Checkers Drive-In wants to add as many 100 burger restaurants to North Texas’ already crowded fast-food landscape.
The aggressive plan calls for 10 to 15 restaurants in the next two years, and the rest as fast as franchisees sign up. That's up from just three existing Checkers restaurants now (two in Houston, and one in Beaumont.)
The obvious question for the Tampa-based chain is: how will Checkers compete against Whataburger and other well-established chains? And where will they fit that many restaurants?
For Bruce Kim, director of development, the answer can be found in what makes Checkers different from other fast-food chains.
“There’s already a lot of burger places there already,” he said. “But we offer a greater value. We fit a niche of a good, tasty burgers and fries at a good price.”
Nationwide, Checkers plans to open 1,200 restaurants by 2020 with a long-term goal of 3,000—though there's no timeline on the bigger figure.
Locally, Kim said he's already scoping out markets in Garland, Mesquite, Fort Worth, Denton and Mansfield.
Checkers, which is owned by New York City-based Sentinel Capital Partners Corp., doesn’t have in-store dining. Instead, 90 percent of business comes via drive-thru window. In that respect, it’s similar to Dallas-based Burger Street. Checkers will also do business out of a walk-up window with outdoor patio seating.
This saves an incredible amount of land. Most Checkers restaurants are about 1,000 square feet, according to Kim. Now, they plan to introduce even smaller restaurant concepts made out of modular pieces that can be assembled off-site. The latest prototype restaurant will be built out of repurposed shipping containers, he said, and could be as small as 800 square feet.
“It saves time [and] permitting costs, and construction can be done eight to 12 weeks faster,” Kim said. “If something happens, you can move it and it’s less expensive to begin with.”
Checkers is looking for franchise owners interested in owning locations in the North Texas area, and has a booth at the Franchise Expo South in Dallas Jan. 12-14.
The initial startup cost for a franchise owner is $30,000 for 20 years, according to Kim, and the cost to build a restaurant ranges from $400,000 to $800,000, depending on the construction method. That doesn’t count the cost of the land.
The average store will have about 25 to 30 employees, he said, noting that fewer employees are needed because there’s no in-store dining area to manage or clean up.
Some Checkers might even take over a traditional brick-and-mortar restaurant and in those cases, the remodeling cost will be higher but the restaurant will keep the in-store dining, Kim said.
The restaurant serves burgers, fries, hot dogs, chicken wings, shakes, French fries and ice cream. It focuses on lunch and dinner—no breakfast. And they stick to fried foods, no salads.
Checkers merged with Rally’s in 1999 and the two restaurants now have identical menus and branding. The Rally’s brand only exists in markets where it was already established.
Nick Powills, CEO and chief brand strategist for No Limit Agency, said brands like Checkers target certain demographics that other brands may not be able to serve.
“They don’t have to be in the highest or wealthiest neighborhoods,” Powill said. “They can go into other markets that might not have the same financial census data and be able to thrive.”
For franchise owners, there’s a lower cost of entry and lower operating costs. Sitting on such a small footprint has its advantages when compared to larger fast-food joints.
“Flexibility in real estate is going to be a key driver of growth for restaurant brands,” Powills said. “They can squeeze into tighter space than the larger boxes who refused to change.”
The typical store takes up about one-third of an acre.
Texas consistently ranks near the top for prospective interest franchising, according to a report by FranchiseHelp, an entrepreneurship resource that connects franchisees with franchisors. In 2016, it ranked second behind Georgia.
“They’re filling a niche that has a lot of demand,” said Anna Flowers, a marketer at FranchiseHelp. “But it’s really easy for restaurant concepts to get extremely expensive so lots of people get priced out of that market. We’re seeing more and more brands in the fast food or fast casual categories, aiming to serve the takeout and lunch crowd more than the sit-down dinner crowd.”
These restaurants can do more orders per day and have a lower profit margin, Flower said.
That’s what has allowed companies like Checkers and Rally’s to open so many stores in a short amount of time. Checkers plans to open as many as 90 restaurants in Houston, too, Kim said.
Restaurants that require two or three times more space could find it difficult to keep up the pace they’ve been accustomed to in the past.
“They grow so fast without perfecting the model to a T and they end up struggling,” Powills said.
Initially, the Texas locations will be served from a food distributor in Jackson, Miss. Once Texas gets enough critical mass, Kim said the state could have its own distribution center.