Guillermo Perales likes to build restaurants. And so he builds a lot of

G
uillermo Perales likes to build
restaurants. And so he builds
a lot of them. “Every year we
try to build as many locations as
we can,” the CEO of Sun Holdings
said. At the moment, he has close
to 50 projects in various stages of
development.
Yet Sun Holdings has grown
so much—it is the eighth largest
restaurant franchisee in the country,
based on our Restaurant 200—that it
can’t build new locations fast enough
to meet its expectations for growth.
And that means new acquisitions. So
in recent years, Sun has added new
Burger King, Arby’s and now Krispy
Kreme locations to its stable. And
Perales keeps looking.
“For me to keep my growth, I
really have to look for other brands,”
he said. “You look for buying
34
August 2014
opportunities. It’s another area of
business. You cannot grow if you
can’t buy, so I have to buy.”
the ranking—like Burger King,
Applebee’s, Wendy’s and others—
haven’t been flourishing.
This is our Restaurant 200, the
ranking of the nation’s largest
restaur ant fr anchisees, in a
nutshell: The franchisees on the
list are so big now that to maintain
self-imposed growth levels they
have to keep buying existing units,
simply because nobody can build
that fast. The companies on the
ranking have been buying locations
at an impressive rate, driving up the
prices for those acquisitions. And
they’ve gotten into new concepts.
Consider this: Today, the average
franchisee on the Restaurant 200
has 109 locations and $143.5 million
in revenue. Both numbers are about
30 percent higher than they were in
2009. The big are getting bigger.
The acquisition frenz y has
carried these companies through
a post-recession environment
that hasn’t exactly been friendly to
the restaurant business. Sales at
many of the chains that dominate
There are now two companies,
Flynn Restaurant Group (No. 1) and
NPC International (No. 2) that have
more than $1 billion in sales. And
each of the top 11 companies on our
ranking had more than $400 million
in sales. Sales for the 25 largest
franchisees on the ranking grew
more than 10 percent last year.
The franchisees we talk to
don’t grow just for grow th’s
sake. Operators say they try to be
opportunistic with their acquisitions,
looking for good deals that make
sense from a business standpoint.
Sun Holdings is a good example.
Two years ago the company took
advantage of Burger King’s eager
refranchising of company stores
with a 99-unit purchase in the
Orlando market. Perales followed
that up with a 50-unit Arby’s
purchase at a time when that chain
was struggling. And then he bought
the Dallas Krispy Kreme market
when that became available.
Allendale, New Jersey, franchisee
Doher ty Enterprises, (No. 12),
bought 38 Applebee’s in Florida
in what the company’s chairman,
Ed Doherty, called a strategic
opportunity. “The franchisee wanted
to get out of the business,” he said.
“We grow strategically where we
think it makes sense, and where we
think it’ll make money, and which
will provide growth opportunities
for people who work with us.”
The buying spree enabled several
franchisees on our ranking to
grow by leaps and bounds. Fifteen
companies on the ranking had
increased sales of at least $40
million last year. Carrols Restaurant
Group grew the most. The fourth
largest franchisee in the country
got a full year’s benefit from its 2012
acquisition of 278 Burger King units
from its franchisor. Carrols’ sales
grew 23 percent last year.
Other companies grew, too.
Team Schostak Family Restaurants
bought 65 Applebee’s in late 2012
and had a year to enjoy the additional
sales, which more than doubled
that company’s sales and helped it
skyrocket to No. 30 on our ranking
from No. 74. The Livonia, Michiganbased franchisee also operates
Burger King and Del Taco as well as
Olga’s Kitchen.
58 MarLu Investment Group, based
in Elk Grove, California. “It’s pretty
friendly from a financing standpoint,
and from a franchisor standpoint.”
As these operators have grown
larger, they get more opportunities
because both franchisors and
existing franchisees are eager to
do deals with them. Franchisors
like the large operators because
they have experience and access
to financing. So a number of the
franchisees on our ranking have
bought into smaller growth chains.
