How Orangetheory and 39 more brands drive smart growth
1. Orangetheory Fitness
Bathed in orange light—and sweat—a couple dozen people hustle from rowing machine to treadmill to TRX suspension rigs as an instructor urges them to stay in the orange zone. On the other side of the glass Dave Long notes how much he enjoys visiting studios when he’s on the road because he’s able to see his brand in action.
The co-founder and CEO of Orangetheory Fitness is in Houston, a market with a dozen locations open and plans for at least 25 by the end of 2019. The growth is indicative of the Orangetheory system as a whole, which crossed the 800-unit mark in early November.
“Now we’re opening six a week,” says Long, who’s on the second leg of a trip that’s already had him in Oregon, with Tennessee up next before returning to Orangetheory’s Boca Raton, Florida, headquarters. “One week we opened 11 locations—that was kinda crazy.”
“We frontload operational support when a studio opens,” says Orangetheory CEO
In the three-year span from 2014 to 2016, Orangetheory grew its unit numbers by 218 percent and its systemwide sales increased 351 percent, statistics that would have any other franchise executive giddy but that Long takes in stride.
“From the beginning, I was pretty sold that this would work,” says Long simply. “This” is instructor-led group fitness classes with intervals of cardio and strength training. Everyone wears a heart rate monitor and the stats are displayed on large screens for all to see.
The workout works, continues Long, his own fit-and-trim figure a walking advertisement for the brand, and he says it’s the No.1 reason for Orangetheory’s continued growth. Orangetheory classes are developed around the concept of excess post-exercise oxygen consumption, or EPOC. The company says its heart rate-monitored training “is designed to maintain a target zone that stimulates metabolism and energy”—also known as the orange zone. Calling it the “afterburn,” Orangetheory claims members burn an estimated 500 to 1,000 calories in 60 minutes and keep burning calories at an average rate of 15 to 20 percent higher than their standard resting calorie burn for up to 36 hours post-workout.
Co-founder Ellen Latham, whose Ellen’s Ultimate Workout gym in Florida was the foundation for Orangetheory, continues to develop the workouts but it’s franchising that has pushed the brand beyond the borders of its home state.
Long, who was a VP at Massage Envy while the concept rocketed from 20 stores to 800, says at that company there was a “relentlessness around the franchise development process” that he’s carried with him to Orangetheory, along with full confidence in the model he saw in action at Massage Envy with real results.
“We are big believers in the area representative model,” says Long. “With that model, it supports us not just for rapid growth, but making it sustainable. There’s a bigger commitment level with the area representatives.”
In purchasing the rights to a specific territory, an Orangetheory area representative solicits and screens prospective franchisees and is paid 40 percent to 50 percent of the initial franchise fees received from franchises sold in their territory. Area reps also receive 33 percent of royalties collected from franchisees in that territory.
The AR model, says Long, helps Orangetheory “keep the needle moving on the best real estate,” something he lists as “challenges 1 through 10.”
“Everyone wants to be next to Whole Foods,” says Long, which of course is impossible, so Orangetheory and some of its franchisees said they’d “take a risk” and try locations that didn’t necessarily have the requisite high foot traffic and high visibility. “We found, surprisingly, that we had huge success in smaller communities, neighborhoods, secondary markets.” The year-old Houston location he’s visiting, for example, is in Sawyer Heights, an older neighborhood that’s re-emerging as a creative hub with a mix of art studios, shops and other retail taking over former industrial spaces.
Orangetheory has also built a strategy around educating landlords, particularly letting them know “we’re not just going to take up all the parking,” says Long, and also touting that a 2,800-square-foot studio can drive 100 to 200 unique consumers to a retail location every day.
Keeping members engaged is key to Orangetheory’s success, so staffers will call people if they miss a class.
Plus, Orangetheory has a shockingly low number of closures: zero.
Corporate bought two locations from franchisees early on, and there have been some transfers, but no closures, says Long, a testament to the concept’s foundation, its popularity and the strong unit-level economics it’s driving.
The average gross revenue of franchise studios in operation for more than a year exceeds $1 million, according to the company’s franchise disclosure document, and studios have an average of 751 active members paying anywhere between $59 and $159 per month. Orangetheory also focuses on a robust presale of memberships, signing up anywhere from 400 to 450 members before a location opens.
“We’re able to really leverage that we have busy studios right from the start,” says Long.
The system as a whole also continues to benefit from a pause taken in early 2012, when “for a few months we just stopped opening franchise locations so we could refocus on our training materials,” Long explains.
“We integrated a lot more touchpoints” with the franchisees, he continues, with the aim of “getting them on a great routine right out of the gate.”
Orangetheory provides franchisees with what it calls OBI—Orange Business Intelligence—insights into specific metrics such as workout traffic, plus marketing tools.
“And we frontload operational support when a studio opens, all looking at topline sales, so they can get on the right track from the start,” says Long. As more studios mature there’s deeper dialogues with franchisees, looking at everything from controllable expenses to ways ‘zees can drive revenue.
In February 2016, Orangetheory landed Atlanta private equity firm Roark Capital as an investor, a move Long calls “very intentional.”
“We wanted a partner that had expertise in growing to thousands of units domestically and had that international expertise,” says Long of the group that has investments in more than 50 franchise and multi-unit brands operating in 75 countries. “We’ve got a really strong team in our corner.”
Long uses the word “massive” when describing the international market potential for Orangetheory, with the expectation of 75 international openings in 2018. The brand already has locations in 15 other countries, including England, Australia and Japan.
As Orangtheory grows, Long says he often thinks back to the first studio opening in Fort Lauderdale in 2012, when they held a weight loss challenge and became particularly connected with the first batch of members.
“Now we focus on staff having a good relationship with members to where they’ll contact a member if they miss a class—there has to be that relationship,” says Long. “Keeping members engaged is integrated throughout the system.”
Long doesn’t just want members and employees to live the brand, he does so himself and says that level of commitment is necessary to take Orangetheory to the next level. “Health and wellness is my No. 1 passion and so I’m in a business that I believe in 110 percent.”
“We’re not an absentee-owner business,” says Shannon Hudson, right, with 9Round co-founder and wife, Heather.
Specialized fitness studios
Shannon Hudson said sustainability is the magic word when it comes to growing 9Round, the kickboxing-themed studio fitness concept he founded with wife Heather in 2008. 9Round debuts on our Fast & Serious ranking in the No. 2 spot. “We could grow a lot faster,” said Hudson, 9Round’s CEO, “but I think we’re the most strict, standards-wise, when it comes to choosing franchisees.” In addition to meeting financial qualifications, prospective ‘zees have to pass a fitness test, and even as the brand grew from 172 to 449 locations from 2014 to 2016, Hudson still sits down face-to-face with every franchise owner. “If you sell to everyone who can fog a mirror—and you can do that—you run into some problems,” said Hudson. “Early on we did that and we did have those problems,” including franchisees who didn’t understand or were unwilling to put in the necessary time and effort. “We’re not an absentee-owner business, we’re an owner-operator franchise,” continued Hudson. “They have to be all in.” From there, Hudson said he’d love to point to a “magic bullet” that guarantees success, but “nothing trumps strong operations, period.”
