With Fresh Capital, Slim Chickens ‘Ready to Take Over the World’
Back in 2003, the better chicken category was nowhere near what it is today. There was Zaxby’s growing in the south, Raising Cane’s had just started getting some attention and Chick-fil-A was about to open its first freestanding location and KFC was growing via co-branded KFC and Taco Bell locations.
Meanwhile, Tom Gordon and Greg Smart were drinking beer in Greg’s garage, surrounded by the smell of chicken frying in a turkey deep fryer and spilled dipping sauces.
“We started that way, you look back on it and we were fortunate that we did. We were focused on the quality of the product, making sure it was exactly right,” said Gordon. “We felt like nobody was really doing this kind of product with the quality we wanted.”
Back then, there were all the challenges of starting a business with nothing but a dream and a turkey fryer. Now with more than 85 locations, Slim Chickens has a whole different set of challenges, but starting with a food obsession was a good footing.
“I think that foundation is important, you have to have quality food and service—those are table stakes,” said Gordon. “We have to continually improve how we get the product to our guest. So now it’s how do we package the food? How do we speed up the drive thru?”
That’s what kept Sam Rothschild busy. The COO joined six years ago, but he’s now focused on growing the franchise program and enhancing the support network beneath it. Onboarding the newest operators and helping them build is one big goal. Since January, the company has inked five development deals with new operators committing to 60 new restaurants. He and other support team members brought a lot of big-brand experience.
“Myself and others have come out of some really big brands, so we designed this thing from the beginning to get the infrastructure in place to really support franchisees,” said Rothschild. “When people come in and see what we’re doing on discovery day, more often than not, they say, ‘Jeez, you guys are really buttoned up.’”
He said that is a nice perk for franchisees, but also creates a foundation for the big goal to hit 600 locations over the next 10 years.
“We’d like to see enough franchisees where we’re able to build 40-50 stores a year, I don’t think that’s out of the realm of possibility, we have the system to do it,” said Rothschild.
Part of that growth formula was a new investment from 10 Point Capital, the owners of Tropical Smoothie Café and investor in Phenix Salon Suites. The private equity firm came in as a minority investor, and Rothschild said it happened at just the right time.
“There came a point where we saw that we might need another resource externally,” he said. “The 10 Point guys are awesome, they own Tropical Smoothie. When they bought, they had a couple hundred [locations], now they’re on the way to 800. To bring in a group that has helped ramp up and scale a system, they’ve got best practices and thought leadership that we think will really help propel us.”
The investment also meant Slim Chickens was able to retire and recapitalized its debt structure, helping to organize finances and empower further growth and more financing options down the road.
Gordon said the 10 Point history was a big reason he finally stopped saying “no” to outside investment.
“We’ve been telling people ‘no’ for years, I think because we had such an interesting and unique proposition we caught the PE attention for a long time, they’ve been coming to us for a decade,” said Gordon. “We never felt like we could pull the trigger, we always wanted to make sure we could make long-term decisions. So we could never get comfortable with the groups that we saw.”
Gordon said the group was willing to “hitch their wagon to our vision and help us.”
And now that the category sees more growth and intensifying competition every day, some outside help will be especially useful.
“To be a disruptive challenger in the marketplace, it was time for us to reconstitute the organization, power up the balance sheet and really get ready to go to take over the world,” said Gordon.