The industry’s leading multi-unit, multi-concept franchisees L · The industry’s leading...

The industry’s leading multi-unit, multi-concept franchisees

Large restaurant franchisees post-recession are evolving into more sophisticated, investor-owned companies that wield more clout than ever with their franchisor, according to an

analysis of the Franchise Times Restaurant 200, our exclusive annual ranking of the nation’s largest restaurant franchisees.

Collectively, the Restaurant 200 posted revenue of $23.9 billion in 2011, up 3.2 percent from the year before. The companies owned 18,408 units, up 3 percent, continuing an almost uninterrupted string of growth for the largest operators in the 20-year history of the ranking, which is compiled by our sister publication, the Restaurant Finance Monitor.

The largest operators have long built and bought new restaurants at a rate faster than other operators because they have more access to capital and are in demand. These big franchisees also have a direct line to franchisor execs and thus more influence. The largest franchisee, Pittsburg, Kansas-based NPC International, has 1,151 Pizza Hut units, or about 20 percent of the system.

Then there is No. 7 Carrols Restaurant Group, which in April agreed to buy 278 more units from its franchisor, Burger King, doubling its size.

Read on to learn about all the moves of this year’s top list.

Sponsored by

REVENUE IN DOLLARSposted by top 200

franchisees

OF KFC’s SYSTEMcontrolled by No. 1 operator

BURGER KING UNITSbought by Carrols, up one spot to 7

42 August 2012

T o get an idea of how active the nation’s largest restaurant franchisees have been recently, look no further

than the biggest, the Pittsburg, Kansas-based Pizza Hut operator NPC International.

In recent months, the company obtained new owners (private equity group Olympus Partners), it bought 36 more units from Pizza Hut, and it refinanced a $375 million loan. And that’s just since November.

That describes the past year and a half for the companies on Franchise Times’ Restaurant 200 in a nutshell: busy. A remark-able number of the companies toward the top of our annual ranking of the nation’s largest restaurant franchisees by annual rev-enue either made a big acquisition or were sold.

As this ranking illustrates, we’re in the midst of a franchisee acquisition boom. According to the New York-based invest-ment banking firm J.H. Chapman’s annual restaurant merger and acquisition census, franchisee transactions rose significantly last year and represented nearly half of all recorded deals. “I can’t ever remember this large a percentage of transactions that involve franchisees,” David Epstein, principal with J.H. Chapman, told our sister publica-tion, the Restaurant Finance Monitor.

The boom is being fueled by low-cost debt and the availability of units. Numerous franchise systems, including the chains that dominate the ranking such as Applebee’s, Burger King, and Yum Brands’ three con-cepts KFC, Pizza Hut and Taco Bell, have been selling off company stores to franchi-sees. In addition, a number of franchisees have put their operations up for sale, as owners retire or simply seek the exits after several years of challenging sales numbers.

The acquisitions boom would ultimately hit the top company on our ranking, too.

To be sure, NPC is no stranger to buying and selling. The company was founded in 1962, when an insurance salesman named Gene Bicknell bought a Pizza Hut restaurant

in Pittsburg, Kansas and worked at night to grow the business. Bicknell expanded over the years and went through a few name changes—eventually becoming National Pizza Co., and then NPC International. By the time he sold his interest in the company to Merrill Lynch in 2006 it had more than 500 restaurants. That was the year after the com-pany claimed the top spot on the Franchise Times Restaurant 200 as the nation’s largest restaurant franchisee.

NPC isn’t just acquiring units. CEO Jim Schwartz said the company is finding a healthy market for building new Pizza Huts, mostly delivery and pick-up units in smaller towns. “Yum’s done a great job provid-ing lower-cost investment opportunities,” Schwartz said, noting the company has built 27 units in the past nine months.

In 2008, Bank of America took over Merrill Lynch, and by last year the Charlotte-based banking giant decided to narrow its focus, putting NPC on the block. It was good tim-ing. The acquisitions market had returned in 2010 following a two-year hiatus and, in the franchisee world, had kicked into gear last year.

In November, Olympus Partners, the Stamford, Connecticut-based private equity firm, agreed to buy NPC for a reported $775 million, or more than seven times the com-pany’s 2011 earnings before interest, taxes, depreciation and amortization. The earnings multiple is a way to measure the purchase price of a business—the higher the multiple, the higher its value. A multiple of 7x EBITDA is high for a franchisee, which typically sells for 4x to 6x earnings.

In this case, there was considerable inter-est in a company that operates more than 20 percent of the nation’s Pizza Hut units.

“That’s a testament to the track record of the team and ownership,” Schwartz said, noting that senior executives and NPC have an aver-age tenure of 17 years.

Olympus is no stranger to franchi-see ownership. The company had owned

Fort Smith, Arkansas-based Yum Brands franchisee K-Mac Enterprises, the No. 15 company on our ranking, before selling it to Los Angeles-based private equity firm Brentwood Associates.

