The quick-service burger segment is very crowded – that’s how Robert Bhagwandat, Senior Director of Franchise Development at Checkers and Rally, sees the landscape.
For him, that means a number of stagnant chains and more opportunities for his legacy concept to thrive.
“Few brands have the amount of white space that we do to give people the ability to strategize how they can add multiple units to their portfolio right off the bat,” Bhagwandat says.
And Checkers took advantage of it. The drive-thru company signed 90 commitments in 2021 and continued that performance with 21 franchise deals (representing 43 stores) in the first three months of 2022. Existing operators are also reinvesting. Falcons Burger recently purchased 30 units from retiring Joe Hertzman, making it the largest Checkers franchise at 57 restaurants in total.
In terms of openings, the chain plans to open 60 locations this year. Checkers ended 2021 with 847 restaurants, including 292 under the Rally segment and 555 for Checkers. The combined total is a net decrease of 13 units year over year. Checkers franchise restaurants averaged $1.13 million in net sales while Rally franchise stores averaged $1.25 million in net sales, according to the company’s FDD.
Bhagwandat attributes the increased development to several levers, including an incentive offered to women in which Checkers waives the initial franchise fee of $30,000. The money saved allows operators to invest more in the business, accelerating future growth.
The idea for the incentive came from Checkers’ strong female leadership core, Bhagwandat says. The initiative has only been in place for a few months, but several franchisees have taken up the offer.
“We looked at some of the gaps in terms of opportunities to make progress in a very male-dominated industry,” he says.
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In addition to incentives, Checkers is getting a lot of attention due to recent technological innovation, including automated voice command technology. In early 2022, the chain revealed it was partnering with Presto to become the first restaurant to roll out the product nationwide. It currently operates in around 60 to 65 stores, but that will expand to more than 320 restaurants by the end of the fall.
Customers place an order on the menu board, which is then transcribed and transmitted to the kitchen using artificial intelligence, in the same way that an employee would take the order. This saves approximately four man-hours, meaning operators don’t need to overstaff to accommodate increased offsite activity.
According to a nationwide survey by Popmenu, 33% of restaurants are not operating at full capacity because they cannot find enough staff and 76% have adopted new technologies to manage labor shortages.
“Labour has been one of the biggest challenges in the market over the past two years,” he says. “Artificial intelligence was brought in to help maintain the workforce, because now you have people making more than ever in restaurants. Honestly, they were burning out.
Bhagwandat estimates that AI technology is accurate at least 95% of the time, if not more, leading to better customer satisfaction. Customers can leave the restaurant without “the frustrating part of having to come back to correct the order,” as Bhagwandat puts it.
On top, this translates to increased frequency and higher revenue. At the store level, it boosts the morale of the staff, who can concentrate more on performing other tasks.
“Going through a drive-thru today, you can see how crowded they are,” says Bhagwandat. “Employees are moving around at a frantic pace trying to listen to someone through headphones…Why not let the computer do it for you so you can focus on the customer?”
Combined with artificial intelligence, new kitchen equipment can further ease the pressure. One of the main changes was to replace the old flat top grills with new clamshell models. The new grill, which has a lid that closes on a hinge much like a clam shell, completes orders faster by cooking burgers evenly on both sides and eliminates the need for employees to monitor and flip patties. Other kitchen upgrades include improved holding units, allowing foods, such as French fries, to be kept at temperature longer. This ensures that the product comes out of the kitchen fresh and hot.
Bhagwandat says all the kitchen upgrades have increased ticket times by around 30%.
“These examples of new kitchen technologies improve operations by two,” notes the manager. “First, there’s less stress for employees, allowing them to focus and streamline their efforts. Second, there is less waste for the restaurant as a whole, which also means improved margins. »
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Checkers also relies on its standard unit design to attract franchisees. Bhagwandat says the dual-drive-thru model gives the brand a distinct advantage due to consumers’ growing desire for convenient off-site options.
Operators can be flexible. For one, they can reserve a lane for e-commerce orders, like third-party delivery, which now mixes 13-14%. During the pandemic, two-thirds of company-operated locations have dedicated a drive-thru lane for off-premises orders. However, if digital channels are slow for franchisees, both routes can be traditional.
“Throughput is limited for most businesses because when you look at them they only have one drive-thru lane. They don’t have dual lanes to help ease the pressure,” Bhagwandat says. “We are in a unique position to manage e-commerce with both drive-thru lanes.”
Another advantage is the economical size of the kitchens. At a time when other quick-service chains are looking to reduce square footage while increasing off-site capacity, Checkers is ahead of the game, Bhagwandat says.
“When you look at the other players in the quick-drive segment, everyone is definitely working on a new prototype,” he says. “You can come up with the sharpest design in the world, but if you can’t operate within that [smaller design]customers will not come to you.
Checkers will rely on both established franchisees and new franchisees to meet 2022 growth targets. Bhagwandat says existing franchisees are responsible for about 60% of new deals. He adds that new franchise partners can look to existing operators for advice when making business decisions.
“It’s a very family atmosphere,” he says. “That’s one of the really nice things about Checkers and Rally’s. Not only is the business looking out for the best interests of the franchisees, but the other franchisees are looking out for each other’s best interests, because they know that when d other restaurants are successful, it helps everyone in the system.”