Hand & Stone’s CEO Todd Leff controls growth by selling no more than three units at a time.
3. Hand & Stone Massage and Facial Spa
Massage and facial spas
Todd Leff’s franchise concept could be growing even faster, but Hand & Stone doesn’t sell more than three units at a time, a decision that was made early on to ensure an intense focus on operations and the customer experience in each spa. “We’ve really sacrificed, in some cases, the pace of growth in favor of making sure it’s the right growth,” said Leff, president and CEO of the massage and facial concept that had 150 locations to finish 2014 and by the end of 2016 was up to 307. The brand’s skincare services have proven to be a key differentiator for Hand & Stone in the sector, accounting for 30 percent of revenue in 2016.
"Skincare has had the most dramatic impact on the business since we launched it in 2010,” said Leff, and it’s also proven effective in alleviating some of the usual staffing challenges. “It’s helped us meet the challenges of hiring massage therapists because aestheticians are more readily available,” said Leff. Hand & Stone, which is up five spots from No. 8 last year, does have relationships with massage schools and is ramping up recruiting to support its unit growth.
Dorvin Lively is CFO of Planet Fitness, which doubled in size.
4. Planet Fitness
One team, one planet. It’s the motto Planet Fitness aims to embed in its system at the corporate level and within the franchisee community, particularly as the brand more than doubled in size in three years. “We want everyone embodying that mentality and extending it to members,” said Dorvin Lively, president and CFO of a franchise system that added nearly 1,000 gyms in a three-year period, from 918 to end 2014 to 1,900 to close 2016. In addition to being an extension of the inclusivity Planet Fitness seeks to foster with its “Judgment Free Zone” brand positioning, that motto has also proved crucial as a reminder to resist the temptation to stray from its core model. “There’s been a lot of boutique and studio concepts that have come up in the last few years, and our franchisees see that, but we’ve gotta stay focused on what got us here,” said Lively of the low-cost model without a lot of fluff. “We’re not changing the brand or the offering just because of the latest fad. What we’re offering is exactly what the first-time user wants.” Planet Fitness is adapting its marketing strategy, shifting ad dollars to more digital, mobile and social media channels versus billboards and other traditional advertising. Lively noted 25 percent of Planet Fitness members are now signing up online and the brand is focused on messaging that pushes potential members into action. New gym development continues to come from the 180 Planet Fitness franchise groups, with “over 95 percent of new store openings by current franchisees in the last two years,” said Lively.
Randy Simon became CEO of Freddy’s in October 2017.
5. Freddy’s Frozen Custard & Steakburgers
Family dining chain
Strong infrastructure is what supports sustainable growth at Freddy’s Frozen Custard & Steakburgers, which aims to make the development path for franchisees more efficient through vetted vendors and its own real estate, construction, purchasing and marketing teams. There’s an emphasis on consistent operations, said CEO Randy Simon, and a culture that “permeates through the restaurants and is established by a strong and committed management team.” Simon was named CEO and president in October 2017 and succeeds his brother and co-founder Bill Simon, who died of cancer in December 2016. With the continued growth of Freddy’s, Simon said maintaining the consistency of fast, friendly service and quality food in each restaurant is a key focus and can be challenging because Freddy’s restaurants are spread across the country. “Our digital training platform, Freducation, facilitates frequent communication to all our team members and helps to create the consistency that guests expect,” said Simon, as he added having an easily accessible training program “is essential to keep us all moving in the same direction.” Social media is playing an increasingly important role in Freddy’s expansion, said Simon, as the team looks to provide “a timely response and personal touch” to any feedback received. Online engagement comes through a mix of news and community events, along with food photos and videos, all with the goal of increasing brand awareness, said Simon. Freddy’s has grown by nearly 75 percent since 2014, from 135 units to 236 at the end of 2016.
Nothing Bundt Cake’s Kyle Smith boasts 71% unit growth.
6. Nothing Bundt Cakes
A wise franchisee once told Kyle Smith “not to outrun your headlights—meaning rational, high-quality growth that can be properly supported and sustained is what really matters,” says Smith. It’s the philosophy the president of Nothing Bundt Cakes has put into practice since coming to the bakery chain in 2012 and it’s a driving force behind the brand’s 71 percent unit growth since 2014, going from 113 locations to 194 to finish 2016. That expansion, coupled with consistent sales increases, attracted the interest of Levine Leichtman Capital Partners, the Los Angeles-based private equity firm that acquired Nothing Bundt Cakes in October 2016. As the brand matures and it continues to put consistency above rapid acceleration, Smith says Nothing Bundt Cakes is now focusing on internal opportunities with existing bakery owners. Multi-unit ownership will account for about 30 percent of total openings this year, he says. That strategy also helps mitigate what Smith calls “the greatest challenge for any growing brand,” operational consistency, and Nothing Bundt Cakes invests heavily in support and training.
Jersey Mike’s President Hoyt Jones looks for a cultural fit.
7. Jersey Mike’s
Jersey Mike’s has “always been fanatical about who’s coming into the system,” said President Hoyt Jones, and the growth the sandwich franchise continues to experience is a direct result of the success of its franchisees. About 70 percent of new store openings are by existing franchisees, people who have “not just the experience and financials, but that are a cultural fit,” noted Jones as he emphasized the importance of community involvement and franchisees having an active presence in their locations. Jersey Mike’s finished 2016 with 1,187 locations, or 38 percent unit growth since 2014, coupled with 57 percent sales growth to $825 million in that same three-year period. With so many one- and two-unit franchisees adding to their unit count, Hoyt said it can be challenging to maintain consistency across locations and franchisees need, in essence, to duplicate themselves at each store. “The franchisee needs to be ready to put in time at both locations, and if they get to four or five, they have to have strong managers in place,” he said. “That’s why the whole training piece is super important and that we maintain that continuity in stores with management. People want to see a familiar face when they go into their store and we don’t take that lightly.”
“People come to Sky Zone to play,” says CEO Jeff Platt.
8. Sky Zone
Though down from its No. 2 position last year, Sky Zone has continued its steady growth, finishing 2016 with 171 locations of the large-format family-friendly trampoline parks, a 74 percent increase from 2014. CEO Jeff Platt said his motto of putting guests “front and center in every decision you make” is what drives Sky Zone’s expansion. “Make sure you are constantly designing and innovating your experience around what it is that they want or tell you that you need to do better to deliver a great experience to them,” he said. New attractions and offerings are what keep people coming back, continued Platt, such as GLOW, the brand’s after dark jumping dance club, or Skyfit workout classes. Platt said one challenge facing Sky Zone is the lack of knowledge regarding the benefits of play and it’s something he’s working to remedy. “People come to Sky Zone to play, and while people know that play is important and beneficial in so many ways, they are not making enough time or prioritizing it in their lives,” he said. “We are working on ways to better communicate the benefits of play and to make the experience more frictionless so that it is easier to play at Sky Zone.”
