Quaker Steak & Lube is undertaking a major expansion initiative, with one franchisee signing the casual-dining chain’s largest area development agreement to date and other franchise negotiations underway.
Jacob Wright, whose Action Companies develops and manages hotels, agreed to develop 16 units in New England and New York State — excluding New York City — over the next four years.
Wright who already owns one motor-sports-themed Lube outlet in Syracuse, N.Y., where his company is headquartered, said he was encouraged enough by that restaurant’s performance in its first year to create a new arm of his business to open more locations.
“We started out the first year with [earning] projections at $3.4 million, and we did a little over $4.2 million,” he said.
His next unit is slated to open in Rochester, N.Y., in April, 2011.
He said he also had found good restaurant sites in the New York State cities of Watertown, Utica and Albany as well as Portland, Maine.
Quaker Steak & Lube, which is based in Sharon, Pa., operates seven restaurants and franchises an additional 32 units.
“You’re going to see us make a push for company-owned restaurants,” said Quaker Steak chief executive John Longstreet, indicating that those would beef up the company’s balance sheet. But he added that three to four “significant” area development agreements would be signed in the near future, allowing the company to add a dozen restaurants.
Wright said he hired one of the brand’s own operations experts, with Longstreet’s permission, to help with his expansion.
“My concern isn’t in finding sites, because with the economy there are good sites everywhere,” Wright said. “And it’s not in building [the restaurants], because we’ve built over 500 hotels and those are more complicated than restaurants. But I wanted someone with expertise in running the restaurants.”
Wright hired operations expert David Eastwood, who will be joining the company in January. “He’s probably one of the top guys in the world who knows the [Lube] concept and how to own and operate them,” he said.
Wright also is interviewing for a chief financial officer with restaurant experience.
He said he was funding growth with equity that he and his business partners have as well as with some bank financing. “We’re using a pretty modest level of leverage for the deal,” he said.
Contact Bret Thorn at [email protected].
