When Rib & Chop House opens a new location, “immediately we’re the best restaurant in town.” So says Yaron Goldman, CEO of the steakhouse concept with a newly launched franchise program targeting single-unit operators who want to take it to smaller cities where the menu of premium entrees and an $80 bone-in French-cut ribeye stands out.
“I think this brand has huge potential in markets of 50,000 to 100,000 people,” said Goldman. “Think outside of Omaha,” Nebraska, “outside of Salt Lake City. We’ll go there before we go to larger metros.”
Since its start in 2001 in Livingston, Montana, a city of 8,300 people on the edge of Yellowstone National Park, Rib & Chop House has expanded to 12 locations in cities such as Bozeman and Billings, Montana, Cheyenne, Wyoming, and St. George, Utah. While customers can spend $70 to $80 on steaks, noted Yaron, the menu remains “approachable” as Rib & Chop House is both a high-end steakhouse “but you can also go with your friends and feel comfortable having some beers and having some wings.”
Founders Burke and Melissa Moran started Rib & Chop House under their Finally Restaurant Group, which also operates TJ’s Ribs, Rio Sabinas and Accomplice Beer Company. Burke Moran’s father, TJ Moran, opened the first Ruth’s Chris franchise in 1975 and became one of the company’s largest U.S. franchisees.
Goldman spent the last two years preparing Rib & Chop House for franchise expansion, creating training and marketing materials and ensuring the supply chain could support growth. Other adjustments addressed labor in the kitchen and size of the buildout.
Rib & Chop House has found success in smaller cities such as Bozeman and Billings, Montana, Cheyenne, Wyoming, and St. George, Utah.
“One of our biggest wins, we recognized the labor and intensive prep in the kitchen, so we had to find creative ways to manage that and not drop any quality,” he said. The company worked with suppliers to portion-cut its steaks and eliminate hand-cutting in the restaurant. It also shrunk the building footprint from 7,500 square feet to about 5,000 square feet, mainly by reducing the size of the kitchen.
The investment range for a Rib & Chop House franchise is $2.3 million to $3.3 million, with ongoing expenses and royalties “very favorable” for operators, said Goldman. “Our key differentiator: You can go in as a single owner-operator and it’s a compelling investment,” he said. The royalty fee is 4.5 percent of gross sales, and cost of goods ran 37.9 percent in 2021 with average gross sales of $4.2 million.
Dan Shrum operates the Rib & Chop House in St. George, Utah, and is one of two licensees of the brand. His restaurant did $4.6 million in sales in 2021, “and that’s a million more that my second-best year.”
Open for nine years, Shrum said it took some time to build up the business but his location is now one of the busiest stores in the system. “I’ve had positive growth every year—except for the COVID year,” he said. “Last year was the best ever and this October is our best month. We’re beating last October, even with all the broader economic challenges.”
Shrum said better quality food sets Rib & Chop House apart from competitors like Outback Steakhouse and Texas Roadhouse. Goldman, meanwhile, highlighted the brand’s Rib & Chop Royalty program as another way it is differentiating itself in the space.
For $50 per month, Royalty members receive priority waitlist status, gift cards, 10 percent off food, liquor, beer and wine, plus other perks. Rib & Chop House has an average check of $77; that jumps to $82 for Royalty members after their discount, said Goldman. “They’re buying that bottle of wine, the bone-in steak,” he said. And nearly 10 percent of Royalty members eat at Rib & Chop House seven times a month; 43 percent of members visit three to seven times a month.
Rib & Chop House CEO Yaron Goldman joined the brand in September 2020 after 20-plus years as a franchisee in multiple concepts.
“We’ve had really nice results with this program,” he continued, and he views it as a platform for long-term guest engagement through special events and even focus groups to garner feedback.
Goldman joined Rib & Chop House in September 2020 following a long career as a multi-unit franchisee of brands including McAlister’s Deli, Sonic Drive-In, MOD Pizza and Fuzzy’s Taco Shop. His company, SD Holdings, filed for Chapter 11 bankruptcy protection in February 2020. As sibling publication the Restaurant Finance Monitor reported at the time, “an unexpected tax bill and a no-margin-for-error capital structure” led to the bankruptcy filing.
“Between December 2018 and December 2019, Goldman sold approximately $8 million of future sales to nine different merchant cash lenders for $5.8 million. The cash out was so overwhelming that Goldman was unable pay landlords or vendors, much less his royalties,” the Monitor reported in March 2020. “An attempt by Goldman to sell the company fell through in late 2019 and he had no other option but to file bankruptcy in February.”
“It’s not something I wanted to go through, obviously,” said Goldman. “What I did learn is you really need to think down the road more. Don’t just grow for growth’s sake. We did a lot of acquisitions and we should have slowed down a little bit.”
Goldman said he’s now more thoughtful about capitalization, lease structures and real estate plays, and brought that mindset to Rib & Chop House. “We want to make sure we’re capitalized to withstand any potential headwinds,” he said.
“Instead of being upset about what happened, you move forward and I’ve taken these experiences and learned from them.”