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Chain LeaderEditorial Archives2005 — September — Growth Strategy

Beefing Up
Beef ‘O’ Brady’s builds on its simple, family-friendly formula as it preps for the next phase of expansion.

President Nick Vojnovic (l.) and CEO Chuck Winship have capitalized on Beef ‘O’ Brady’s simple concept of a family sports pub with a limited menu and small box, growing the chain from 30 units in 1998 to 170 units today.

To help keep costs down, Beef ‘O’ Brady’s serves most food in plastic baskets lined with paper, eliminating the need for a dishwasher, and uses supplier-branded fixtures and paper products.

Beef ‘O’ Brady’s upgraded its burgers, replacing ground chuck with aged-steak trimmings.

Beef ‘O’ Brady’s sells about 70 million chicken wings a year. The company recently added new flavors including garlic, teriyaki and Cajun.

Last fall Beef ‘O’ Brady’s introduced its popular Grouper Salad, featuring a fresh mix of greens, cucumbers, tomatoes, onions and Parmesan cheese topped with choice of blackened, grilled or fried grouper.

Beef ‘O’ Brady’s units are located in high-growth suburban markets in grocery-store-anchored shopping centers. “We tell [franchisees] try to pick a site that right now is on the edge of growth, but 20 years from now, you’ll be right in the middle,” says President Nick Vojnovic.

Family matters at Beef ‘O’ Brady’s. For 20 years, the chain of family sports pubs has created a niche built on late founder Jim Mellody’s mantra of “do a few things right.” The concept’s small, family-friendly atmosphere, limited menu, owner-operator format and community involvement have propelled it from a Tampa, Fla., brand to a regional Southeast and Midwest chain.

However, many credit Family Sports Concepts Inc. for Beef ‘O’ Brady’s growth and evolution while sticking to the concept’s simple formula. Since Family Sports Concepts took the reins in 1998, the chain, fondly known as Beef’s among customers, has grown to 170 franchised units in 17 states including breaking out of its Southeastern core into Illinois and Texas in 2004. It posted systemwide sales of $110 million in 2004 and expects to generate $150 million this year. And same-store sales went up 9.3 percent last year, followed by a 10 percent increase in the first quarter of this year and 9.3 percent in the second quarter.

Family Sports Concepts is now shifting gears. After the chain enters Minnesota, Tennessee, Virginia, Maryland, Wisconsin and Indiana this year to fulfill existing franchise agreements, it will not enter new markets. Instead the company plans to fill out its existing territories over the next five years to develop operations depth, brand awareness and marketing efficiencies. It expects franchisees to open 250 units by 2010 including 46 this year.

Setting Limits
As part of its new five-year strategic plan, Family Sports Concepts is initially limiting most new franchisees to one unit after making some mistakes early on. When it bought the chain seven years ago, the company admits, it sold five-unit packages hastily. And every year, 2 percent to 3 percent of units closed for various reasons including bad real estate and operators who lacked the skills to run the units or didn’t finish the training program.

“When we first got here, we were in survival mode,” says Nick Vojnovic, president of Family Sports Concepts. “We had to have enough money coming in to support our overhead to give us momentum to at least get us to where it was a viable concept, where we were making money.”

Now the company wants to make sure new franchisees can execute the concept successfully before they open a second unit. “We’re trying to keep the cap to one and make it the exception if they get two,” Vojnovic says. “We are all owner-operator stores. And a lot of the partners come in with no experience, and we’re going to try to help them grow. So we’d rather them not commit to too large of a system. We’d rather have them focus on their initial store.”

However, restricting new franchisees to one or two stores could keep experienced operators from buying into the chain, says Dan Rowe, CEO of Alexandria, Va.-based Fransmart, a franchise-development company. “You’re still going to get some, but I think the more successful franchisees are looking for companies to build. They’re not looking to buy themselves a job,” he says. “I just think it limits you from really attracting a whole pool of really qualified people that would ordinarily want to go and develop a whole market of your concept.”

Family Sports Concepts says it will consider multiunit packages only with franchisees who have substantial restaurant experience and capital. But for the most part, new franchisees will only be allowed to open one or two units so they can focus on becoming hands-on operators and active in the community—both vital to the chain’s success.

Because local-store marketing is integral to the concept, the company requires franchisees to be owner-operators with deep roots in their communities and a track record of active community involvement. Franchisees take part in local charity and community events and sponsor Little League teams and school activities.

“Managers don’t really do that. At 5 o’clock, they’re done. And they have their own issues,” Vojnovic says. “And we’ve found that owners are the ones that dig in, and they do it for the long haul. I think that’s why franchises are so successful. Because they have a level of dedication that you cannot replicate.”

Sticking to the Formula
It’s a formula that has worked for the past 20 years. Family Sports Concepts has remained true to Mellody’s vision of a community-oriented family sports pub while bringing needed systems, support and discipline to the chain.

