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
, 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.
, 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.
The Sunny Side Of Steak
"Our franchises are small locations that are easy to run. They don't require the labor that real restaurants require," says Ivey. One store can be run with three employees including a cashier, sandwich maker and assistant manager. Unlike larger restaurants that rely on a chef and experienced manager, no skilled labor is required.
Ivey still manages one franchise, which helps keep him attuned to the market. "We use the product every day so we are still connected to sales volume," he says. "Otherwise we would have to rely solely on the franchisees to tell us what is going on."
"One of the barriers to BBQ cuisine is how particular it is to regions of the country," says Glenn Drasher, vice president of marketing at
Ivy advises his franchisees to be flexible and allow for change. High rents at nearly $8,000 per location a month, for example, prompted him to start looking for smaller and more reasonably priced spaces at strip mall centers.
Virginia BBQ franchisee Vince Miller says Ivey is always there if he has questions but he keeps his requests for help realistic. "You have to be able to do work on your own; you can't expect him to do it for you," says Miller.
Ivey's ultimate goal is 5,000 locations, similar in popularity to
Quizno's. He hopes to have 23 franchises open by December 2008 and over 100 in five years.
Even a good chain like
is not going to be very profitable if there's another one across the street, reminds Harry Dannenberg, a counselor with the non-profit organization,
Score. As opposed to distance in miles, Ivey now uses population to judge the proximity of his franchises -- one franchise for every 40,000 people.
In a sizzling franchise category, traditional BBQ proves that simple is best. Just be willing to mess with the original recipe a little.