Despite the Pandemic, Large QSR Operators Still Optimistic
Restaurant 200 franchisees participate in a webinar to discuss how they’re navigating the pandemic.
With portfolios primarily made up of quick-serve restaurant brands, three of the largest franchisees in the U.S. are bullish in their outlooks as they and their stores continue to climb out of the hole created by COVID-19 shutdowns.
For Tabbassum Mumtaz, the CEO of Ampex Brands operating 202 KFCs, 141 Pizza Huts, 39 Long John Silver’s and 18 Taco Bells, the coronavirus pandemic, “while scary to begin with,” proved his leadership team was “fearless” and up to the challenge.
“The first couple of weeks, three weeks, for both of our major brands, KFCs and Pizza Huts, were very scary, down 25 to 28 percent, each brand,” said Mumtaz. “But then all of the sudden we started seeing that trend going up … overall sales on all of our brands we’re in on the QSR side, we’re double digits up.”
Health and safety concerns, along with the $600 per week federal add-on to state unemployment benefits, have brought new labor challenges, noted Lee Engler, CEO of 201-unit Taco Bell operator Border Foods, but not unsolvable ones.
“We’re paying more on a proactive basis in terms of new hires,” he said, along with sticking to scheduled bonuses. “We’ll continue to pay bonuses throughout COVID and it’s really become a benefit to us in terms of retention”
Jeff Engler, who co-founded Minnesota-based Border Foods with his brother, Lee, and serves as chairman, pointed out they’d fortuitously “pruned down” their store count over the years. “We’re fortunate that all our stores are good stores,” he said. “We’re bullish, we actually want to build stores.”
The Englers’ Border Foods, with almost $350 million in sales in 2019, is listed at No. 30 on the Restaurant 200, an exclusive ranking of the biggest operators, prepared by Franchise Times sister publication The Restaurant Finance Monitor. The Englers, Mumtaz and Anil Yadav, CEO of Yadav Enterprises, joined Monitor Publisher John Hamburger for a webinar July 22 to discuss how they’re navigating the pandemic. (Register to view a recording of the webinar.)
“Overall, Jack in the Box and QSR has done very well for us,” said Yadav, who has 221 Jack in the Box stores, 81 Denny’s and 66 TGI Fridays units in his portfolio. “The full-service restaurants like Denny’s and TGIF definitely had a different experience because the dining room was shut down and the bar business was totally impacted.” Ranked No. 12, Yadav Enterprises had sales of $596.4 million in 2019.
“We were digging ourselves out of the hole as we were getting ourselves more acquainted with what the needs are, creating the outdoor dining room, getting set up with third-party delivery, start signing up with the to-go experience, enhancing the app to make it better, but it is challenging,” continued Yadav of his full-service restaurants. “QSR is the place to be right now and I think we’re glad to have it in our portfolio from that angle—but I think things are moving in the direction to learn through the challenges we have.”
Jack in the Box, he noted, has expedited the creation of a streamlined menu, and at Denny’s the franchisor “chose very smartly how to promote their product” and “entice people to really not only come in for value but also have the ability to trade up.”
Yadav acknowledged he will permanently close some locations of his full-service brands but added he’s already building more sites for Jack in the Boxes.
Mumtaz, whose Ampex Brands is ranked No. 19 on the Restaurant 200 with $432 million in sales, said he, too, will keep developing.
“Even during the COVID we are going to be building stores, so by the end of September we will be building another store and by December it will be two new stores we build.”
And to the question of would he be in a position to acquire other franchisees, Mumtaz was emphatic: “Hands down, absolutely.”