Franchises expanded because the
market is flush with investment
Nearly half of all franchises
cash. Private equity groups
on the ranking, including
have been pouring money
By Jonathan
into the sector, buying up
most of the very largest
Maze
large franchisees quickly,
c o m p a n i e s , o p e r a te
Research
by
c r e atin g b e h e m oth s
more than one brand. So
Matt Haskin and
in addition to big legacy
overnight. No. 16 RMH
Nick
Sommers
brands like Taco Bell,
Franchise Corp. became
Burger King, Wendy’s and
Applebee’s second largest
Applebee’s, operators have
franchisee almost overnight
been getting into chains like Biggby
with a series of purchases. The
company is backed by a Washington,
Coffee, Freddy’s Frozen Custard,
D.C.-based private equity group,
Great American Cookie and Corner
AKON Investments.
Bakery. Doherty recently started
developing Noodles & Company
Likewise, debt has been readily
units.
available, from a growing number
of lenders that have eagerly entered
And they are also among the
the restaurant finance market in the
first people called when another
past couple of years.
franchisee goes on the market.
“There are plenty of deals available,”
“There is plenty of money, provided
Lutfi said. “We’re currently looking
your paperwork is accurate, and
at three very large deals. We’re
provided you have your ducks in
going after all three.”
order,” said Tony Lutfi, owner of No.
Sponsored by:
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August 2014
35
Franchise Times’
Restaurant 200:
TOP 25
1
Flynn Restaurant
Group, LLC
San Francisco, CA
Annual sales:
1,297,719,000
Units/Concepts:
448 Applebee’s
115 Taco Bell
2
NPC International, Inc.
Overland Park, KS
1,094,032,000
1263 Pizza Hut
91 Wendy’s
3
Summit Restaurant Group
Richardson, TX
697,417,000
257 IHOP
115 Applebee’s
4
Carrols Restaurant
Group, Inc.
Syracuse , NY
663,483,000
564 Burger King
5
Bridgeman Foods
Louisville, KY
547,000,000
235 Wendy’s
125 Chili’s
6
Covelli Enterprises
Warren, OH
528,800,000
233 Panera Bread
9 Dairy Queen
7*
WendPartners
Cortland, NY
455,000,000
324 Wendy’s
8
Sun Holdings, LLC
Irving, TX
450,000,000
186 Burger King
81 Popeye’s
9
Strategic Restaurants
San Ramon, CA
417,445,000
291 Burger King
27 TGI Friday’s
10
Boddie-Noell Enterprises
Rocky Mount, NC
412,572,000
337 Hardee’s
Big getting bigger
Average annual revenue and number of
units for Restaurant 200 companies.
120
109
UNITS
100
84
80
150
140
2009
2010
2011
2012
2013
$143.5
REVENUE
(in millions)
130
120
110
100
$109
2009
2010
2011
2012
2013
11
Heartland Food Corp.
Downers Grove, IL
401,229,000
378 Burger King
12
Doherty Enterprises, Inc.
Allendale, NJ
380,000,000
100 Applebee’s
34 Panera Bread
13
Harman Management
Corp.
Los Altos, CA
346,122,000
120 KFC
188 YUM! Multi
14
The Briad Group
Livingston, NJ
345,660,000
65 TGI Friday’s
50 Wendy’s
15
K-Mac Enterprises
Fort Smith, AR
345,362,000
202 Taco Bell
17 KFC
16
RMH Franchise
Corp.
Lincoln, NE
335,000,000
138 Applebee’s
17
Pilot Travel Centers, LLC
Knoxville, TN
327,370,000
199 Subway
83 Cinnabon
18
24
KBP Foods, Inc.
Overland Park, KS
274,000,000
227 KFC
49 Taco Bell
25
D.L. Rogers Corp.
N Richland Hills, TX
262,500,000
223 Sonic Drive-In
Franchise Times’
Restaurant 200:
TOP 26-200
$200-260 Million
26
United States Beef Corp.