“They’re really terrific people and are great supporters of our business and strat-egies,” Schwartz said of Olympus. “There’s been no change in how we operate, or in the senior management. Our job is taking care of customers every day and executing our mid-term and long-term strategies.”

Articles by Jonathan Maze Research by Matt Haskin and Abbi Nawrocki

Bought and SoldTop franchisees change hands at quick clip

Wells Fargo Restaurant Finance provides financing to corporate restaurant brands, large multi-unit restaurant franchisees, experienced commercial real estate investors who own restaurant properties, private equity firms, and other investors in restaurant concepts. Our loan products include: syndicated corporate senior financing, fixed and floating rate term loans, acquisition facilities, sale-leaseback financing, bridge/development financing, working capital revolvers, and interest rate swaps. For more information, visit www.wellsfargo.com/restaurants

FRANCHISE TIMES’ RESTAURANT 200

…based on number of franchisees on FT’s Restaurant 200

Top Five Brands

August 2012 43

1 NPC International, Inc. 938,000,000 1151 Pizza Hut Pittsburg, KS

2 Apple American Group 821,000,000 337 Applebee’s San Francisco, CA

3 Bridgeman Foods 518,000,000 163 Wendy’s Louisville, KY 124 Chili’s

4 Covelli Enterprises 426,000,000 198 Panera Bread Warren, OH 5 O’Charley’s

5 Strategic Restaurants 405,000,000 293 Burger King San Ramon, CA 26 T.G.I. Friday’s

6 Boddie-Noell Enterprises 386,000,000 335 Hardee’s Rocky Mount, NC 5 Moe’s Southwest

7 Carrols Restaurant 348,000,000 298 Burger King Group, Inc. Syracuse , NY

8 Harman Management 346,000,000 314 KFC Corporation 4 Taco Bell Los Altos, CA

9 The Briad Group 327,000,000 71 T.G.I. Friday’s Livingston, NJ 42 Wendy’s

10 Doherty Enterprises, Inc. 303,000,000 61 Applebee’s Allendale, NJ 29 Panera Bread

11* Pepper Dining, Inc. 300,000,000 106 Chili’s Charlotte, NC

12 Heartland Food Corp. 297,000,000 297 Burger King Downers Grove, IL

13 Pilot Travel Centers, LLC 277,000,000 165 Subway Knoxville, TN 47 Wendy’s

14 ADF Companies 267,000,000 285 Pizza Hut Fairfield, NJ 13 Panera Bread

15 K-Mac Enterprises 254,000,000 150 Taco Bell Ft. Smith, AR 32 YUM! Multi

16 United States Beef Corp. 251,000,000 279 Arby’s Tulsa, OK 5 Taco Bueno

17* JIB Management 250,000,000 219 Jack in the Box Fremont, CA 29 Denny’s

18 Tacala/Boom Foods 242,000,000 160 Taco Bell Vestavia Hills, AL 66 Sonic Drive-In

19 MUY Brands, LLC 235,000,000 164 Pizza Hut San Antonio, TX 48 Long John Silver’s

20 Sun Holdings, LLC 233,000,000 72 Popeyes Irving, TX 71 Burger King

21 Thomas and King, Inc. 230,000,000 88 Applebee’s Lexington, KY 6 Carino’s

22 D. L. Rogers Corp. 229,000,000 198 Sonic Drive-In N Richland Hills, TX

* Denotes revenue estimate

# Company Revenue Units Concepts

Franchise Times’ Restaurant 200: TOP 25


NPC International hasn’t stopped growing since it claimed the top spot on the Franchise Times Restaurant 200, in 2005. It has made several acquisitions under Merrill Lynch’s

ownership—and sold a few units, too. Olympus Partners bought the firm last November. By the end of last year it had 1,151 locations, mostly in the Midwest and the South.

“Gene’s philosophy has been passed through our culture,” said CEO Jim Schwartz, referring to company founder Gene Bicknell. “We’ve continued to reinvest in the business. Our focus has been to take care of the Pizza Hut brand. We’ve grown by acquiring stores from franchisees, as well as Yum Brands, and through development activity.

“It’s amazing,” Schwartz added. “Over the years, you acquire 50 here, 50 there, and the next thing you know you’re almost at 1,200.”

50 Here, 50 There

Franchise Times Restaurant 200 is compiled annually using a combination of companies’ self-reported 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. In some cases, where an acquisition took place during the year, we derive pro-forma revenue in calculating the company’s ranking.

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.

If you believe your company might make the list or we missed you, or you know another company that should be listed, contact Abbi Nawrocki at (612) 767-3200; [email protected]

Our ranking of the top 200 franchisees is combined with the second 200 franchisees in a report prepared by the Chicago consulting firm Technomic.

