old gas station, Quaker Steak started franchising in 1997 and now has more than 20 units in the eastern third of the country.

    Making the emotional connection
    Quaker Steak & Lube

    Satisfying customers with good food and service is one thing. Connecting on an emotional level is another, and it's something that Quaker Steak & Lube has raised to an art form. It's done, in part, through special weekly events crafted to appeal to the Lube's niche fan base--motorcyclists, muscle car and vintage car collectors and anyone passionate about motor sports (or just addicted to its award-winning chicken wings).

    "Our motto is 'There's always something happening at the Lube,'" says Gary Meszaros, who co-founded the restaurant in 1974 with partner George Warren after both returned from Vietnam. "We use events to make every day a Saturday."

    One that draws head-spinning traffic is Bike Nite, held on a weeknight during the summer and year-round where weather permits. "At our home restaurant in Sharon, Pennsylvania, we've had as many as 7,500 bikers attend. Sharon's population is 1,800, so it's a big deal," Meszaros says. "The Cleveland store has done that many, as well. In Sharon, the first Bike Nite of the summer is special. A popular local priest does the 'blessing of the bikes.' The crowd goes quiet, all hats come off and it's very moving. Things like this make these events special."

    Also making them special are giveaways: At least one premium motorcycle is given away each summer at every unit. "That's what really put this on the map," Meszaros says. "Word of mouth spread, and it's grown organically ever since." Food buffets and kiosks in the parking lot make serving the large crowds easier. On average, revenues on Bike Nite jump 300 percent compared to regular week nights, Meszaros says.Other weekly events include Cruise-Ins, which draw vintage car enthusiasts, and All You Can Eat Wings Night. All events are promoted on the company's Website and in flyers listing the theme for each week. Through a franchising program started in 1997, Quaker Steak & Lube expects to grow to 50 units in the next few years, and to hit revenues of $130 million to $140 million by the end of '07.

    49. Pal's Sudden Service
    Kingsport, TN

    .S $28,000*/7.7
    .U 20/5.3
    .A $1,400*/1.8

    Fred "Pal" Barger opened one of the nation's first carryout-only restaurants in 1955. Now, there are a few eat-in locations but most service takes place at the drive-through. Barger still owns the company but has passed daily operations to president/CEO Thom Crosby. The original menu of Sauceburgers, Frenchie Fries and milkshakes has grown to include regional favorites like Chipped Ham Sandwiches, Gravy Biscuits and Cheddar Rounds. Pal's has expanded slowly throughout Eastern Tennessee to its current count of 20 restaurants. All locations are company owned and are festooned with Pal's trademark enormous fiberglass hamburgers, fries and hot dogs straddling the roof.


    50. Kincaid's Fish, Chop & Steakhouse
    Seattle, WA

    .S $44,000*/7.3
    .U 9/12.5
    .A $5,200*/2.0

    A Restaurants Unlimited concept, Kincaid's is positioned as a contemporary interpretation of a traditional fish, steak and chop house. The restaurants--three in California, two in Minnesota, and one each in Indiana, Hawaii, Virginia and Arizona--feature signatures like rock salt roasted prime rib, lamb trio (chop, shank, sausage), classic seafood boil and prawn tower appetizer. Each unit does an average of nearly $5 million in annual sales. A recent "First Seating" promotion offering a three-course meal for under $20 (no alcohol) has helped to spur sales in the typically slow 5 p.m. to 6 p.m. slot.

     
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