Tulsa, OK
322 Arby’s
6 Taco Bueno
27
Apple Gold Group
Raleigh, NC
132 Applebee’s
6 Burger King
28
Sizzling Platter, Inc.
Murray, UT
154 Little Caesars
20 Sizzler
29
Cedar Enterprises, Inc.
Columbus, OH
170 Wendy’s
Muy Brands, LLC
San Antonio, TX
317,272,000
225 Pizza Hut
75 Taco Bell
30
TEAM Schostak Family
Restaurants
Livonia, MI
65 Applebee’s
60 Burger King
19
JIB Management, Inc.
Fremont, CA
306,000,000
221 Jack in the Box
35 Denny’s
31
Interfoods of
America, Inc.
Miami, FL
145 Popeye’s
20 Taco Bell
20
Quality Dining, Inc.
Mishawaka, IN
282,372,000
165 Burger King
48 Chili’s
32
DavCo Restaurants, Inc.
Crofton, MD
152 Wendy’s
21*
Pepper Dining, Inc.
Charlotte, NC
282,000,000
104 Chili’s
33
Pacific Bells, Inc.
Vancouver, WA
84 Taco Bell
24 Buffalo Wild Wings
22
ADF Companies
Fairfield, NJ
278,000,000
289 Pizza Hut
14 Panera Bread
34
Fugate Enterprises
Wichita, KS
172 Pizza Hut
72 Taco Bell
23
Tacala
Birmingham, AL
277,046,000
247 Taco Bell
66 Sonic Drive-In
Iconology
Top 10 Gainers
Notable
Newcomers
* Denotes revenue estimate
36
August 2014
35
Southern California
Pizza Co., LLC
Orange, CA
224 Pizza Hut
41*
Valenti Management
Tampa, FL
125 Wendy’s
17 Chili’s
36
Frisch’s Restaurants, Inc.
Cincinnati, OH
95 Big Boy
37
Falcon Holdings, LLC
Westlake, TX
165 Church’s Chicken
46 Long John Silver’s
42
Apex Restaurant
Management, Inc.
Dallas, TX
112 KFC
68 Long John Silver’s
43
The Rose Group
Newtown, PA
58 Applebee’s
6 Corner Bakery Cafe
$170-220 Million
38* Rottinghaus Co.
La Crosse, WI
400 Subway
39
JRN, Inc.
Columbia, TN
151 KFC
22 YUM! Multi
40
Carlisle Corp.
Memphis, TN
134 Wendy’s
47
T.L. Cannon Management
Ponte Vedra Beach, FL
60 Applebee’s
53
Apple-Metro, Inc.
Harrison, NY
36 Applebee’s
48
Western Reserve
Restaurant Mgmt
Rochester, NY
112 Wendy’s
54*
Hamra Management Co.
Springfield, MO
49 Panera Bread
34 Wendy’s
49
Franchise
Management, Inc.
Houlton, ME
140 Pizza Hut
45 KFC
50
BR Associates, Inc.
Jasper, IN
103 Long John Silver’s
35 Wendy’s
Caspers Co.
Tampa, FL
53 McDonald’s
51
Apple Investors Group
Chino Hills, CA
51 Applebee’s
23 Burger King
$150-170 Million
52
Restaurant
Management Co.
Wichita, KS
139 Pizza Hut
15 Long John Silver’s
44* T-Bird Restaurant Group
La Jolla, CA
63 Outback Steakhouse
45
46
Century
Management, Inc.
Memphis, TN
59 McDonald’s
$140-150 Million
55
Metro Corral Partners
Winter Park, FL
30 Golden Corral
56
Palo Alto, Inc.
Denver, CO
90 Taco Bell
38 Pizza Hut
57
SSCP Management, Inc.