One limit on The Joint’s growth has been convincing owners they don’t need to be a doctor of chiropractic to buy a franchise; rather, they can employ one to provide services.
9. The Joint Chiropractic
Peter Holt put strong unit economics and careful selection of franchisees at the top of his list as keys to driving smart growth. The CEO of The Joint said a concept will “never be stronger than the franchisees that are brought into your network, so an effective franchise recruitment program is key. In your sales process, you need to assure that you are providing the key information that a franchise prospect must know about you, and that you have a process in place to capture key information about the potential franchisee as well,” continued Holt as he noted transparency is the essential ingredient. Up seven slots from its No. 16 ranking last year, The Joint has seen 50 percent unit growth since 2014, finishing 2016 with 370 locations. Helping to accelerate that growth, The Joint reinstated a regional developer model in which it sells the rights to open a minimum number of clinics in a defined territory and the regional developer in turn helps identify and qualify potential new franchisees in that territory and assists with providing field training, clinic opening and ongoing support. “In return, we share a portion of the initial franchise fee and the ongoing royalties for the clinics opened in that territory,” said Holt. This past year The Joint expanded to include eight regional developer territories, with a combined commitment to open a minimum of 211 units in their geographic areas over the next 10 years. Holt said a focus for the brand is continuing to use its storefronts to educate potential franchisees that they don’t need to be a doctor of chiropractic to own a clinic. “We are trying to overcome this challenge in our franchise recruitment messaging,” said Holt. “We have also added complete P&L information to our Item 19 in our FDD and have created a stand-alone franchise website to educate potential franchisees so they understand that this model has strong unit economics and is right for entrepreneurs and doctors of chiropractic alike.”
Chicken wing chain
Wingstop is in a category of one, said Charlie Morrison, able to continue its growth trajectory because of the brand’s “simple menu, operational efficiency, compelling unit economics and highly transferable model.” Morrison is president and CEO of the Dallas, Texas-based chicken wing chain that’s added 286 units over three years, finishing 2016 with 998 restaurant locations. Sales during this period increased 43 percent, something Morrison attributes not only to Wingstop’s made-to-order, hand-sauced wings, but also its commitment to being a digitally driven brand. “As an industry leading innovator in the digital space, Wingstop was the first to offer full menu customization through voice-activated ordering” on Amazon Echo, “and first to enable social ordering on Facebook Messenger and Twitter, before launching our most recent Wingbot text ordering capabilities and becoming among the first brands integrated into Facebook’s native Order Food page,” said Morrison. Today, he continued, digital ordering accounts for 21 percent of total sales and that percentage is growing. As Wingstop continues to expand its reach, especially in international markets, Morrison said a key challenge is keeping the authenticity of a local brand and flavor intact. Wingstop does this through a flexible menu mix. “Internationally, our menus offer an assortment of our most popular flavors, as well as items that have been specifically created for local tastes and palates and cultural needs,” said Morrison, as he noted in Asian markets such as the Philippines, Indonesia and Singapore menus include Flavored Rice Bowls with boneless wings, while Chicken Gliders (Wingstop’s version of a slider) are popular in Mexico, the United Arab Emirates and Asia.
Kona Ice founder Tony Lamb still has passion but less time.
11. Kona Ice
Kona Ice is riding a wave of indulgence in the treat segment. The brand has grown sales an impressive 146 percent from 2014 to 2016, far ahead of the brand’s unit growth of 33 percent. Founder and CEO Tony Lamb said it all comes down to two things: franchisee satisfaction and innovation. Because the company operates on a fixed royalty instead of a percentage of sales, Lamb and the team don’t spend a lot of time measuring performance. “As a company we never talk money,” said Lamb, who has little incentive to push sales. “I have franchisees that don’t work as hard, but they’re just as happy and sometimes happier. So I don’t want to be upset with them for not making the company money from this percentage standpoint. So I focus on the one thing that I think drives the growth, which is franchisee satisfaction. Then they buy more and have more sales points.” Then it’s all about truck technology and flavor innovations. In the past few years, Kona Ice has added solar panels, efficient LED lights and brighter menu boards. The brand has also invested heavily in new flavors. “We have a flavor scientist on retainer,” said Lamb. “Cincinnati is this mecca for flavorings. I’ve got a flavor scientist that won all these flavoring awards, all she does is create new flavor lines.” Digging deep into one segment has been a big help, too. For Kona Ice, that means getting cozy with schools via a series of programs from special fundraising cups to a cup emblazoned with the Star Spangled Banner that has sold well during football games—especially in this politically charged climate. And when Lamb found himself with 10,000 Kona Ice soccer balls, his franchisees were ecstatic, scooping up the stock in just eight days and giving them to schools in their markets. He said the biggest challenge has been staying connected with his growing franchisee base. “The early guys used to be able to call me up and say, What do you think about this?” said Lamb. “Now I’m much busier, and I hate that but my team has the same passion I do, so I don’t think anything is lacking.”
CEO Jeff Bevis of FirstLight Home Care.
12. FirstLight Home Care
Home healthcare provider
FirstLight Home Care is growing sales fast. At 142 percent sales growth over the past three years, it’s more than 100 percent ahead of the brand’s 42 percent unit growth over the same period. Founder and CEO Jeff Bevis said there are three things driving that sales growth. “The three keys are staying 100 percent focused on franchise owner selection, relentless pursuit of even higher quality in both our services and caregiver retention,” said Bevis. “And remaining very nimble to enhance our services to better address increasing demand of disease-specific populations.” That last point is big in the home care industry. As more and more families seek out care specific to cardiac issues or specialized care around joint replacement, they are seeking brands with a specialized focus. Bevis said to keep up with that sales growth, FirstLight Home Care has added significantly to the support team and added a bevy of tools for franchisees. The human resources and recruitment department has also been built out to help find and keep those specialized home care professionals. While finding people is certainly tricky with such low unemployment, Bevis said it wasn’t the biggest challenge. “Our biggest challenge in growing our brand has been staying true to our selection requirements for new owners—which we have done—and not being tempted to cut corners to simply plant flags,” said Bevis. “The result is seeing many flags fail, close and hurt the brand integrity. We have not had this occur and have overcome this by giving continually more focus to both new and existing owners for greater support in the initial six to 18 months in business, as well as adding new tools and programs to increase existing owner differentiation vs. competition, owner profitability, unit economics and success.”
Bryon Stephens stays disciplined at Marco’s Pizza.
13. Marco’s Pizza
Marco’s Pizza President Bryon Stephens said there is one word that drove the brand’s three-year growth of 44 percent in sales and 36 percent in units. “It’s all about staying disciplined. That’s my No. 1 word for growth, especially around site selection and franchisee selection,” said Stephens. “And we’ve added elements to be very disciplined around the operations experience, about delivering a five-star experience to guests.” Real estate has been really tough, he said. Construction costs have risen as much as 30 percent in some markets, but maintaining discipline is possible by watching every single expense and working franchisees to get valuable landlord contributions in new developments, especially. It’s hard to be disciplined about everything, however, when the competitive giants in the segment are in the midst of a price war. He said they’ve had to fight soft same-store sales with their own value messaging to drive traffic, but discipline around the brand differentiators helps them stay slightly above the fray. High quality ingredients and daily fresh dough made on premise means they can charge a little more and still do the discounting that consumers are used to. Constant negotiations on the supply side also keep costs from rising sharply as cheese and flour tick up. “While we emulate what the big guys are doing and charge a slight premium on our offerings, we maintain about a 15 percent price premium. That bodes well for us,” said Stephens. Last year, 80 percent of Marco’s Pizza locations were built by existing franchisees who appreciate the culture of discipline at the home office.