How we compiled| the ranking

44 August 2012

23 DavCo Restaurants, Inc. 224,000,000 153 Wendy’s Crofton, MD

24 AmRest 219,000,000 103 Applebee’s Atlanta, GA

25 Quality Dining, Inc. 215,000,000 114 Burger King Mishawaka, IN 48 Chili’s

# Company Units Concepts # Company Revenue Units Concepts


28* Fugate Enterprises 208 Pizza Hut Wichita, KS 70 Taco Bell

29* Sunshine Restaurant Partners, LLC 153 IHOP Sunrise, FL

30 Cedar Enterprises, Inc. 151 Wendy’s Columbus, OH

31 Interfoods of America, Inc. 143 Popeyes Miami, FL 18 Burger King

32* Kazi Management VI, LLC 176 KFC St. Thomas, VI 25 Burger King

33 The Rose Group 59 Applebee’s Newtown, PA 4 Corner Bakery

$150 Million to $175 Million 34* Valenti Management 112 Wendy’s Tampa, FL 17 Chili’s

35 Border Foods Companies 84 Taco Bell Golden Valley, MN 80 Pizza Hut

36 T.L. Cannon Management 61 Applebee’s Ponte Vedra Beach, FL

37 Apple Gold Group 86 Applebee’s Raleigh, NC 6 Burger King

38 Apple Sauce, Inc. 78 Applebee’s Crestview Hills, KY

39* T-Bird Restaurant Group 56 Outback La Jolla, CA

40 Kaizen Group of Companies 70 Burger King Beaverton, OR 56 Denny’s

41 Carlisle Corporation 121 Wendy’s Memphis, TN

42* Sizzling Platter, Inc. 142 Little Caesars Murray, UT 22 Sizzler

43* REE Inc. 73 McDonald’s Beaumont, TX

44* B & B Consultants 155 Sonic Drive-In Las Cruces, NM

45* Western Reserve Restaurant Mgmt 103 Wendy’s Rochester, NY

$125 Million to $150 Million 46 Casual Restaurant Concepts 50 Applebee’s Tampa, FL

47 Pacific Bells, Inc. 84 Taco Bell Vancouver, WA 12 Buffalo Wild Wings

48* Hamra Management Company 47 Panera Bread Springfield, MO 28 Wendy’s

49* Caspers Company 49 McDonald’s Tampa, FL

50 Metro Corral Partners 28 Golden Corral Winter Park, FL

$180 Million to $205 Million 26 JRN, Inc. 161 KFC Columbia, TN 23 YUM! Multi

27 Southern California Pizza Company 222 Pizza Hut Corona, CA

# Company Units Concepts

Franchise Times’ Restaurant 200: TOP 26-200

Brad Honigfeld’s effort to keep his house may end up being the best thing that ever happened to his company.

Honigfeld is the CEO of the No. 9 company on our ranking, the Briad Group, owner of 71 T.G.I. Friday’s and 42 Wendy’s. In December 2008, Briad was forced to scramble to find tenants for a strip mall his company built in New Jersey after most of its would-be occupants wouldn’t move in due to the credit freeze. Honigfeld had a personal guarantee on the center—meaning that the bank would come after him if his loan couldn’t be paid. Briad had to fill that center, quickly.

So Briad started finding concepts to open in the center. Honigfeld called Sam Fox, owner of the Arizona-based Fox Restaurant Concepts, and talked him into letting him franchise Fox’s upscale burger concept called Zinburger. And then Briad created a yogurt concept out of thin air called

“Cups.”

The result? Zinburger did $3.9 million its first year, and now Briad plans to open more such restaurants east of the Mississippi. But the big story is Cups, which is what you get when you have Hooters-like staff serve frozen yogurt to danceable techno music. That first store enjoyed consistently long lines and generated $2.2 million its first year, a ridiculous sum for a fro-yo concept. Now Briad expects to have 11 Cups shops open by the end of the year. It has started franchising the idea, and expects 50 to 70 next year and plans to take Cups to Europe and Brazil.

Accidental Franchisor

August 2012 45

51 Restaurant Management Co. 132 Pizza Hut Wichita, KS 14 Long John Silver’s

52 Apple-Metro, Inc. 33 Applebee’s Harrison, NY

53 BR Associates, Inc. 104 Long John Silver’s Jasper, IN 35 Wendy’s

54 Wisconsin Hospitality Group 83 Pizza Hut Wauwatosa, WI 38 Applebee’s

55 KBP Foods, Inc. 119 KFC Overland Park, KS 30 Taco Bell

56 Quality Restaurant Concepts, LLC 58 Applebee’s Birmingham, AL

57 Friendly Franchisees Corporation 64 Carl’s Jr. La Palma, CA 18 Denny’s

58 Pizza Properties, Inc. 41 Peter Piper Pizza El Paso, TX 39 Burger King

$100 Million to $125 Million 59 Palo Alto, Inc. 73 Taco Bell Denver, CO 39 Pizza Hut