Dallas, TX
68 Applebee’s
58
MarLu Investment Group
Elk Grove, CA
53 Arby’s
47 Church’s Chicken
650+ restaurants
10+ STRAIGHT YEARS
WORLDWIDE
SAME STORE SALES INCREASES
974,025
$
average unit
volume per store*
RECORD BREAKING
74
NEW restaurants
OPENED IN 2013
FRANCHise opportunities available
WINGSTOPFRANCHISE.COM | 972.686.6500
*Figure reflects the average annual net sales for all Wingstop Restaurants (23 corporate and 503 franchise) in the system that were open during the entire period from December 30,
2012 through December 28, 2013, as published in Item 19 of our May 1, 2014 Franchise Disclosure Document. Of these 503 restaurants, 225 (43%) had higher net sales during the
reported period. The financial performance representation contained in Item 19 of our May 1, 2014 Franchise Disclosure Document also includes the average annual net sales information
(1) separately for all franchised Wingstop Restaurants, and (2) separately for all company-owned Wingstop Restaurants, in operation in the United States during the referenced period.
A new franchisee’s results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk. © 2014 Wingstop Restaurants Inc.
August 2014
37
59
Pizza Properties, Inc.
El Paso, TX
47 Peter Piper Pizza
40 Burger King
60
Celebration
Restaurant Group
Celebration, FL
100 Pizza Hut
40 Taco Bell
61
Potomac Family
Dining Group
Herndon, VA
69 Applebee’s
62* PJ United
Birmingham, AL
155 Papa John’s
$130-140 Million
63
WKS Restaurant Group
Lakewood, CA
59 El Pollo Loco
22 Denny’s
64
Wisconsin Hospitality
Group, LLC
Waukesha, WI
83 Pizza Hut
38 Applebee’s
65
Miller/Hopkins Group
Las Vegas, NV
150 Pizza Hut
66* Fourteen Foods, LLC
Minneapolis, MN
142 Dairy Queen
67
Quality Restaurant
Concepts, LLC
Birmingham, AL
60 Applebee’s
68
Desert de Oro Foods, Inc.
Kingman, AZ
76 Taco Bell
59 Pizza Hut
69
The Jan Companies
Cranston, RI
101 Burger King
4 Krispy Kreme
$120-130 Million
70
Meritage
Hospitality Group
Grand Rapids, MI
114 Wendy’s
71
Border Foods Companies
Golden Valley, MN
84 Taco Bell
5 Sonic Drive-In
77
America’s Pizza
Company, LLC
Lafayette, LA
129 Pizza Hut
72
Paradigm Investment
Group, LLC
San Diego, CA
99 Hardee’s
1 TGI Friday’s
78
Wendy’s of
Colorado Springs
Colorado Springs, CO
73 Wendy’s
9 Golden Corral
73
BurgerBusters, Inc.
Virginia Beach, VA
83 Taco Bell
11 Pizza Hut
79
Southern Multifoods, Inc.
Jacksonville, TX
64 Taco Bell
22 YUM! Multi
74
Pennant Foods, LLC
Knoxville, TN
89 Wendy’s
80
McEssy Investment Co.
Lake Forest, IL
46 McDonald’s
81
Starboard Group
Coral Springs, FL
76 Wendy’s
82
B & G Food
Enterprises, LLC
Morgan City, LA
62 Taco Bell
20 YUM! Multi
75* Goldco, LLC
Atlanta, GA
110 Burger King
$110-120 Million
76* RPM Pizza, Inc.
Gulfport, MS
135 Domino’s
Playing in the middle
The growth of large-scale franchisees has
created concern in the restaurant business for the
fate of small franchisees, the “mom-and-pops,” or
“onesies-twosies” as they’re often called, because
they own just one or two units.
But what about the mid-sized operator? Many of
the franchisees on the Restaurant 200 are getting
bigger not by purchasing these mom-and-pops, but
because they’re buying out mid-scale operators with
10 to 20 locations. These franchisees are retiring or
simply getting out of the business.
“It’s happening a lot,” said Rick Ormsby, co-founder
of Louisville-based investment bank NDA Inc., which
works on the sale of a number of franchisees—but
especially the Yum Brands concepts, Taco Bell, KFC
and Pizza Hut.
