Next Steps for Growth: How four restaurant chains flourish

Financing

A significant investment from Georgia Oak Partners brought experienced operators to Your Pie.

Your Pie
Right when Your Pie needed a fast, large infusion of capital “to provide infrastructure so we didn’t out-punt our coverage,” Georgia Oak Partners made a significant, undisclosed investment in the brand, founder Drew French said. The deal also brought experienced operators to Your Pie, like chairman David Barr, former chief financial officer and chief executive of Great American Cookies and a board member of five other restaurant franchisors or franchisees.

Chuy's
The 2012 initial public offering by Chuy’s Holdings Inc. repaid the company’s long-term debt, so cash flows are now used to fund growth. Chief executive Steve Hislop said Chuy’s is focused both on this and on maintaining good returns for shareholders.

Le Pain Quotidien
Expansion is funded with cash flow from sales of existing restaurants. The mostly European shareholders have made long-term commitments to the company, terms of which were not disclosed.

Bojangles' Famous Chicken 'n Biscuits
Bojangles’ Famous Chicken ’n Biscuits has taken advantage of just about every financing option available, from Small Business Administration lending to major private equity investments.

Soon after its founding it was acquired by a public company, then soon taken private by a Silicon Valley, Calif., venture capital group. Later, a private investor group took control using securitized financing.

Next, private equity firms Falfurrias Capital Partners and Advent International completed separate deals for ownership, terms of which were not disclosed.

Now Bojangles’ uses build-to-suit financing as its primary tool of growth. Franchisees use a mix of SBA loans and conventional lending.

Operations

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Chuy's biggest challenge is hiring, training and retaining top talent.

Your Pie
Your Pie keeps its operations support for franchisees in focus by having more skin in the game through corporate-owned locations, executives said. French owns and operates three stores personally, and the company has opened two corporate locations to test new brand messaging and a new design.

Chuy's
With a unit growth rate of 20 percent, Hislop said his biggest challenge is hiring, training and retaining top talent. Each unit has a general manager and seven other managers, as well as hourly employees. Chuy’s focuses on promotion from within to help solidify the culture.

Le Pain Quotidien
On top of its emphasis on unique design and site selection processes, the chain is starting to shop for and implement new human resources software to ensure that, among other things, team evaluations are carried out regularly and an open dialogue with staff is facilitated.

Bojangles' Famous Chicken 'n Biscuits
Bojangles’ has focused on developing hiring, payroll, management and point of sale systems.

“The key point is to hire, train and retain on a quality basis, and stay ahead of the curve,” Bojangles’ executive vice president Eric Newman said. “If you wait to hire until you need people, you’ll be in trouble.”

Your Pie
The chain “has always let customers drive where we go on the menu,” which is inherent to a brand called Your Pie, French said. As Your Pie enters new markets, regional menu development will be crucial, he added, from regional pizza ingredients to craft beers from local breweries.

Chuy's
The Tex-Mex menu featuring enchiladas, burritos, chile rellenos and Margaritas has made the supply chain fairly simple to manage as the company expands, Hislop said. The entire menu is based on 12 sauces that are mixed, matched and available for customers to customize.

Le Pain Quotidien
Le Pain Quotidien builds bakery commissaries in each of its markets to supply each of its locations with bread and pastries. It sources its retail items internationally, contracting with manufacturers who ship those items to the 17 countries where the chain operates.

Bojangles' Famous Chicken 'n Biscuits
“You want multiple suppliers so you don’t have issues if someone goes out of business,” Newman said.

The company’s discipline about geographic growth has helped ease supply chain logistics. Also, because Bojangles’ uses fresh, never frozen chicken, the chain has always looked for local or regional products.

With competitors jumping into the breakfast game, Bojangles’ has worked to protect its early-daypart market share.

“Most chicken chains put their restaurants on the going-home side of the street,” Newman said. “We put our restaurants on the going-to-work side. You have to be visible and easy in/easy out. Your breakfast customer is not in a position to wait.”

Marketing

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For Bojangles', market presence is key to staying top-of-mind.

Your Pie
While Georgia Oak’s backing means more marketing dollars than an 18-unit chain might expect to have, “we have to balance increasing marketing spend with creating tools that drive unit economics,” French said. “We’re franchisee focused, so the main goal is to be part of the local community.” Print, radio and billboard ads will ramp up in built-out markets first.

Chuy's
As Chuy’s back-fills into existing regions, marketing scale may come into play, Hislop said. However, much of the company’s focus is on local-store marketing as each unit opens.

Le Pain Quotidien
In order to maintain personal relationships with its customers and steer away from large chain advertising strategies, most marketing is done within the four walls of the restaurants. The chain does have a Facebook page, and each market uses Twitter to promote menu items and engage with guests.

Bojangles' Famous Chicken 'n Biscuits
Having a greater presence in any market is the best marketing. The more units in any one market and the more contributions to the shared marketing fund, the greater the shared voice.

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