Working the line at Tropical Smoothie Cafe, where management tries to adjust resources offered to the needs of operators.
14. Tropical Smoothie Café
Smoothie and food chain
When Tropical Smoothie Café blows up the numbers, it’s all part of the plan that has pushed the brand to 50 percent sales growth and 31 percent unit growth over the last three years. “Don’t ever get comfortable, you can’t settle. Push for what others think is impossible. I know that sounds like pie in the sky thinking, but if you want to grow and you want it to be sustainable growth you have to do those things that other people can’t wrap their head around,” said Tropical Smoothie Café CEO Mike Rotondo. That means constant innovation on the product side, but also investing heavily at the supporting level of the company and in franchisees. What exactly that means is different for every franchisee. “Some people come in and open a café and they need financial resources because they don’t have a big backing, so we have a financial arm that people can apply for before they might be able to apply for an SBA loan,” said Rotondo. “We’ve helped several franchisees become multi-unit operators through that program.” And for those with financial backing but who don’t have an operational mindset, Rotondo said they can help them too. “If you’re not a true operator, we can help partner you up and we’ve got several situations out there where people have merged as franchisees and brought talent together to really grow their portfolio,” said Rotondo. “So it’s a process we’re going through to identify ready-to-grow franchisees. If you’re ready to grow, what is it that’s holding you back and how can we help you get over that hurdle?”He said helping his current franchisees means that more than half of new-location development has come from the ranks—something he remembers every time an enticing multi-unit operator comes to discovery day. “It’s easy to fall in love with the new, the new franchisee that owns 50 Little Caesars or is a big franchisee and you’re like, ‘Wow, these guys have backing, they are great operators,’” said Rotondo. “But I like to say, ‘Dance with who brung ya.’ We’ve grown to 629 locations, and it’s by the grit of our franchisees, so we think a lot about how do we show love to the new but also help the people who have helped move this brand along.”
Scott Deviney replaced the founder at Chicken Salad Chick.
15. Chicken Salad Chick
Fast-casual chicken restaurants
When looking at a three-year unit growth rate of 100 percent and sales growth of 156 percent, the phrase, “But it’s just chicken salad,” may come to mind. But for President and CEO Scott Deviney, chicken salad is plenty. “We’ve had a nice little run. The growth of new and existing ‘zees in infill markets and in new markets has been really fun,” said Deviney, who added it all comes down to location connection. “It sounds a little cliché. We have 74 stores, but it’s like we operate in 74 different communities so we operate like a non-brand community restaurant.” The biggest move lately has been a full point of sale upgrade that allowed them to give fervent customers an easier way to connect with the brand. “We recently changed our POS system to allow for efficient loyalty app connection, so we can have online ordering fully integrated into our POS,” said Deviney. He said above all the growth avenues, the POS upgrade was the most important because Chicken Salad Chick fans are extremely loyal and there are a lot of them. “We have about 130,000 in our loyalty program,” said Deviney. “It’s nothing like Starbucks, but for the size of the brand, we have really loyal customers.” Making it easier for loyal customers to connect and for new customers to get integrated into the program helps with that strong unit growth. By tapping into that fan base, he said they can push for extremely strong openings because the hype machine starts about 13 weeks before a new location opens. It also helps with franchise sales; Deviney said many franchisees are loyal fans who want to bring the concept back to their own community. The brand has also found itself well positioned for the trend toward convenience. It does about 25 percent of business off premise with one-pound and half-pound chicken salad to go. And where possible, it partners with strong third-party delivery partners as well.
CEO Chris McCuiston of Goldfish Swim School with ...
... Jenny McCuiston, co-founder and Olympic qualifier.
16. Goldfish Swim School
Swimming lessons schools
What is behind the meteoric growth (151 percent in sales and 105 percent in locations in three years) at Goldfish Swim School? Hint, it’s not arm-floats. “We’re such a service-based industry, but the technology is so, so important. It’s becoming so much more powerful in how we operate, in how we hire and also to the parents that communicate with us,” said Goldfish Swim School CEO Chris McCuiston. He said technology has already revolutionized how franchisees run the business. They can push out information, find and talk to substitute instructors and enable employees to request time off all without being anywhere near the school. It’s drastically changed how the brand markets as well. “Each location is spending about $1,000 a month on social media, on top of marketing through our system of phone calls and emails,” said McCuiston. He said that digital framework is about to get more robust by pulling all those disparate digital parts together. “We’re looking to improve the software we have or by building our own. We have so many things that go through Salesforce and they all communicate through APIs, so we’re able to make better decisions around all that,” said McCuiston. He doesn’t tarry on the past results—it’s all upward and onward. He said his motto is about finding the next best franchisee, the next best location and the next best technology upgrade. “We talk a lot about people processes and partner. Our goal is first and foremost bringing in the right people as franchisees, then having systems in place to make sure that we’re all doing the same thing and doing them in sync. We’re really, really good at teaching students to swim—that’s our bread and butter, but we need good people for site selection and technology and marketing. So we’re partnering ourselves up with the best and the brightest,” said McCuiston. Like others, the biggest challenge is real estate, but for one particular reason at the core of the concept. “We have a unique challenge, that we’re putting pools in a space. So if we don’t own a space the landlord gets nervous about having a hot pool with lots of humidity in there,” said McCuiston. He said a new partnership is on the books that will help expedite those leases so future growth is more efficient. “If we know everything ahead of time, we can start checking boxes very quickly,” said McCuiston.
Gene Simmons, left, and Paul Stanley of KISS fame are front men for Rock & Brews.
17. Rock & Brews
Music and food restaurants
Rock & Brews has enjoyed a three-year sales growth rate of 90 percent and unit growth rate of 111 percent. That’s no small feat, but co-founder and managing partner Michael Zislis says he still gets razzed by some of his franchising peers. “Driving sustainable growth, that’s key. Some people will say, You only have 26 stores in five to six years?” said Zislis. “I’m always amazed when I see a brand come out of the ground and all the sudden there are 1,000. That’s not sustainable. I think the 25 to 40 percent growth is sustainable. I’d rather stay closer to 25 percent because you have enough people in the back ready to go out.” He said the best fuel for future growth has been finding key people for the corporate staff. “We brought in a president and CEO, Michael Sullivan—that was mandatory, you start getting all these stores and there is a lot of communication, daily and weekly promotions. There’s just so much to do so you really have to expand the team. We also hired a marketing director for the first time. Before we did our marketing in house but the franchisees wanted better marketing,” said Zislis. He said the brand also brought in a new training director to tackle one of the biggest challenges across the restaurant industry and one the longtime restaurateur and entrepreneur takes very seriously. “I guess the biggest challenge is controlling the same quality everywhere. That’s the fight, that’s why you give them more information, you give them more support,” said Zislis. “The last thing I want to hear is, ‘I was at store Y and the mac and cheese was better at store X.’ That’s the thing we fight day to day.”
