In an effort to attract new franchisees to the system and recharge stagnant unit growth, Roy Rogers is refranchising stores in its core Mid-Atlantic markets. The new strategy is the latest move made by the 56-year-old western-themed restaurant chain that has struggled to gain organic franchise interest in the competitive quick-service dining space since its peak in 1990 when there were well over 600 Roy Rogers locations scattered up and down the East Coast.
With 24 corporate-owned restaurants and 16 franchise locations owned by four franchisees, Roy Rogers is focusing its refranchising growth strategy in Maryland and Virginia, where the vast majority of restaurants are located within a 90-minute drive from its Frederick, Maryland headquarters.
Roy Rogers Restaurant Co-President Jim Plamondon.
“The refranchising program is not to spin off corporate restaurants necessarily. We want this to be about net growth and enabling potential franchisees to get into our system quicker, easier and cheaper, and we feel a refranchising strategy is an opportunity for us to perhaps change the percentages and get more of our units to be franchised,” said Jim Plamondon, who, along with his brother, Peter, is co-president of Roy Rogers.
Although Plamondon said there is no set goal of how many corporate locations the company wants to refranchise, he noted, “I’d love to get to 75 percent franchise and 25 percent corporate” locations by “packaging a half dozen or so of our corporate stores” for new franchisees. He said he is open to grouping corporate stores for potential multi-unit deals.
The four franchisees that own Roy Rogers are AppleGreen with seven Pennsylvania locations, MA Foods and owner Mohammad Haque with six restaurants in Maryland and Virginia, and Ed Abramson, who owns two New Jersey locations. One Holland Restaurant Group also owns and operates a Roy Rogers location in Cleves, Ohio.
“We have always believed that philosophically that having a significant number of corporate restaurants is a good for the brand because we can demonstrate success to our existing franchisees and that we have skin in the game,” Plamondonsaid. “They want to see that we are developing new markets, new initiatives, new products and new marketing programs.
“Ideally, we’d like to get new blood into our system with the refranchising program,” he said.
Growth from new franchisees hasn’t come easy for the legacy company which, despite little to no unit growth in recent years, still landed at No. 375 on the Franchise Times Top 400 rankings with $70.7 million in sales in 2022. Plamondon said two new locations are set to open this fall in Independence and Florence, Kentucky.
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While Plamondon conceded it’s highly unlikely that the company will ever come close to reaching the level of success and popularity it achieved in its heyday, he said the restaurant chain still has enough loyal customers who crave its burgers and chicken, dipping sauces and unlimited fixings salad bar to give hope they can still grow the brand with new locations.
He said the company is committed to remodeling restaurants and pointed to completed projects in Westminster, Hagerstown, Thurmont, Maryland and Leesburg, Virginia, and Germantown and Fredericksburg, Maryland. Plamondonalso touted a new online training system and an employee rewards program implemented over the last year as examples of Roy Rogers reinvesting in itself.
Meanwhile, the company has high hopes its refranchising program will help stimulate new franchisee interest.
“Refranchising is an effective tool to seed markets and stimulate growth thru development rights in conjunction with the transfer sale. Plus, refranchised locations have an existing performance history, so there is less guesswork and lenders appear more eager for this deal type,” said Joe Briglia, director of franchise development at Roy Rogers, in an announcement of the program.
The total investment for a Roy Rogers restaurant ranges from $1.2 million to $1.6 million for a newly constructed location, $817,250 to $967,950 for an inline/strip center restaurant and $755,250 to $1,365,250 for the conversion of an existing restaurant to a Roy Rogers unit.