Beef ‘O’ Brady’s still serves a limited menu of Buffalo wings, sandwiches and salads. It rolled a new menu last fall that features dishes with more intense flavor profiles while eliminating slow sellers like the cold sandwiches. The menu now includes wraps such as the Grilled Chicken Wrap, $6.99; sandwiches like the Roast Beef Garlic Melt, $6.79; and salads including the popular Grouper Salad, $7.49. Beef’s also upgraded its burgers using aged-steak trimmings. In the fall, it will introduce more items including several burgers, a queso dip and a strawberry shortcake dessert. The company hopes the new items and 3 percent price increases will boost sales and lower food costs to 32 percent to 33 percent from 34 percent to 35 percent.


Beef ‘O’ Brady’s Family Sports Pub

Parent Company
Family Sports Concepts Inc., Tampa, Fla.
2004 U.S. Systemwide Sales
$110 million
2005 U.S. Systemwide Sales
$150 million (company estimate)
Average Unit Volume
Average Check
Expansion Plans

System 46 in 2005, 250 in 5 years

While the menu has evolved, Beef ‘O’ Brady’s site-selection criteria have remained the same. It continues to choose sites in high-growth suburban markets in grocery-store-anchored shopping centers. Catering to middle- and upper-middle-income families, units average only 2,500 to 3,000 square feet with seating for 100. The decor features green walls, blond wood, TVs and memorabilia of local sports teams to create a cozy neighborhood pub feel. About 150 square feet are reserved for an arcade room for kids. To maintain a family-friendly environment, the restaurants prohibit dartboards, jukeboxes, pool tables and hard liquor. Most units close at 11 p.m.

Franchisees invest about $350,000 to $400,000 to open a store, which includes the $30,000 franchise fee. They go through six weeks of hands-on training at one of the regional training stores in Texas, Georgia, Kentucky or Florida; three days of classroom instruction at Beef’s University in Tampa, Fla.; and a one-day construction workshop. They participate in several store openings before opening their own. Corporate then assists them with their openings and stays for about a week afterward. Franchisees pay ongoing royalty fees of 4 percent and marketing fees of 1.5 percent of gross sales.

Except for the marketing fee, the other fees have gone up since 1998, when the franchise fee was only $15,000 and the royalty fee was 2.5 percent, as Family Sports Concepts provides more training and support. The company plans to raise the franchise fee to $35,000 in the third quarter, when it extends the initial training to seven weeks and the classroom instruction at Beef’s University to one week. “That’s part of our two big initiatives: to continue to raise the quality of the franchisees and make it even more difficult to get in,” Vojnovic says.

The company’s commitment to ongoing quality and training includes two scheduled quality-assurance visits a year. “We used to do one unannounced, and I felt like it put us in an adversarial role,” Vojnovic says. “I look at operations visits as an opportunity to teach and train. The goal of operations people is not to beat up on the franchise partner but to try to teach them and help them become better. No matter where they are, we constantly want to raise the bar and challenge each franchisee to do better.”

But Rowe says two QA visits are not enough for new franchisees. “The franchisees need more help than that, especially in the first year,” he says.

Share and Share Alike
Vojnovic contends that providing training and support that facilitates better relationships with and among the franchisees will help the chain succeed: “A lot of what we do is to get the different partners talking to each other—sharing their ideas.”

To that end, the company is building its ongoing training and support around sharing best practices. It holds regional workshops three times a year, including one at its annual retreat, that cover topics such as marketing, strategic issues, purchasing and menu items. Family Sports Concepts also distributes a quarterly magazine and a weekly e-mail newsletter that share success stories and new developments.

As Beef’s prepares to grow within its existing markets over the next five years, longtime franchisees like Richard Macri are pleased with the company’s new strategic plan but concerned about the system growing too fast. “I just don’t want them to get so big that I can’t pick up the phone and talk to somebody and I can’t get immediate answers,” explains Macri, who owns three units in Bradenton and Ellenton, Fla. “The caring factor.

“[Currently] I can call up any of them there and say, ‘Look here’s my problem.’ And they’re eager to help, and they give me some good suggestions and ideas. I don’t want to see that go away,” Macri adds. “I think it will go away if we get too big and we forget about the little guy.”

To keep corporate from spreading itself too thin, Vojnovic intends to hire a new support staff member for every eight restaurants that open. It is also considering CDs, DVDs and the Internet for training, operations and disseminating information.

According to Vojnovic, these new initiatives will help franchisees excel while also keeping Mellody’s original concept viable for years to come. “We’re caretakers for this brand. Mr. Mellody did it for the first 15 years. He handed it off to [CEO Chuck Winship] and I and the rest of our team here. We’ve got it for 15 or 20 years,” Vojnovic says. “He took it from zero to 30. Our goal is to take it from 30 to hopefully 500, 600, 700.”

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