18. AtWork Group
Temporary staffing is perhaps one of the few parts of the economy that doesn’t mind the very low unemployment rate. In fact, Jason Leverant, president and COO at AtWork Group, said it’s helped push growth further. “It’s been a wild ride. If you go back to the recession, that impacted the temporary staffing industry drastically,” said Leverant. “But because we’ve seen such a rebound—the unemployment rate is the lowest in years—that’s helped us tremendously.” Nearly full employment will likely drive growth further, from sales growth of 78 percent and unit growth of 35 percent over the last three years. But while it means more clients, that low level of unemployment does change the balance for franchisees. “It’s very much like a tug of war. One side is your client development and the other game is the talent pipeline. So with the swings in the economy there’s always going to be one side winning that tug of war,” said Leverant. “So we have to put more of our branch focus on building that pipeline. The advantage we have over a widget company, that’s what they do, as a staffing firm that’s all we do is recruit. We adjust our operations and change our strategy to find that talent.” He said they’ve turned to more technology than ever before. Adding new customer relationship management tools has been a major benefit to keep recruitment efforts efficient, and Leverant said they’re even looking into some machine learning tools to see if artificial intelligence can help move the needle. He said the mission “At Work, For You” translates to franchisees as well. “I’m new to the franchise industry, but I’ve always been service oriented,” said Leverant. “That’s what wins you business and helps you grow business, so we want to make our owners as successful as possible.”
19. Wayback Burgers
For William Chemero, executive vice president at Wayback Burgers, there is one big thing behind the brand’s 58 percent sales and 48 percent unit growth over three years. “It’s all customer service. The brands that are going to stay healthy and grow through the next phase in development are going to be the ones that focus 100 percent on customer experience because there are a lot of options. And if they don’t feel good about their experience, they can go somewhere else,” said Chemero. “Then you run the risk of losing that customer you spent so much getting because marketing is not cheap.” He said that’s been a major push lately and will continue to be so, creating that wow factor. He believes in wowing customers with more products beyond the standard burger, wowing them with a new beverage program and wowing them as it all gets put together. “Our new design is renewing our brand. We are emphasizing a whole refreshment bar that you can sit at, a counter to watch your new concoction being made,” said Chemero. “People like to watch things, so we make it an interactive order.” He said one of the challenges has been financing, but he said the brand has addressed that by bringing banks right into the discovery and sales process.
“Even before we ask them to be a lender, they go through the whole process. After that, if they want to do financing, we’ll go to the bank and sit down with the powers that be to get to know the ownership group,” said Chemero. Real estate is another challenge, but Chemero said they have some unique ways to get around the problem. Non-traditional is getting a much closer focus, and he said the brand has “perfected” small-format convenience store locations, signing up with Walmart for in-store locations and just starting to grow on military bases—all of which tap into transient or captive audiences and don’t require the same 2,500 square-foot box everyone is fighting for. And then there’s the Wayback Wagon that is just rolling out now. “I just pull it behind a car. Level it, set up and start cooking, said Chemero. “It’s all solar powered, EPA friendly, compressed gas so there is not a lot of fumes. We tested this in Manhattan from 11 a.m. to 2 p.m. on a downtown street and did $1,300 in sales, so the line is down the block.”
20. Berkshire Hathaway Home Services
Residential real estate services
Berkshire Hathaway Home Services CEO Gino Blefari has been a student of business culture since his earliest working days. And he continues to make his mark as CEO at BHHS to further the three-year 64 percent sales and 25 percent unit growth. He said growth comes down to setting goals and hitting them over and over. “Growth only occurs when goals are clear, measurement is systematized and insufficient efforts are responded to and results are appropriately reinforced and rewarded,” said Blefari. “This is at the bottom of my email: ‘Don’t join an easy crowd, you won’t grow. Go where the expectations and the demands to perform are high.’ The bottom line: the challenge creates the muscle to become better, wiser and more unique.”That quote from storied entrepreneur and motivational speaker Jim Rohn is one of many guiding principles Blefari has put in place since taking the reins at the top of BHHS. There are accountability partners. He’s implemented the Four Disciplines of Execution (also known as 4DX) and he journals—for Blefari, it’s all culture all the time. And in the real estate business made of so many self-made stars with their own way of doing things, getting everyone to buy into that culture is a big challenge. “My job is to hire eagles, but then to get them to fly in formation when they’re not wired to fly in formation,” said Blefari. “As soon as everyone really understands, it’s all wonderful.” How does he maintain that cultural push? “Going on the road doing it live, leading by example and creating systems for our companies to use,” said Blefari. “It’s a constant, constant never-ending thing. You’re talking about it all the time.”
21. Scooter’s Coffee
At Scooter’s Coffee, it’s all about unit level profitability for franchisees, in tandem with aligned relationships, declares Todd Graeve, CEO. “Everything we do starts and ends there,” he adds. “We must be diligent, thoughtful and strategic in our daily decision-making.” A ULP focus isn’t necessarily unusual, although that particular acronym isn’t seen every day (most CEOs throw around AUVs or average unit volumes.) But another aspect of Graeve’s philosophy stands out from others. “We must walk with a posture of humility, integrity and an ‘others-first’ mentality. When we do that, we elevate trust with our franchisees.” Graeve said the biggest challenge for a growing company is staying ahead of expansion with investments. “If you want to grow, you must be willing to commit. This often means investment in infrastructure, people, technology, partnerships, etc., ahead of the curve and in advance of opposing forces,” he said. “With strong and positive growth trajectory, we’ve been challenged at times with approaching size and scale before making the strategic investments.” The goal is an environment for “thoughtful strategy and investment that is far less reactionary, and much more strategic.”
22. Newk’s Eatery
Newk’s emphasizes its menu of made-from-scratch soups, sandwiches and salads prepared in an open-view kitchen, both of which are on trend in the fast-casual space. The formula powered a 48 percent growth rate in systemwide sales over the past three years, and a 40 percent growth rate in number of units, both impressive numbers indeed.
23. Kiddie Academy
Children’s learning centers
Kiddie Academy leaped way up the Fast & Serious list this year, hitting No. 23 after last year’s rank of 50. Chief Development Officer Josh Frick attributed much of the momentum to technology, in which the brand seeks to be “first and foremost.” For example, parents get access to live, streaming video of students in classrooms through the WatchMeGrow app. “We view technology as a key differentiator within our space, said Frick. “We’re going to be on the leading edge.”