Ormsby recently created a database, and found
that 25 to 30 percent of operators in the Yum system
with 10 to 15 units or fewer have left the system
over the past four or five years. Most have sold their
businesses.
38
August 2014
That trend is playing out over many other chains.
At least part of the reason is due to retirements.
The legacy chains that dominate the Restaurant 200
grew in the 1970s and ‘80s. Their franchisees are
reaching retirement age, don’t have heirs who want
to continue in the business and they sell.
But that’s not the only reason. Many believe
the current operating environment is increasingly
difficult for smaller operators, even mid-sized
franchisees. That has reduced operating margins.
Add into that remodel requirements from a number
of legacy brands, and older franchisees may opt to
leave the business rather than keep going.
“Many aging franchisees have impending
remodeling obligations,” Ormsby said. “There’s a
lack of clear generational pass-downs. Everyone
wants to retire at some point in time. And the
average age in a lot of these systems is high.”
So big franchisees will keep getting bigger. And
mid-sized operators will be fewer.
83
Pacific Island
Restaurants, Inc.
Honolulu, HI
44 Pizza Hut
38 Taco Bell
84* Lemek, LLC
Elkridge, MD
54 Panera Bread
85*
Big River Restaurants
Natchez, MS
46 Applebee’s
11 Pizza Hut
86*
JEM Restaurant Group
Charleston, SC
92 Pizza Hut
29 Taco Bell
87
DORO, Inc.
Eau Claire, WI
99 Hardee’s
5 Taco John’s
88
QK, Inc.
Phoenix, AZ
90 Denny’s
6 Del Taco
$100-110 Million
89
Diversified
Restaurant Holdings
Southfield, MI
36 Buffalo Wild Wings
18 Bagger Dave’s
90
R.E.E. Inc.
Beaumont, TX
52 McDonald’s
91
Carolina
Restaurant Group
Charlotte, NC
67 Wendy’s
92
Parikh Network
Edison, NJ
83 Popeye’s
1 Corner Bakery Cafe
93
Summit
Restaurant Holdings
Lakewood, CO
95 Hardee’s
94
The Saxton Group
Dallas, TX
53 McAlister’s Deli
4 Pinkberry’s
95
Retzer Resources, Inc.
Greenville, MS
41 McDonald’s
96
RGT Management, Inc.
Memphis, TN
61 Taco Bell
32 KFC
97
Friendly Franchisees
Corp.
La Palma, CA
72 Carl’s Jr.
$90-100 Million
98*
Neighborhood
Hospitality/Woodland
Group, Inc.
Hazard, KY
41 Applebee’s
14 Wendy’s
99
Treadwell
Enterprises, Inc.
Springfield, MO
92 KFC
3 HuHot
Fastest growers
The 10 fastest-growing franchisees
on the Restaurant 200, by percent sales
increase.
Frisch’s Restaurants Inc............... 120.9%
TEAM Schostak
Family Restaurants....................... 104.4%
100 Apple Sauce, Inc.
Crestview Hills, KY
44 Applebee’s
WKS Restaurant Group.................. 77.7%
RGT Management, Inc......................61.9%
101 Platinum Corral, LLC
Jacksonville, NC
28 Golden Corral
102
Ocedon............................................ 48.8%
Apple Gilroy, Inc.............................. 48.3%
PR Management
Corporation
Newton, MA
33 Panera Bread
Dolan Foster Enterprises, LLC....... 43.3%
Diversified Restaurant Holdings.... 40.6%
103 Strang Corp.
Cleveland, OH
38 Panera Bread
104
Parikh Network.............................. 31.3%
Luihn Food Systems, Inc.