60 Carolina Restaurant Group 82 Wendy’s Charlotte, NC

61 RPM Pizza, Inc. 127 Domino’s Pizza Gulfport, MS

62* The Jan Companies 90 Burger King Cranston, RI 2 Popeyes

63 ACG Texas, L.P. 62 IHOP Richardson, TX

64 SSCP Management, Inc. 42 Applebee’s Dallas, TX 18 Burger King

65 Concord Hospitality, Inc. 43 Applebee’s Lincoln, NE 4 Famous Dave’s

66 Strang Corporation 32 Panera Bread Cleveland, OH 15 Applebee’s

67 Apple Investors Group 44 Applebee’s Pomona, CA 17 IHOP

68 Apex Restaurant Management, Inc. 66 LJS/A&W Pleasanton, CA 54 KFC

69* Pennant Foods 89 Wendy’s Knoxville, TN

70 Falcon Holdings, LLC 165 Church’s Chicken Westlake, TX

71 America’s Pizza Company, LLC 127 Pizza Hut Lafayette, LA

72 Desert De Oro Foods, Inc. 68 Taco Bell Kingman, AZ 40 Pizza Hut

73 Southern River Restaurants 49 Applebee’s Natchez, MS

74 Neighborhood Restaurant Partners, LLC 48 Applebee’s Duluth, GA




75* PJ United 113 Papa John’s Birmingham, AL

76 Wendy’s of Colorado Springs 74 Wendy’s Colorado Springs, CO 9 Golden Corral

77 Pacific Island Restaurants, Inc. 45 Pizza Hut Honolulu, HI 38 Taco Bell

78 Frisch’s Restaurants, Inc. 29 Golden Corral Cincinnati, OH

79 Gator Apple, LLC 41 Applebee’s West Palm Beach, FL

80 McEssy Investment Co. 43 McDonald’s Lake Forest, IL

81 QK, Inc. 79 Denny’s Scottsdale, AZ 5 Del Taco


When Atour Eyvazian met Anil Yadav in 1984, shortly after Eyvazian went to work as a janitor for a Los Angeles Jack in the Box, neither had any idea that the

two of them together would become the system’s largest franchisee. But that’s exactly what happened.

Eyvazian, an Iranian immigrant, rose through the ranks of Jack in the Box, eventually becoming a regional manager for the company. Yadav became a franchisee when he bought his first restaurant in 1989. The two continued their friendship over the years, and when 10 units became available for sale in the Sacramento area in 2004, they decided to become partners.

In 2007, the two bought restaurants in Texas and Eyvazian moved to Houston to run those restaurants. Since then, they’ve bought 109 locations in that state. Today, Eyvazian runs those plus the 10 in Sacramento.

Yadav runs the remaining 100 Jack in the Box restaurants they own, most of which are in California, plus 29 Denny’s. Their company, JIB Management, is the No. 17 company on our ranking. The two partners and their families remain good friends. When Eyvazian visits the California stores he stays at Yadav’s house, and vice versa when Yadav goes to Texas.

“We have one of the greatest partnerships anybody could wish for,” Eyvazian said. “The way our partnership works, he has a circle and I have a circle. Our resources are different. We bring different pieces to the table. We’ve become an asset to each other.”

It Takes Two

46 August 2012


The past couple of years have been more fun for Denny’s franchisee Dawn Lafreeda.

In 2001, Spartanburg, South Carolina-based Denny’s and its CEO at the time, Nelson Marchioli, told franchisees to stop growing as it sought to fix its sagging sales. Lafreeda and other operators acquiesced, and for the next several years, the chain stood still, enabling rival chain IHOP to speed past it to become the country’s biggest family dining concept.

But, like many of the companies on the Restaurant 200, Lafreeda likes buying and developing new restaurants. So she jumped in head-first when Denny’s started focusing on growth again in 2010—to the point where her company, San Antonio-based Den-Tex Central, is now one of the fastest-growing franchisees in the country.

Den-Tex added 12 units last year, 31 since 2008, and now has 70 restaurants in six states. Company revenue grew 45.6 percent last year, and Den-Tex shot up 41 spots on our ranking to No. 103. “It’s always enjoyable when your franchisor wants to grow the brand,” Lafreeda said. “It’s nice to see a new Denny’s on the corner. I love to build new restaurants. I always want to be growing.”

Denny’s has been particularly aggressive in getting operators to build and develop again. In 2010, the company agreed to convert 140 family dining restaurants in Flying J Travel Centers to Denny’s, and franchisees like Lafreeda jumped on board. Since then, the company has sold some restaurants to operators—Lafreeda bought six in Chicago last year and five in St. Louis—and now it’s trying to get operators to build new units in underserved markets.