24. Anytime Fitness
International is the growth watchword for Anytime Fitness, the behemoth brand and perennial contender on our Fast & Serious ranking of smartest-growing franchises. “We will open globally in this year anywhere between 425 and 450 clubs around the world. About 200 of those are in the U.S., so as you can see we have more club growth outside the U.S. than inside the U.S.,” explains Chuck Runyon, CEO and co-founder. “It’s a big world out there and they are under-served when it comes to fitness.” Because Anytime Fitness, like most, uses master franchise arrangements in international markets, its percentage of revenue is lower than in domestic markets, but a 29 percent gain in systemwide sales and a 25 percent increase in units over three years shows this fitness brand is still going strong. Australia and Japan are the two standout countries across the globe. In Australia, “they are racing past 500 clubs open. In Japan, they are racing past 300 clubs open. They are right now the fastest-growing country for Anytime Fitness,” he said, giving credit to the master franchisees who operate in the two countries. Private equity firm Roark Capital bought a minority stake in Anytime Fitness in 2014, the first year covered in our three-year ranking, and their backing has been valuable, Runyon said. “They’ve been a value add,” he said. “What we’ve gotten better at is our reporting, strategically and financially,” which he attributes to the accountability a private equity board brings to a brand, versus a founder-led company. Anytime Fitness is actively looking for new brands to acquire, too, to add to its Waxing the City brand, although “as you know it’s a very hot market,” Runyon said.
CMO Jan Barnett simplified Another Broken Egg’s menu.
25. Another Broken Egg Café
Breakfast, brunch and lunch restaurants
Net promoter scores, the index ranging from minus 100 to 100 that measures the willingness of customers to recommend a company’s products or services to others, get loads of attention from Jan Barnett, chief marketing officer at Another Broken Egg Café. She’s been in marketing at franchise brands for 40 years, at Taco Bell, McDonald’s, then the agency side, then Egg and I until joining Another Broken Egg two years ago. “Net promoter scores weren’t something I focused on until coming here,” she said. Now, she and her team of five respond to every review the café gets, usually numbering more than 2,000 reviews a week from 65 cafes and pores over the data from an outside firm called Reputology. “This has become cultural, and now I’m publishing net promoter scores.” Franchisees will email and ask, why aren’t they at a higher score? “It’s a direct correlation to sales and profitability. If you’re a high-volume café, you also have a higher net promoter score,” she said. When she first started digging in, she noticed the biggest complaint was the time it takes for food to get from kitchen to table, so she began examining the menu. “I worked on menu engineering, simplification, so a huge project I completed year two. We reduced a ton of SKUs, both entrees themselves and ingredients. It wasn‘t that hard—you see what sells and what doesn’t,” Barnett said. Barnett has adjusted her approach to grand openings, something she learned at Egg and I the hard way, she said. “At Egg and I, where I did come in with hard openings, it crashed the kitchen, and it took quite a bit of time to rebuild that trust. I had cooks on the line in tears,” she said. Now she does soft openings and expects traffic to build more slowly over time. Barnett says the good news about her brand is it closes at 2 p.m., meaning operating hours for owners can be very attractive. Alcohol, too, is served at Another Broken Egg, which draws a younger crowd and a higher check average. “I’m forced to teach America to drink in the daytime all by my little self,” she jokes, contrasting that to McDonald’s, which has put huge marketing dollars into breakfast all the time and so has helped everyone in the breakfast category. One challenge is something she can’t do anything about. “Egg is in my name, and if egg is in your name, people think you can’t do lunch. But our lunch is amazing,” she said.
26. Which Wich
The Which Wich brand was built on the philosophy of “taking the leap,” or “buying in to the idea of owning a business that will create positive change in your life,” said Jeff Sinelli, founder of the sandwich chain that topped 433 units and $271 million in systemwide sales in 2016. “As CEO, I work hard to make sure that those franchisees who made the leap with Which Wich feel like the company has their back.” In the past year, particularly, that meant investing time and energy in shoring up operations and helping franchisees become more efficient and improve the customer experience. “Out of that came our ‘favorites’ addition to the menu, so that fans who may not enjoy our trademark brown bag ordering system have a way to point to a sandwich they love and have it made immediately,” Sinelli explained. The restaurant business has been a tough space “for several years now,” he added, “and a lot of competitors have emerged specifically in the sandwich segment.” Disrupters in the space include grocery stores, which are trying to steal market share from restaurants, the expansion of delivery options and the integration of technology. But don’t expect to hear complaints from Sinelli. The corporate team and the franchise system “have to work hard in order to stay ahead of the pack and anticipate the evolution needed to grow and thrive five, 10, 20 years from now,” he said. “The best is yet to come in 2018.”
27. Mosquito Squad
Pest spraying and control
Mosquito Squad was under the $40 million basement for revenue before this past year, and now appears in our top 40 at No. 27. Chris Grandpre, CEO, said his group formed Outdoor Living Brands as the umbrella company in 2008, and acquired Mosquito Squad in early 2009 from three partners, along with four other brands under the corporate roof. At the time, there were 15 locations doing a million dollars in systemwide sales, but at year-end 2017 he expected to cross through 240 locations with sales roughly three times that long ago number. How’d they do it? “We spent three years re-inventing that business. The average unit volumes were very modest; they were too low,” he said. “Our strategy has been to broaden the service offering to drive increases in unit economics.” The marketing message, too, has shifted slightly over time. “For the first six or seven years, all the marketing messages were tapping into lifestyle,” that is, helping people enjoy the outdoors free of pesky mosquitoes. “While lifestyle is still important, we’re seeing health concerns are being a very big motivator, such as West Nile, Lyme disease and chikungunya,” all carried by mosquitoes. “We’ve had to significantly ratchet up the education to tap into those trends that are out there, but doing it in such a way that we’re not trying to create unnecessary fear.” Why is that important? “It’s personal philosophy, ethics,” he said. “Fear is a big motivator, but I don’t want to prey on that fear. I don’t think it’s the right way to grow a business, is using fear.” Grandpre said he carefully evaluates the number of people at corporate it takes to support growth at each of the company’s five brands, and each one is different. Mosquito Squad is “probably our simplest” concept, so he knows he can bring on 25 to 30 franchisees a year, and has been doing that consistently for five years. With Archadeck, by contrast, “we’re talking about five to nine a year, because it is a much more complex business. I think you have to be thoughtful about complexity of the business model or simplicity of the business model, the capabilities of your team, and then instead of just selling everything you can sell, set your franchise development numbers to the number you can support,” he said.
BurgerFi’s Steven Buckley added people before growth.
