To help spur interest for its franchise conversion initiative and ease costs, Nathan’s Famous is offering restaurant owners a 50 percent reduction in its franchise fee, from $30,000 to $15,000.
When fast-food restaurant company Nathan’s Famous launched a franchise sales initiative in December to entice restaurant owners of other concepts to convert their existing locations into the iconic brand, Oliver Powers had no idea how much the strategy would stimulate unit growth.
Over halfway through 2023, the vice president of franchise operations for Nathan’s still isn’t sure.
“We’ve gotten a lot of calls from those interested in converting their restaurants, but right now, we have one conversion in the works in Myrtle Beach, South Carolina. It’s a former ice cream shop, and that location probably won’t open until next spring because of equipment that needs to be ordered,” Powers said.
“I still think the program can gain momentum,” said Powers, “with construction costs being so incredibly high and how difficult it’s gotten to borrow money now.”
Oliver Powers, vice president of franchise operations for Nathan’s
To help spur interest for the conversion initiative and ease costs, Nathan’s is offering restaurant owners a 50 percent reduction in its franchise fee, from $30,000 to $15,000. The limited-time-only offer allows flexibility for restaurant owners to utilize their existing equipment and infrastructure and helps ease the costs of opening a new Nathan’s location, according to Powers, who said the company can convert practically any size restaurant, “from 500 square feet to 3,500 square feet.”
Potential franchisees willing to join its conversion program can also benefit from additional revenue opportunities from Nathan’s ghost kitchen delivery brands, Arthur Treacher’s Fish & Chips and Wings of New York, he said.
Phil McCann, vice president of marketing for Nathan’s
“While the restaurant industry is making incredible progress in rebounding from the pandemic, it is still battling food cost increases, supply chain issues, diminished profitability, a labor shortage and more hurdles,” said Phil McCann, vice president of marketing for Nathan’s. “This program offers business owners an opportunity to utilize existing equipment and infrastructure, therefore saving money and allowing them to open quickly.”
Asked why more restaurant owners have not taken advantage of the conversion offer so far, Powers pointed out his company is being “really picky” on selecting new franchisees and locations. He also talked about the jittery economy. “I still think that people are gun shy about doing a franchise right now with all that’s going on with costs so high,” he said.
Nathan’s has nearly 200 franchise locations in over a dozen countries. The iconic hot dog brand operates four corporate locations, as well as 150 virtual kitchens. It’s opened about a dozen franchise locations this year—including food trucks and trailers—in Egypt, Mexico, Brazil, Dubai, New York, New Jersey, Pennsylvania and Kentucky, according McCann.
Powers said Nathan’s is set to break ground next month on a new location in Rock Hill, South Carolina, and is looking at adding a second location in Mexico City in October. Other new locations are planned in Tucson, Arizona, at the beginning of next year.
The estimated total cost of a Nathan’s franchise, without co-branding, is between $554,350 and $2,032,610, according to its franchise disclosure document.
After a few challenging years during and after the pandemic, Nathan’s appears to be back on a growth trajectory. The publicly traded company reported last week that its total sales of $41.9 million in the first fiscal quarter ending June 25 represented a 5.7 percent increase from the previous year’s period.
Powers said after pulling back on advertising during and even after the pandemic, the company is again ramping up its franchise growth efforts. It plans this year to start offering Arthur Treacher’s as standalone franchises, with a focus on the Midwest and the New York metro area. Nathan’s co-brands about 60 locations of the once popular fast food seafood restaurant, which it acquired in 2002, said Powers.
Over the years Nathan’s has expanded its menu choices beyond the hot dogs, hamburgers and fries that made it famous, and now offers chicken and fish sandwiches, cheesesteaks, and an assortment of wraps, lamb gyros and salads.
Nathan’s is a 107-year-old company that traces its roots back to a nickel hot dog stand that opened on Coney Island in 1916 and still bears the name of its co-founder, Nathan Handwerker. Over the years the company has expanded its menu choices beyond the hot dogs, hamburgers and fries that made it famous, and now offers chicken and fish sandwiches, cheesesteaks, and an assortment of wraps, lamb gyros and salads.
By far the most successful marketing campaign for the company is the Nathan’s Famous International Hot Dog Eating Content, held annually on July 4 at the original Coney Island location. The event, which is aired live on ESPN and has been dominated in recent years by world record eating champion Joey “Jaws” Chestnut, “increases sales by over 60 percent versus a typical summer day at our flagship restaurant on Coney Island,” McCann said.
“I was in Egypt last week to open a restaurant and you know what they wanted to talk about there? Yeah, you guessed it, The Hot Dog Eating Contest,” Powers said. “It’s live streamed there and, I’ll tell you, it’s on a lot of people’s tongues no matter where you go. In fact, we’re getting ready to put on a similar contest in the U.K.”
Miki Sudo and Joey Chestnut celebrate winning the 2023 Nathan’s Famous International Hot Dog Eating Contest held in Coney Island, Brooklyn, on July 4.