8 Local Franchisees Rank Among Top 200 in Country
Four Minnesota companies and an equal number in Wisconsin made the Restaurant Finance Monitor’s 200 Restaurant Franchisee list based on revenue for 2019. Total revenue for all 200 companies is a whopping $42 billion, and while the five fastest-growing operators collectively added more than $256.5 million in sales in 2019, the authors of the study say that revenue will look different next year due to restaurant shutdowns related to COVID-19.
Next year’s numbers will be interesting since eight of the top 10 brands are QSRs, which have been doing much better during the current pandemic than casual-dining, family- and fine-dining chains.
One QSR operator told us that while sales have been good, “I would not go as far as ‘better than' pre-COVID. Our transactions are down, but sales are positive single-digit.”
One thing that is helping the bottom line is that closed dining rooms have improved the labor expenses, but it has also made it more difficult to find staff and thus it’s impacted the hours they can stay open in some areas. And while they’ve socially distanced the tables in locations where dining rooms can be open at limited capacity, “distanced seating is hard to maintain because customers move the seats around,” the operator told us.
Casual dining, such as Applebee’s, which is the sixth most favorite brand of the Monitor 200 list, has been “written off” by industry experts, the study says. The Restaurant Finance Monitor is Foodservice News sister publication.
Here are the top franchisees in Minnesota and Wisconsin, listed by their ranking:
No. 30 — New Hope-based Border Foods with 201 Taco Bells reported revenues between $325 million to $425 million. The company started in 1979 with a QSR Mexican restaurant, called Los Primos, after Jeff Engler detected a lack of Mexican restaurants in the marketplace. Lee Engler, who graduated from college that year, was assigned the job of making tacos. The brothers grew the chain to 19 locations in five states, before deciding to reinvent their company as a franchise, gradually acquiring Taco Bells. Today, Lee Engler is CEO and Aaron Engler is CFO.
No. 50 — Fourteen Foods, Minneapolis with 225 Dairy Queens and revenues between $225 million and $325 million. Senior executives are CEO Mathew Frauenshuh and CFO Chad Underwood.
No. 75 — Rottinghaus Co. in La Crosse, with 350 Subways and revenues between $175 million and $225 million. Senior executives include Donald Rottinghaus as CEO and Dennis Rottinghaus as CFO.
No. 128 — S&L Companies, based in Portage, with 35 Culver’s. Jeffrey Liegel is the CEO and Chad Stevenson is president. Their revenues were in the $90 million to $100 million range.
No. 129 — a fellow Wisconsinite, Brodersen Management Corp., is based in Milwaukee, with 60 Popeyes. John Brodersen is president and Brenda Cook, CFO. Revenues were $90 million to $100 million.
No. 153 — Carisch in Wayzata is franchisee of 63 Arby’s with revenues between $70 million and $80 million. Senior executives are Fred Stauber, president and Mark Gregory, CFO.
No. 157 — with the same revenue range as Carisch, is Roaring Fork Restaurant Group in Milwaukee, who has 57 Qdoba Mexican Eats. Ron Stokes is president and James Anderson is CFO.
No. 188— Northcott Hospitality in Chanhassen, franchises 22 Perkins and 3 Houlihan’s—the only casual-dining franchisee and multi-concept franchisee in our grouping of the eight local companies on the list. Northcutt’s revenue is between $40 million to $50 million. Paul Kirwin is CEO/president and Brian Schwen is CFO.
The No. 1 company, Flynn Restaurant Group out of San Francisco, had $2.338 billion (with a “b”) revenue from four concepts: 451 Applebee’s, 369 Arby’s, 264 Taco Bell and 136 Panera Bread. Owned by Greg Flynn, the company has been the largest restaurant franchisee in the ranking for eight straight years.
The first ranking, almost 30 years ago, had only one franchisee with revenue over $500 million, a 500-unit Hardees franchisee, and only three companies had revenue over $100 million. For 2019, there were 14 companies with revenue greater than $500 million and 122 with revenue greater than $100 million.
Another insight from the report: During the past decade, multi-unit franchisees have grown through acquisitions rather than new-unit development. Often that growth came from former company-owned units.