Lafreeda, a franchisee since 1986 and now the company’s second largest operator, credits a leadership change for her franchisor’s shift in focus. Marchioli resigned in 2010, and John Miller, former executive at Dallas-based Brinker International, became the CEO in January 2011.

“They’ve got a lot of good ideas on the table,” Lafreeda said. (See related story on page 48.)

Acquisitions helped a number of companies move up the rankings last year. And perhaps no company vaulted up the list as much as did Decatur, Georgia-based multi-concept franchisee NRD Holdings.

NRD Holdings debuted at No. 163 on our ranking, thanks to nearly 70 percent sales growth. Last year, it was the 254th largest restaurant franchisee and didn’t make the list, meaning it rose 91 spots.

Much of that sales growth came thanks to a big acquisition of a Domino’s Pizza franchisee in Jacksonville and Orlando. NRD Holdings and its CEO, Aziz Hashim, have made a habit of acquisitions in recent years, and have stepped up their aggressiveness recently. Since the Domino’s deal, it reached an agreement to buy 28 Golden Corral locations in the Southeast, but the franchisor ended up buying those restaurants by exercising its contractual right of first refusal.

“We’re always on the prowl,” Hashim said, adding, “it’s not an unlimited thing. And we have exited brands that didn’t fit into our model.”

The purchase of the Domino’s units in Orlando and Jacksonville was “a bit of a distressed sale,” as the franchisee had some personal issues and had to put his company on the block, Hashim said. Those personal issues kept the operator from paying enough attention to the business, so Hashim knew it was a business that could be turned around.

In addition, he said, the Domino’s brand is a good one, and the market is strong. “We could see there were some opportunities to put some focus on the business, which he could not do,” Hashim said, though he noted that distressed units “take some time” to turn around.

Both Hashim and Lafreeda are career restaurateurs who almost literally grew up in the fast food business. But investors are increasingly getting involved, and they’re aggressive in taking advantage of the buyer’s market to make their companies bigger. One of those investors is Boyne Capital, a private equity group out of Miami that owns Overland Park, Kansas-based KBP Foods.

KBP is quickly becoming one of the biggest KFC operators in the country at a time when many of the chain’s franchisees have been struggling. Last year, Boyne bought 53 KFC units in Atlanta from the franchisor Yum Brands, giving it 119 KFC restaurants to go with 30 Taco Bells. KBP has thus gone from 113 on our ranking to 55 this

year. Its revenue grew 84 percent.

“We think, as the economy recovers, there will be good opportunities for growth,” said Derek McDowell, managing director at Boyne. He added that KFC has a dominant market position, and has made changes in marketing and advertising that could make it grow considerably again. “We think the KFC brand is undervalued.”

Biggest RisersNew CEO brings fun back for Denny’s franchisee, plus two more move up

“It’s always enjoyable when your franchisor wants to grow

the brand.”— Dawn Lafreeda

August 2012 47

$90 Million to $100 Million 82 Platinum Corral, LLC 29 Golden Corral Jacksonville, NC

83 BurgerBusters, Inc. 82 Taco Bell Virginia Beach, VA 11 Pizza Hut

84 Starboard Group 63 Wendy’s Coral Springs, FL

85 Fourteen Foods 119 Dairy Queen Minneapolis, MN

86 Luihn Food Systems, Inc. 33 KFC Morrisville, NC 24 Taco Bell

87 Southern Multifoods, Inc. 59 Taco Bell Jacksonville, TX 23 YUM! Multi

88* Tar Heel Capital 75 Wendy’s Boone, NC

89 Rosenfield Restaurants, LLC 82 Hardee’s Lakewood, CO 15 Carl’s Jr.

90 Treadwell Enterprises, Inc. 84 KFC Springfield, MO 2 Ruby Tuesday

91 Paradigm Investment Group, LLC 92 Hardee’s San Diego, CA 1 T.G.I. Friday’s

92 CLP Corporation 41 McDonald’s Homewood , AL

93 Southern Bells, Inc. 70 Taco Bell Indianapolis, IN 5 KFC

94 Meritage Hospitality Group 86 Wendy’s Grand Rapids, MI

95 Austaco, Ltd 77 Taco Bell Austin, TX

96 The Bistro Group 30 T.G.I. Friday’s Cincinnati, OH 5 McAlister’s Deli

97 Daland Corporation 100 Pizza Hut Wichita, KS

$80 Million to $90 Million 98 V&J Holding, Inc. 65 Pizza Hut Milwaukee, WI 37 Burger King