Morrisville, NC
41 Taco Bell
10 KFC
105 Stine Enterprises, Inc.
Phoenix, AZ
70 Jack in the Box
106
Romulus
Restaurant Group
Phoenix, AZ
58 IHOP
107
Hielan
Restaurant Group
Lewisville, TX
43 Chili’s
108 Daland Corp.
Wichita, KS
110 Pizza Hut
$80-90 Million
109
OCAT, Inc......................................... 40.5%
Dolan Foster
Enterprises, LLC
Pleasanton, CA
72 Taco Bell
110 Den-Tex Central, Inc.
San Antonio, TX
75 Denny’s
111*
Kazi Management VI, LLC
St. Thomas, VI
76 KFC
24 Burger King
112
Stanton
& Associates, Inc.
Jackson, MI
66 Wendy’s
5 Biggby Coffee
113
Morgan’s Foods, Inc.
Cleveland, OH
53 KFC
4 Taco Bell
114*
American Franchise
Capital, LLC
Greenwich, CT
33 Applebee’s
28 Taco Bell
115*
The Bistro Group
Cincinnati, OH
28 TGI Friday’s
5 McAlister’s Deli
116*
United Restaurant
Group, L.P.
Glen Allen, VA
29 TGI Friday’s
117
Hospitality Restaurant
Group, Inc.
Traverse City, MI
43 Taco Bell
14 Pizza Hut
118
Gala Corporation
Costa Mesa, CA
18 Applebee’s
10 Famous Dave’s
119 High Plains Pizza
Liberal, KS
87 Pizza Hut
$70-80 Million
120 FourCrown, Inc.
Oakdale, MN
58 Wendy’s
121
OCAT, Inc.
Modesto, CA
50 Taco Bell
1 YUM! Multi
122 Benton Properties, Inc.
Springdale, AR
63 Sonic Drive-In
123
Jem Restaurant
Management Corp.
Fresno, CA
43 Wendy’s
14 KFC
124
Rucker Restaurant
Holdings, LLC
Chappaqua, NY
56 Jack in the Box
125
KC Bell, Inc.
Wichita, KS
63 Taco Bell
3 Freddy’s
126 Oerther Foods, Inc.
Orlando, FL
24 McDonald’s
127 CLP Corp.
Homewood , AL
21 McDonald’s
August 2014
39
128* Schuster
Enterprises, Inc.
Columbus, GA
63 Burger King
129
Howley Bread
Group, Ltd.
Westlake, OH
27 Panera Bread
130
AB Enterprises
Redding, CA
13 Burger King
11 Applebee’s
$60-70 Million
131* Original Bread, Inc.
Wichita, KS
34 Panera Bread
132
Apple Core
Enterprises, Inc.
Minot, ND
24 Applebee’s
137 DiPasqua Enterprises
Winter Park, FL
115 Subway
147 Ocedon
Westerville, OH
51 Burger King
138 Hallrich, Inc.
Stow, OH
85 Pizza Hut
148
139 Carisch, Inc.
Wayzata, MN
66 Arby’s
140
Ansara Restaurant
Group, Inc.
Farmington Hills, MI
22 Red Robin
$50-60 Million
Lehigh Valley
Restaurant Group
Allentown, PA
20 Red Robin
149 DenSuccess, Inc.
Apex, NC
44 Denny’s
141* Fourjay, LLC
North Little Rock, AR
49 Wendy’s
150
142
151 LDF Food Group, Inc.
Wichita, KS
42 Wendy’s
Fowler Foods, Inc.
Jonesboro, AR
45 KFC
15 YUM! Multi
VKC Group
Sugar Land, TX
105 Subway
18 Great American Cookies
143 Parrish Foods
Dallas, TX
23 McDonald’s
152* William Tell, Inc.
Salt Lake City, UT
18 Applebee’s
8 Famous Dave’s
144
Verlander
Enterprises, LLC
El Paso, TX
10 Applebee’s
10 Village Inn
153
Top Line
Restaurants, Inc.
Chandler, AZ
37 Denny’s
2 Corner Bakery Cafe
135 Cotti Foods Corp.
Rancho Santa Margarita, CA
60 Taco Bell
145* Apple Corps, L.P.
