Nearly 10 years after being purchased out of Chapter 11 bankruptcy by its franchisees, casual-dining chain Ground Round once again is plotting a growth trajectory that could boost its unit count by almost 50 percent over the next several years.
The 27-unit chain also is rolling out a new prototype, as well as a smaller sports-themed concept, that will allow it to open in nontraditional sites, according to Jack Crawford, president and chief executive of the Freeport, Maine-based Ground Round Independent Owners Cooperative.
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Crawford said Ground Round — which was spun off from the iconic Howard Johnson’s hotel and restaurant brand in 1969 — signed two multiunit development agreements in recent months. Recreation Centers LLC agreed to open five units in New Jersey, while GR Minnesota signed a deal to open eight locations over the next 10 years in the Minneapolis and St. Paul markets.
“We’ve got about 15 stores in the pipeline,” Crawford said of the franchisee-run business. “The brand is doing well. I can see 40 locations open by 2015.”
He said four or five of those restaurants are expected to open in 2013.
Meanwhile, Ground Round is planning to debut its new prototype in Waconia, Minn., at the end of January. Crawford said the 4,700-square-foot building features exterior and interior upgrades, such as added stonework to the exterior design and a new color scheme and other décor changes in the restaurant’s two themed dining rooms. One room caters to family dining, while the second is designed as a sports lounge.
The two dining areas can seat about 215, split evenly between them and at the bar. The restaurant also includes extension party tables that allow for group gatherings.
Not factoring in the price of the land, the new prototype costs about $1.8 million to build, Crawford said. Franchisees also have the option to renovate an existing building. “We’ve already done a lot of conversions,” he said. “We can take an existing building and renovate it for between $400,000 and $600,000. It’s a much smaller investment.”
Ground Round also is offering an upgraded menu featuring burgers, sandwiches, Mexican items, pasta dishes and salads. Hamburgers still account for about 26 percent of Ground Round’s sales mix, Crawford said, while alcoholic beverage sales comprise another 20 percent of total sales. The average per-person check is about $13, Crawford said.
The chain also has developed a second concept, called the Ground Round Sports Grille. The sports-themed operation has a smaller footprint and was designed for nontraditional sites, like airports and bowling centers, Crawford said. The menu is more streamlined too, with fewer entrées and more salads, appetizers and sandwiches.
While Ground Round was verging on extinction 10 years ago, business has been trending upwards in recent years, Crawford said. Ground Round generated 11 straight quarters of same-store sales gains. Since 2004 average unit volumes have risen from $1.4 million to nearly $1.9 million as the chain has made improvements to the concept and winnowed out lower-volume stores. Systemwide sales were about $43 million for 2012.
Ground Round Independent Owners Cooperative purchased the brand out of bankruptcy from former franchisor American Hospitality in 2004 for about $5 million. At the time, there were 59 company-owned units — all of which were closed by American Hospitality — and 72 franchised outlets. While about $3 million of the total sales figure was financed, the company has been debt free since April 2011, Crawford said.
Contact Paul Frumkin at paul.frumkin@penton.com.
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