BurgerFi is only six years old, peddling better burgers branded with the BurgerFi logo, but the amount of expertise on the corporate team is more like a prosperous baby boomer than an up-and-coming youngster. “We consider ourselves to be an adolescent in terms of the time that we’ve been in business but not in terms of the expertise and the depth of the organization,” said Steven Buckley, COO. The corporate team “has been built out very aggressively, with no resources spared to create a very solid organization and infrastructure that can support growth. That was done early on, in the overall conceptualizing of the brand.” Staffing up ahead of a growth curve is easier said than done, as typically new brands have to wait for revenue streams to get big enough to support a corporate team. But in BurgerFi’s case, founder John Rosatti provided 90 percent of the funding in the form of equity, and an additional minority investor was brought on. Rosatti also owns eight car dealerships, a chain of fine-dining Italian restaurants and a gastropub called The Office, so he had plenty of resources to deploy at BurgerFi. “The growth of BurgerFi was funded through an infusion of equity capital, not debt, and that allowed us to do things that were not financially driven. We were always able to take the high road because we didn’t have the financial burdens,” he said. “We’re a profitable company, with 100 restaurants and growing, but we never felt that pain of a company that has debt payments to make and has to worry about where the next dollar is coming from.” One of Buckley’s key initiatives was communication and execution, for which he purchased technology systems. “Everybody talks about collaboration as being important in a business, but not a lot of companies can deliver that and execute well in a collaborative environment,” he said. “If you have hundreds of initiatives going on, how can you execute?”
29. Jimmy John’s
For a sandwich chain blasting past 2,600 units and $2.14 billion in systemwide sales in 2016, its founder’s intense focus on operational details is surprising. But that’s what Jimmy John Liautaud revealed during an interview early in 2017 when his deal with Roark Capital was named Franchise Times Deal of the Year. He visits with the head of customer service at his Champaign, Illinois, headquarters, and asks how many complaints her team handles each day—400 customer interactions, she replies, each handled within 24 hours. In the IT department, he points out the social media interactions displayed on a big screen, which were spiking up to 5,000 on one mid-morning. And in the construction department, he brags about the team cutting out $100,000 in costs to build a Jimmy John’s store, to under $315,000. “We are exceptional operators, perhaps one of the best on a large scale,” he told Franchise Times. “What we aren’t is strategists and that’s what Neal Aronson is best at,” he says, referring to Roark Capital’s chief. “I’m a micro guy and he’s a macro guy,” and the combination is promising.
Founder Eric Ersher stresses culture at Zoup.
Soup and sandwich restaurants
Menu innovation, specifically limited-time offers, has helped boost Zoup’s growth in recent years, and that’s “kind of a new area for us. When we look back we have not been innovative for the last 19 years, so we’re excited,” said Eric Ersher, founder of the chain that grew nearly 44 percent in systemwide sales and 35 percent in units over the past three years. He’s been focused on elevating the quality of the breads, salads and sandwiches, and moving toward more of a seasonal, rotating soup list. “It provides more predictability, which our customers through research have told us they would appreciate. They want to know when their favorite soups will be there,” he said. What hasn’t changed for the brand, which started franchising in 2003, is promoting and nurturing a “positive and deliberate culture.” “One of the things we talk about is our founding story and how we got to Zoup,” he said. “We refer to it as the Zoup experience, which is the why behind it all.” And what is the Zoup experience? “Really good soup, and bringing those really warm qualities, and in an environment where everything matters.” That includes 14 “Zoupisms,” such as reach out, words matter, always better, and be proud. Although he’s short on specifics as to exactly what those things mean, perhaps for franchisees it’s all in the soup pot.
At The Learning Experience, hands-on classes are backed by a new “Google-esque” headquarters in South Florida.
31. The Learning Experience
Child development centers
Accelerating its annual growth rate, especially in terms of systemwide sales, The Learning Experience added 20 new units and boosted its sales by more than 37 percent—to a total of $200 million—over the last three years. President and COO Andrew Alfano has directed investments to further train and develop its staff members, while also spending money on technology and opening a new, “Google-esque” global headquarters in South Florida that includes a graphic design office, film studio and theater-style training center that can host nearly 100 people at a time. “Money is not a dirty word. We recognize that profitability is critical to our success,” Alfano said. “In addition to delivering value back to our franchisees and investors, we believe it’s imperative to be in a position to give back to the communities where we work and live.” In recent years, The Learning Experience has hired several “big thinkers” to its executive team who he added “embrace a company on a steep change curve.” With similar headwinds as other fast-growing brands, Alfano said the company sees challenges with construction and healthcare costs, but underscored how its foundation for future growth rests on maintaining its status as an employer of choice within the early-education segment.
Gordon Logan, with his signature hat, founded Sport Clips.
32. Sport Clips
Haircuts for men and boys
Down 14 positions to No. 32, Sport Clips remains one of the fastest-growing franchises, and the only salon brand to make the Fast & Serious list. Sales at the franchise grew 33 percent from 2014 to 2016 to $568 million with 1,618 units, an increase of 250 since year-end 2014. Founder and CEO Gordon Logan expects Sport Clips to add more than 130 new units during 2017, stating that 130 to 150 new units per year is a sweet spot for the Texas-based brand to maintain its desired level of support for its franchisees. “It’s like watching your kids grow up, you enjoy every stage of their development,” he said of the brand’s consistent growth over the years. “We have some great leadership in our system, so I am able to take a slightly more strategic viewpoint,” adding that he has increased his involvement in the franchise and hair salon industry associations. Rolling out a new point-of-sale system is the brand’s marquee investment, as it continues spending in customer-facing technology and training for its owners and team leaders. Logan said the fact that everybody needs regular haircuts—with the average man going in for a chop every three or four weeks—has allowed Sport Clips to buck negative trends in the retail sector. In concert with other salon and personal care brands, Sport Clips has supported industry efforts aimed at reducing the barrier to entry for new stylists, while continuing its investments in a relief fund that supports team-members experiencing unexpected difficulties including recent hurricanes that impacted multiple locations in southern states. The goal, Logan added, was ensuring that Sport Clips remains an employer of choice in an industry with razor-sharp competition for talented stylists.
As Smashburger celebrates its 10th anniversary, the Denver-based fast-casual burger brand remains one of the fastest-growing players among its cohort, moving down to No. 33 from No. 21 in last year’s ranking. Since year-end 2014, Smashburger increased its unit count by 70—to a total of 382 locations—while adding a 32.4 percent sizzle to its sales that reached $360 million during 2016. Michael Nolan exited the CEO spot in December of 2016, replaced by co-founder Tom Ryan who became the company’s fourth leader since 2013. Compared with its previous leadership, Ryan characterized his growth motto as “more consumer-centric than business-centric” and said one of his key concepts is keeping the brand focused on the mindset of 32-year-old consumers, whom he views as young enough to still be youthful, but with approximately 10 years of work behind them to keep the brand young at heart, but also aimed at consumers entering their prime earning-growth years. “I’m 60 so I can say this with reckless abandon,” Ryan said of his oft-repeated mantra. “I incorporate that into all of my marketing decisions, my music and decor decisions, and I have all my departments striving to be constantly looking at what is on the forefront of that particular cut of the population, and quite frankly, I have a really young organization here.” Since taking the helm, Ryan added he has “truncated” growth in smaller markets like Boise, Idaho, Columbus, Ohio, and Salt Lake City, Utah, in favor of growing in larger markets like Phoenix, Houston, Minneapolis, Denver and the tri-state area surrounding New York City.
Annie Mooney of Alamo Drafthouse Cinema.