Witchita , KS
25 Applebee’s
136 Kades Corp.
Pasadena, TX
29 McDonald’s
146* Las-Cal Corp.
Las Vegas, NV
64 Taco Bell
154
Bullard
Restaurant Group
Raleigh, NC
23 Moe’s Southwest Grill
18 Burger King
133* Ultimate Challenge, LLC
Willmar, MN
95 Domino’s
134
First Sun
Management Corp.
Clemson, SC
47 Wendy’s
156*
Franchisors with the most franchisees
on the ranking.
Taco Bell.................................................41
Wendy’s................................................. 31
Applebee’s............................................. 27
KFC........................................................ 26
Pizza Hut............................................... 26
®
West Quality
Food Service, Inc.
Laurel, MS
53 KFC
11 YUM! Multi
157 BMW Management, Inc.
Temecula, CA
23 Sizzler
158
Brodersen
Management Corp.
Glendale, WI
39 Popeye’s
159 Serazen, LLC
Orange, CA
69 Papa John’s
160* J.S. Ventures, Inc.
Wichita, KS
25 Applebee’s
161
Mirabile
Investment Corp.
Memphis, TN
43 Burger King
7 Popeye’s
162 Janjer Enterprises, Inc.
Silver Springs, MD
29 Popeye’s
August 2014
C & P Restaurant
Company, LLC
Macon, GA
12 Captain D’s
8 Cheddar’s Casual Cafe
164
RLC Enterprises, Inc.
Northbrook, IL
50 Taco Bell
9 KFC
165
Staab Management
Co. Inc.
Grand Island, NE
68 Pizza Hut
166* JAX, LLC
Charlotte, NC
18 Golden Corral
167
Metz Group
Dallas, PA
12 TGI Friday’s
2 Krispy Kreme
168 SD Holdings
Fort Collins, CO
39 McAlister’s Deli
169 S-Group Companies
Sandusky, OH
33 Wendy’s
170 GPS Hospitality, LLC
Atlanta, GA
42 Burger King
171
155 DRM, Inc.
Omaha, NE
69 Arby’s
Popular brands
40
163
RoHoHo, Inc.
Charleston, SC
55 Papa John’s
4 Jersey Mike’s
$40-50 Million
172 Wendco Group
Pensacola, FL
39 Wendy’s
173 Primary Aim, LLC
Zanesville, OH
31 Wendy’s
174
Northcott Co.
Chanhassen, MN
21 Perkins
4 Houlihan’s
175
Taco Bill Inc.
& Affiliates
Auburn, CA
23 Taco Bell
16 Long John Silver’s
176
Creative
Foods Corp.
Garden City, NY
27 Burger King
177
R & L Foods, Inc.
San Antonio, TX
10 Taco Bell
5 KFC
178 U.S. Restaurants, Inc.
Blue Bell , PA
34 Burger King
179
RREMC
Restaurants, LLC
Merritt Island, FL
36 Denny’s
1 Dairy Queen
180
Shamrock Companies
Hinsdale, IL
24 Taco Bell
11 KFC
181
Ryan Restaurant Corp.
Billings, MT
8 Applebee’s
8 Famous Dave’s
182
Hart Restaurant
Management, Inc.
Corpus Christi, TX
44 Burger King
183 Apple Gilroy, Inc.
San Jose, CA
12 Applebee’s
184* Thomas 5 Ltd.
Dublin, OH
32 Wendy’s
190* PRB Management, LLC
Fairfield, CA
34 Taco Bell
195
H & K Partners
Milwaukee, WI
34 KFC
7 YUM! Multi
$35-40 Million
196
Texas Subs, Inc.
Fort Worth, TX
62 Subway
1 Mooyah Burger & Fries
185 Pizza Hut of Arizona
Tucson, AZ
33 Pizza Hut
186 Emerald Foods, Inc.
Columbus, OH
39 Wendy’s
187
Century Fast
Foods, Inc.
Los Angeles, CA
33 Taco Bell
188
Rawson
Foodservice, Inc.