99* AppleCreek Management Co., Inc. 40 Applebee’s Duluth, GA

100 Kessler Group, Inc. 48 Friendly’s Rochester, NY 21 Burger King

101 Neighborhood Hospitality/ 40 Applebee’s Woodland Group, Inc. Hazard, KY

102 J&B Restaurant Partners 59 Friendly’s Ronkonkoma, NY 8 Taco Bell

103 Den-Tex Central, Inc. 70 Denny’s San Antonio, TX




104 Emerald Foods, Inc. 75 Wendy’s Houston, TX

105 Morgan’s Foods, Inc. 59 KFC Cleveland, OH 9 YUM! Multi

106* Both Inc. 19 Golden Corral Virginia Beach, VA

107 Mancha Development Co. 35 Denny’s Corona, CA 34 Burger King

108 Hospitality Restaurant Group, Inc. 40 Taco Bell Traverse City, MI 15 Pizza Hut

$70 Million to $80 Million 109 Retzer Resources, Inc. 35 McDonald’s Greenville, MS

110* Stanton & Associates, Inc. 63 Wendy’s Jackson, MI

111 Gala Corporation 18 Applebee’s Costa Mesa, CA 7 Famous Dave’s

112 MarLu Investment Group 46 Church’s Chicken Sacramento, CA 21 Jack in the Box

113 Benton Properties, Inc. 63 Sonic Drive-In Springdale, AR

114 Food Management Investors, Inc. 23 Applebee’s Minot, ND 2 Space Aliens

Neighborhood Restaurant Partners, based in Duluth, Georgia, debuted at No. 74 on our ranking after buying 40 units from Bill Palmer, the

Applebee’s franchisee who actually founded the chain in 1980 before selling the brand to W.R. Grace & Co. Not finished, Neighborhood in May bought the No. 46 company on the ranking, Casual Restaurant Concepts, owned by longtime franchisee Franklin Carson.

Neighborhood is owned by Atlanta-based Argonne Capital, which has jumped head-first into franchising in recent years—it’s a huge operator of IHOP, for instance, owning two of its franchisees on our ranking: No. 29 Sunshine Restaurant Partners, which operates 153 units in Florida and Georgia, and No. 63 ACG Texas, which operates 62 units in that state. Argonne didn’t limit itself to franchisees: In March it bought Chattanooga-based burger chain Krystal.

List Debut


48 August 2012

The oil bust in Texas in the late 1980s was good for Dawn Lafreeda.

The Orange County, California native started working as a waitress at Denny’s when she was 16 years old. She continued working at Denny’s through college, even when she took another job selling accounting software. In 1984, Denny’s decided to sell a restaurant in little Globe, Arizona, a former mining town of 7,500 east of Phoenix.

The restaurant was called Hobo Joe’s, and Denny’s initially planned to convert it before deciding the town was too small to support a 24-hour restaurant. Lafreeda bought Hobo Joe’s. She was just 23.

Two years later, Lafreeda got her big break when four stores in West Texas were put up for sale after the oil bust there hurt the local economy. “I grew up in Orange County,” Lafreeda said. “That was a little bit of a culture shock,” moving to West Texas. “After several months I called Denny’s every week telling them, You have to sell me a Denny’s in a bigger city.”

Eight months later, Denny’s did, selling Lafreeda a store in San Antonio. Today, Lafreeda’s company, Den-Tex Central, No. 103 on our ranking, owns 70 restaurants and is the chain’s second-largest operator—and she still has that restaurant in Globe, though it’s now called Judy’s Cookhouse.

Waitress Makes Waves



115 FourCrown, Inc. 58 Wendy’s Oakdale, MN

116 Goldco, LLC 63 Burger King Atlanta, GA

117* Killian Management Services 36 McDonald’s West Bend, WI

118 High Plains Pizza 82 Pizza Hut Liberal, KS

119 WKS Restaurant Corp. 50 El Pollo Loco Long Beach, CA 3 Denny’s

120 B & G Food Enterprises, LLC 57 Taco Bell Morgan City, LA 20 YUM! Multi

121* Restaurant Management Group 42 Hardee’s Kingsport, TN 35 Little Caesars

$60 Million to $70 Million 122 First Sun Management Corp. 51 Wendy’s Clemson, SC

123 DORO, Inc. 64 Hardee’s Eau Claire, WI 5 Taco John’s

124* Hallrich, Inc. 82 Pizza Hut Kent, OH

125* JDK Management Company/ 40 Perkins K Investments Ltd. 3 Quaker Steak Bloomsburg, PA