34. Alamo Drafthouse Cinema
Movie theater/restaurant chain
An outlier in franchising that combines upscale movie theaters with in-house restaurants, Alamo Drafthouse Cinema moves up two slots to No. 34 on the Fast & Serious ranking with a 37 percent jump in sales growth over three years. The Austin, Texas-based chain grew its sales to $170 million during 2016, with three additional units added to the system for a total of 25 open locations. Annie Mooney, director of business development, said the brand is especially focused on guest satisfaction and a best-in-class theatrical presentation to maintain its steady, positive system-wide growth. “We’re constantly monitoring the picture and sound between every movie—we’re very diligent about that,” she said. “We’re always adapting our menus and trying to offer specific food and drink options … and then we’re also hiring the right people, which we have found to be extremely important” to maintaining its customer satisfaction metrics. To maintain the wow factor that has brought the brand high net-promoter scores, it has invested in new technology, including a new app that speeds transactions and has encouraged use of the brand’s loyalty program. She added the chain’s growth rate increased during 2016, and said the concept’s high investment levels require extremely high standards for granting new franchises. “It’s a really small group, and they have a love of film, a track record of success and access to capital, so we’re pretty uncompromising in that,” Mooney said. “We’re open to bringing in a few more” franchisees, “but we have to have the high standards for consistent quality across our brand.”
Bruce Dean is Black Bear Diner’s co-founder.
Anita Adams says Black Bear Diner works in smaller towns.
35. Black Bear Diner
A newcomer to the Fast & Serious ranking, Black Bear Diner debuts at No. 35 with 86 units, up from the 67 it had at the end of 2014. CFO Anita Adams, who joined the Northern California-based restaurant brand last March, said the brand’s recent strategy has focused on infilling its western state markets, slowly pushing eastward with new locations and maintaining its family-friendly customer experience. “We are known for an affordable abundance of great comfort food, and it’s a strong value proposition,” she said. “For us it’s paramount to continue to foster that … and we have 26 quarters of positive same-store sales in, frankly, a rough market in this last year or two.” Its year-over-year sales grew 14 percent during 2016, for a total of $205 million across the system. “This brand has done extremely well in what we’d call rural markets, populations of 100,000 to 200,000,” Adams added. “We’re ensuring that we identify the right locations with all the right rent factors, maximizing what we can get out of conversions” as many restaurant and retailers shrink their unit counts. Black Bear Diner’s unit count has increased by nearly 30 percent since 2014, with sales that have grown by 34.6 percent over three years.
A newcomer to the Fast & Serious list, but no stranger to rapid growth, Ann Arbor, Michigan-based Domino’s Pizza is investing massive resources in store remodels and leading-edge software and delivery technologies, including a recent partnership with Ford to test self-driving vehicle deliveries in its home market.
Since year-end 2014, Domino’s has added 2,182 new units and grew its sales 22.5 percent to $10.9 billion at the end of 2016. “We have dedicated ourselves to including as many franchisees in the build process as possible,” said Matthew Walls, the company’s vice president of franchise development and recruiting.
“This requires marketing the opportunities to the entire system, educating franchisees on the development process, and inspiring non-building franchisees to recognize the value of continued growth.” Part of that strategy has included redrawing existing territories to allow the brand’s locations to better serve its customers with faster deliveries, which has boosted system-wide sales, while also creating new territories across the country. “Our biggest challenge was moving from an environment of few franchisees with many builds to one of many franchisees with fewer builds,” Walls added. “We tackled this situation by partnering with franchisees, strategy and insights department, and field operations to ensure that we were identifying the best opportunities for development and then matching those opportunities with franchisees who were best suited for the opportunity.”
Dan Cathy is CEO of Chick-fil-A and son of the founder.
Fast-casual chicken restaurants
Chick-fil-A is a newcomer to this year’s Fast & Serious list, debuting at No. 37 as the Atlanta-based fast-casual chicken brand continues its multi-year growth streak that has boosted sales 36.9 percent from 2014 to year-end 2016. Over the same period its unit count swelled by 11.6 percent to a total of 2,085 locations. With a simple menu focused on chicken sandwiches, Chick-fil-A has added many new locations in its home turf in the southeast U.S., while also expanding to new markets including downtown Los Angeles and a new five-story restaurant in New York City’s Financial District. In the last year, the brand’s sales increased by more than a billion to $7.85 billion by the end of 2016. The brand has also expanded its breakfast offering with its first breakfast bowls in a bid to increase sales in the hours before the lunchtime rush.
Fast-casual chicken restaurants
Zaxby’s continues its growth spurt with dramatic increases in both sales and unit counts. The Athens, Georgia-based chicken chain grew its year-over-year sales by 6.4 percent during 2016, with a 12.4 percent increase in new units—for a total of 816 compared with a total of 659 at year-end 2014. Its annual sales eclipsed the $1.56 billion mark during the year.
Rob Price was named School of Rock’s CEO in 2017.
39. School of Rock
Music education school
Falling from No. 23 to No. 39 in this year’s ranking, School of Rock is still jamming as one of the fastest- and smartest-growing franchise concepts following a period of tumult in relations between the franchisor and its franchisees. Previous CEO Dzana Homan was ousted during the summer of 2017 and replaced by Rob Price, former president of Edible Arrangements. The New Jersey-based music education school added $22 million in new sales since year-end 2014, now exceeding $65 million. It added 42 new units over the three-year period, with a total of 193 open locations by the end of 2016.
Price cast an inclusive tone listing his priorities as CEO, underscoring the listening and collaboration with franchisees, while laying the groundwork to accelerate the school’s expansion within the United States and its international markets. “One of my earliest priorities is capturing the existing insights there at the brand from owners, from students, from staff and the schools … so the most important component of our strategy right now, which we’ve all embraced, is that it was created with the participation of the vast array of stakeholders,” Price said. As an example, he distributed his personal cell phone number throughout the system and encouraged direct contact with everyone affiliated with the brand. “It can get scrappy at times, but hey, it’s rock and roll and that’s an incredibly exciting environment because it’s real time and it’s much more of a dialogue than just what an email creates,” he said. With sales, school and student growth, Price added that boosting unit-level numbers will simultaneously encourage additional expansion among existing franchisees, while attracting new front men and women to the brand. “We’re doing something far more important than business here,” he said. “We’re looking to enrich lives to really change the world.”
Dave Rutter says drive-thru business boosted Costa Vida.
40. Costa Vida
Costa Vida returns to the ranking at No. 40 after its last appearance two years ago at No. 27 as the beach-inspired Mexican grill added 17 new units since year-end 2014, on sales that grew from $70 million to $98 million during the period. CEO Dave Rutter specifically pointed to its drive-thru business as a driver of growth, a move the company made four years ago to implement drive-thrus throughout its system. “It accounts for, on average, about 34 percent of the revenue for those stores,” he said of all its recently opened company stores. “And the stores that have them on average run about 50 percent higher AUVs than the brand average.” Rutter said one of his primary challenges has been building brand and product awareness in its new markets, which it has worked to overcome through community events, and being diligent in where it decides to open new restaurants. “If a new store opening is in a market where people aren’t familiar with Costa, we try to have multiple groups opening at the same time to create brand awareness in that new market.”