Princeton, NJ
20 Wendy’s
189* GC Partners, Inc.
Winston-Salem, NC
12 Golden Corral
191 Mach Robin, LLC
Sun Valley, ID
14 Red Robin
192
Brumit
Restaurant Group
Asheville, NC
44 Arby’s
2 Which Wich
193
Bartlett
Management Services
Clinton, IL
42 KFC
1 Taco Bell
194
WMCR Co.
Alpena, MI
37 KFC
2 Taco Bell
197* Peak Interests, LLC
Golden, CO
47 Pizza Hut
198
NRD Holdings, LLC
Atlanta, GA
16 Popeyes
9 Subway
199 Wendy’s of Montana
Billings, MT
18 Wendy’s
200
Tricorp Food
Services, Inc.
Chesterfield, MO
12 TGI Friday’s
Cutting out the go-between
Private equity groups have become an increasingly
important investor in the franchise sector—they own
many of the top companies on our Restaurant 200,
and are buying up more of them all the time.
And yet, there is a certain level of conflict about
these groups within the industry. Franchisors are
historically wary of private equity groups. The firms
also have short investment horizons, meaning that
whenever they buy a franchisee, they’ll look to sell
that company in five or so years.
But what if a franchisee could find a way around
that? Greg Flynn might have done just that.
The CEO of the top company on our ranking,
Flynn Restaurant Group, recently inked a deal with
the Ontario Teachers Pension Plan, which invested
$300 million in the San Francisco-based operator
as part of a management-led buyout of its private
equity owners, Goldman Sachs and Weston Presidio.
The deal values Flynn’s company at $1.1 billion, an
enormous valuation for a franchisee and the first one
in the U.S. to reach that level. But it’s the involvement
of that pension plan that makes this a big deal.
Pension plans are among the large investors that
invest in private equity groups, which turn around
and buy out companies or make other investments.
In essence, said Flynn, “This eliminates the
middleman.”
Pension funds will periodically, albeit rarely,
invest in companies themselves. But this is the
first time we could find that one has invested in a
franchisee. It might not be the last, either. Flynn’s
deal has generated considerable buzz within the
franchise community, because it could provide a
longer-term alternative to the private equity investor.
“There are no fund life issues,” Flynn said. “They
don’t have to sell. They’re not led to sell just to create
a data point. They can be as patient as appropriate
for the business without regard to the capital source.”
W ith a growing number of large-scale
franchisees, pension funds could be viewed as an
attractive alternative to the private equity group. And
franchisors could get on board, too.
The franchisees could also be a good investment
for the funds themselves, for many of the same
reasons that private equity groups have been buying
out the operators. The businesses generate cash,
and some of the biggest franchisees on our ranking
are growing at rates that easily rival some of the
fastest growing restaurant chains.
August 2014
41
How we compiled the ranking
Franchise Times Restaurant 200 is compiled
annually using a combination of companies’ selfreported information and estimates gleaned from
publicly available documents. Those documents
include annual reports, Securities and Exchange
Commission filings, and Franchise Disclosure
Documents. The ranking is compiled by Franchise
Times’ sister publication, the Restaurant Finance
Monitor.
The ranking is based on the companies’ prior year
revenue from their operations for which they are a
franchisee. It does not count franchisees’ privately
owned, non-franchised concepts, or concepts
for which they are the franchisor. Nor does the
ranking include revenue from other business
operations, such as hotels or real estate interests.
42
August 2014
For companies that did not respond to our survey,
we confirmed the number of units operated by the
company and then estimated the revenue. In the
case of a tie in the amount of total revenue we give
favor to the company with the most units. We give
preference on our ranking to companies that provide
us with their information, rather than companies for
which we have to estimate annual revenue.
Our ranking of the top 200 franchisees is combined
with the second 200 franchisees in a report prepared
by the Chicago consulting firm Technomic.
For more information, contact Abbi Nawrocki at
(612) 767-3200; abbi@franchisetimes.com