126 Kades Corporation 29 McDonald’s Pasadena, TX

127 Janus 1 Unlimited, Inc. 31 McDonald’s Houston, TX

128 Team Schostak Family Restaurants 62 Burger King Livonia, MI 3 Del Taco

129 Original Bread, Inc. 32 Panera Bread Wichita, KS

130 Romulus, Inc. 37 IHOP Phoenix, AZ

131 AB Enterprises 14 Burger King Redding, CA 12 Applebee’s

132 Carisch, Inc. 68 Arby’s Naples, FL

133* Bros. Management, Inc. 26 McDonald’s Knoxville, TN

134* Las-Cal Corporation 65 Taco Bell Las Vegas, NV

135* Stine Enterprises, Inc. 71 Jack in the Box Phoenix, AZ

136* Fourjay L.L.C 49 Wendy’s North Little Rock, AR

137 Ansara Restaurant Group, Inc. 22 Red Robin Farmington Hills, MI 5 Big Boy

138* Austin Sonic, Inc. 56 Sonic Drive-In Austin, TX

139 KC Bell, Inc. 61 Taco Bell Wichita, KS

140 DiPasqua Enterprises 101 Subway Winter Park, FL

141 RGT Management, Inc. 53 Taco Bell Collierville, TN 7 Long John Silver’s

142 Apple Corps, L.P. 25 Applebee’s Witchita , KS

$50 Million to $60 Million 143 Howley Bread Group, Ltd. 23 Panera Bread Westlake, OH

144 Dolan Foster Enterprises, LLC 60 Taco Bell Pleasanton, CA

145 Verlander Enterprises, LLC 10 Village Inn El Paso, TX 10 Applebee’s


August 2012 49

This has been a tough few years for KFC. The Kentucky-based chicken chain, which is enjoying stunning growth in China, has been struggling in the United States. In 2011, those struggles led to a 4.3 percent decline in the number of restaurants, and a 5.2 percent fall in estimated sales, according to the Chicago consulting firm Technomic.

This has come home to roost with many of the chain’s largest franchisees. Twenty-three franchisees on our ranking operate the concept, and many are struggling.

Cleveland-based Morgan’s Foods fell from No. 89 to No. 105 after its sales fell 8.5 percent. The reason: KFC forced the company to close 12 of its 81 units because they didn’t meet the franchisor’s remodeling requirements. It closed another unit and now has 68 units, nine of which are cobranded with KFC’s sister concept, Taco Bell. And KFC’s largest operator, Los Altos, California-based Harman Management, fell from No. 4 to No. 8 on our ranking following a sales decline of nearly 17 percent last year.

But none had a tougher year than Kazi Management, the Studio City, California, operator of both KFC and Burger King. In 2008, Kazi was the 11th largest franchisee in the country, with revenue nearing $300 million. It was also KFC’s second largest operator.

But Kazi put four companies into bankruptcy protection last year, and those four operated about half of Kazi Management’s 235 KFCs. Those companies operated restaurants in Florida, Maryland, New York and Michigan. Kazi was forced to close 32 restaurants last year during court proceedings, and as a result the operator is a lot smaller. At the end of last year, it operated 176 KFC units and 25 Burger King units in Hawaii. Kazi, No. 20 last year, is No. 32 this year.

It will be even smaller next year: In February, the remaining restaurants in those states, 113 units in all, were sold to a pair of companies for $56.2 million.

A few of the other systems that dominate the list also had tough years, including Miami-based Burger King. Last year, Jan Cos. was No. 43 on the ranking. The Cranston, Rhode Island-based company operated 97 Burger Kings and two Popeyes. It closed seven restaurants and has fallen to No. 62.

Then there is Duke & King. In 2009, the Minneapolis-based company operated 95 Burger Kings and was the 63rd largest operator on our ranking. Last year the company was dissolved. After going through bankruptcy court, its restaurants were sold, mostly to two of Burger King’s largest franchisees: No. 12 Heartland Food Corp. out of Downers Grove, Illinois, and No. 5 Strategic Restaurants, based in San Ramon, California.

The good news: Same-store sales at both Burger King and KFC have turned positive this year.

