Couple Hits the Sauce, Finds Barbecue Success

Cooking up smokin' steaks is easy and much more satisfying than fancy catering, Rick Ivey and his wife realized when their catering company was asked to do barbecue for an upscale wedding in 1999.

One year and $7,000 later, Ivey opened Virginia BBQ out of a former dress consignment house in Ashland, Va., and began cooking up typical barbecue fare like Texas beef sandwiches, chicken barbecue sandwiches and corn bread muffins.

After a writeup of the restaurant in the Richmond Times-Dispatch as the best barbecue in town, business exploded, and Ivey soon opened a second location. "We had lines out the door," he says. Ivey currently owns eight franchises in Virginia, with a ninth opening in Delaware in about two weeks.

Fast food, the largest U.S. frachise category, has exhibited the most new concept growth since 2003, according to a 2007 report by FRANdata. In a booming sector that includes household names such as McDonalds (MCD) and Wendy's (WEN), Virginia BBQ is doing what fast food does best: keeping business simple and cheaper than the rest.

The Cost Of Good Cookin'

For a restaurant, Virginia BBQ's franchise fee is considerably low, says Eric Stites, founder of Franchise Business Review. "125,000 is a very affordable food concept," he says.

Subway, for example, estimates its startup expenses at around $256,500. According to FRANdata, the average initial investment for a fast food franchise ranges from $200,000 to $2 million.

Virginia BBQ's $20,000 franchise fee includes use of the trademark along with a week of on-site and financial training. Equipment costs factor to about $65,000 and build-out costs -- which include plumbing, electricity and building permits -- come to about $40,000.

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