Moving DownKFC’’s tough year hits select franchisees



146* Hunt Enterprises 26 McDonald’s Hauppauge, NY

147 LDF Food Group, Inc. 42 Wendy’s Wichita, KS

148 Cotti Foods Corp. 61 Taco Bell Rancho Santa Margarita, CA

149 William Tell, Inc. 18 Applebee’s Salt Lake City, UT 8 Famous Dave’s

150 J.S. Ventures, Inc. 25 Applebee’s Wichita, KS

151 LeHigh Valley Restaurant Group 19 Red Robin Allentown, PA

152 RLC Enterprises, Inc. 50 Taco Bell Northbrook, IL 11 KFC

153 GB Restaurants 37 Denny’s Chandler, AZ

154* Oerther Foods, Inc. 22 McDonald’s Orlando, FL

155 Fowler Foods, Inc. 36 KFC Jonesboro, AR 16 YUM! Multi

156* Diversified Restaurant Holdings 22 Buffalo Wild Wings Southfield, MI

157 DRM, Inc. 69 Arby’s Omaha, NE

158 Serazen, LLC 66 Papa John’s Orange, CA

159* Mirabile Investment Corp. 45 Burger King Memphis, TN 5 Popeyes

160* Miller Apple, L.P 21 Applebee’s Bay Harbor, MI 2 Sonic Drive-In

161 The Bailey Company, LLP 57 Arby’s Golden , CO 1 Good Times

162 S-Group Companies 33 Wendy’s Sandusky, OH

163 NRD Holdings, LLC 23 Domino’s Pizza Decatur, GA 20 Checkers/Rally’s

164 BMW Management, Inc. 24 Sizzler Temecula, CA

165* Koning Restaurants International 61 Pizza Hut Miami, FL

166* Parrish Foods 24 McDonald’s Dallas, TX

167 MetzGroup 12 T.G.I. Friday’s Dallas, PA 3 Krispy Kreme

168* OCAT, Inc. 38 Taco Bell Modesto, CA

169* West Quality Food Service, Inc. 65 KFC Laurel, MS 1 Checkers

50 August 2012





$40 Million to $50 Million 170* C&R Management Co. 26 McDonald’s West Jordan, UT

171 C & P Restaurant Company, LLC 12 Captain D’s Macon, GA 7 Cheddar’s

172 Restaurant Partnership of Central Texas 21 Applebee’s Houston, TX

173 Wendco Group 39 Wendy’s Pensacola, FL

174 VKC Group 84 Subway Sugar Land, TX

175 Northcott Company 20 Perkins Chanhassen, MN 4 Houlihan’s

176* JAX, LLC 15 Golden Corral Charlotte, NC

177 U.S. Restaurants, Inc. 34 Burger King Blue Bell, PA

178* J & S Restaurants, Inc. 42 Hardee’s Cleveland, TN

179 Shamrock Co, Inc. 24 Taco Bell Hinsdale, IL 11 KFC

180 Brodersen Management Corp. 33 Popeyes Glendale, WI

181 RREMC, LLC 35 Denny’s West Palm Beach, FL

182 Primary Aim, LLC 29 Wendy’s Zanesville, OH

183 PFC/Classic Dining 31 Denny’s Crystal Lake, IL 1 Ruby Tuesday

184* Thomas 5 Ltd. 31 Wendy’s Dublin, OH

185 RedKing Foods, LLC 36 Burger King Maple Grove, MN

186 Ryan Restaurant Corp. 8 Applebee’s Billings, MT 7 Famous Dave’s

187* R & L Foods, Inc. 16 YUM! Multi San Antonio, TX 9 Taco Bell

188 Rawson Foodservice, Inc. 21 Wendy’s Rocky Hill, NJ

189 Ocedon Restaurant Mgmt. 52 Burger King Denver, CO

190* GC Partners, Inc. 11 Golden Corral Winston-Salem, NC

191* Lunan Corporation 45 Arby’s Chicago, IL

192* RoHoHo, Inc. 52 Papa John’s Charleston, SC

$35 Million to $40 Million 193 Wendy’s of Montana 23 Wendy’s Billings, MT

194 H & K Partners 37 KFC Milwaukee, WI 7 YUM! Multi

195 L & K Hodge 62 Papa Murphy’s McKinleyville, CA

196 Tricorp Food Services, Inc. 12 T.G.I. Friday’s Chesterfield, MO

197 Mach Robin, LLC 14 Red Robin Sun Valley, ID

198 Pizza Hut of Arizona 36 Pizza Hut Tucson, AZ

199 Century Fast Foods, Inc. 32 Taco Bell Los Angeles, CA

200 Peak Interests, LLC 45 Pizza Hut Golden, CO

The largest franchisees have all sorts of sophisticated tools at their disposal to do market research when they want to buy

new concepts or enter new cities. Then again, some of them aren’t above a little Dumpster diving.

John Brodersen, president of the 33-unit Popeyes operator Brodersen Management, based in Glendale, Wisconsin, had to find a way to determine the strength of the market when he decided to buy some units in Detroit. So he visited numerous KFC and Church’s restaurants there, and kept asking staff which store was the busiest in town.

Brodersen had to risk some funny looks. But, “by the end of the day, you have the five busiest KFCs in town,” he said.

Brodersen couldn’t do this when he decided to build units in Puerto Rico later—because he didn’t know Spanish—so instead he visited Church’s Chicken units there, set himself up in the dining room, and counted customers and cars. He cleaned tables, dug through some trash, and collected 500 receipts in a week. “I figured out they were doing $1.4 million” a year,” he said. The average Church’s in the United States does $700,000.

Later, when he hired many of those Church’s managers to run his Popeyes restaurants there, Brodersen discovered that his customer counting strategy was almost entirely accurate.

Dumpster Diving

The industry’s leading multi-unit, multi-concept franchisees L · The industry’s leading...

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