2008 Chain Operator of the Year: Wing Zone
By leveraging a commitment to sustainable growth and a well-thought-out equipment package, this multi-unit operator specializing in Buffalo wings is ready to take flight.
By Joseph Carbonara, Editor in Chief -- Foodservice Equipment & Supplies, 12/1/2008 12:00:00 AM
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2008 Chain Operator of the Year |
Some of the best ideas come from the most humble origins. Consider Atlanta-based Wing Zone, a quick-service chain specializing in Buffalo wings. Some 15 years ago, two fraternity brothers at the University of Florida turned their desire to have Buffalo-style chicken wings delivered to their doorstep into a franchising business that today has nearly 100 units systemwide and annual revenues in excess of $50 million.
The chain developed by Matt Friedman and Adam Scott continues to rake in the accolades, most notably having earned a place on Inc. magazine's list of 500 Fastest Growing Private Companies and Entrepreneur magazine's Franchise 500. One key factor allowing Wing Zone to garner recognition at a rate almost as fast as the way it draws customers is the concept's dedication to its business model.
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| Wing Zone uses as many fresh ingredients as possible, including its wings, and makes all menu items to order. Customers can place their orders at the register or phone them in to the store. |
Indeed, spend some time getting to know this concept and it becomes pretty obvious pretty fast as to why it remains successful. First and foremost, the company's leadership has a keen understanding of its value proposition and target customer base. More importantly, Wing Zone's operational engine is a well-thought-out and -designed foodservice equipment package that maximizes output using minimal labor in making all of its food to order.
Thanks to its commitment to sustainable growth and operational discipline, including a sound understanding of its unit economics, FE&S' proudly recognizes Wing Zone as its 2008 Chain Operator of the Year.
School Days
Friedman and Scott first tested their concept in the kitchen of their fraternity house. Because the facility had a full kitchen, including the necessary walk-in refrigeration to store ingredients and the fryers needed to make the chain's signature wings, this was a turnkey test kitchen for the duo. With Friedman and Scott testing wing recipes on their fellow students, their culinary creations grew in popularity. As a result, they quickly had to vacate the fraternity house kitchen as their vision came to life in favor of an actual restaurant.
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| Because it specializes in takeout and delivery, Wing Zone restaurants feature little, if any, dining space. |
After borrowing some money from their families, Friedman and Scott leased some space that had previously housed a restaurant, put up a few walls, gave the place a fresh coat of paint and purchased some used equipment, including a few items at an auction. With that, they were in business.
Over the next nine years, the aspiring restaurateurs grew their operation to seven stores. At that point the pair decided it was time for a change. “I was in the restaurant every day. That's what I did,” Friedman recalls.
Having refined their business model and developed a formula that can be consistently duplicated, Friedman and Scott decided to start franchising the concept. Today, Wing Zone's corporate office is in Atlanta near two company-owned stores, one of which has a training room and kitchen large enough for the chain to conduct research and development.
Site Selection
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| Consisting of 10 core items and 25 sauces, Wing Zone's menu is best described as focused but flexible. |
Like any other retail business, location and the demographic profile of the consumers that live and work in a five-mile radius play a critical role in the success of any Wing Zone location. When you introduce a concept with few, if any, national competitors, selecting the correct real estate becomes even more important.
Individual markets may have independent operators that provide direct competition but there are few, if any, national wing concepts that specialize in takeout and delivery like Wing Zone.
“We started our business in a college market and in those markets the demand for takeout exceeds that for dine-in,” Friedman adds. “I also think there's limited competition in our segment. There's a lot of pizza concepts that do takeout/delivery but not as many in the wing segment.”
In some respects the lack of competition offers many benefits but it also introduces other challenges. For example, the average consumer may only consider wings around the time of a special occasion or a sporting event. “You would think 'what a gold mine' about a market with little competition in the wing segment,” Friedman laughs. “But you want to go into a market where the product's popular and there's some love and loyalty for the wings.
“We don't want to be the only wing provider in town, even if they are sit-down or sports bar-kinds of places,” Friedman says. “Otherwise, we have to educate people on the fact that wings can be a once-a-week or once-a-month meal for the family, particularly when we enter a new market. We don't mind educating them about home delivery or takeout, though.”
Consumers in regions such as the Southeast, Northeast and certain sections of the Midwest tend to be more receptive to purchasing wings for more than a special occasion, Friedman has learned over the years. Desirable demographics include middle income families, blue collar workers and the younger the consumer the better, according to Friedman. “That's why we've done well in college markets, military or dense apartment condo-type areas,” he adds.
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| Each Wing Zone restaurant uses an efficient but potent equipment package, including five fryers and a charbroiler, to prepare the food customers order. |
The typical Wing Zone ranges in size from 1,200- to 1,500-square-feet and most of the stores are in-line units situated in smaller strip malls and larger shopping centers with other complementary regional or national chains, such as sub or pizza shops. Wing Zone prefers single-story buildings because it makes venting easier and potentially less expensive. And new construction is considered a plus.
The chain looks for densely populated areas that will generate significant foot traffic and delivery orders but does not necessarily target the most upscale part of town. “This helps us keep our costs of opening a Wing Zone very reasonable,” Friedman says. “We are typically going after pretty quality real estate. I would say that 50 percent of our growth in 2008 and 2009 is going to take place in urban environments. You can get into some quality real estate at a better cost than you can in some suburban markets.”
More to the point, the urban demographics tend to mesh better with Wing Zone's value proposition. “Our takeout/delivery model works well in urban markets because people are on the go and used to picking up something and bringing it back to their home to eat,” Friedman says.
In addition to site selection, infrastructure plays an equally critical role in the chain's success. Wing Zone uses a well-thought-out equipment package, one that totals roughly $60,000. In doing so, the chain balances cost and firepower with efficiency as to not hinder a store's economic performance. “What we really look for is good solid equipment at a fair price,” Friedman says. “We could probably buy something more expensive but we purchase good, reputable equipment with a name brand.
“We also look for the support and service after the sale; the manufacturers should stand behind the product,” Friedman adds. “If you are only buying five fryers and not 150, you will get treated different. Our manufacturers have done an excellent job supporting our product after the sale.”
Each store is equipped with five deep fryers, a charbroiler ranging in size from 24 inches to 36 inches depending on the location's anticipated volume, an 8 foot by 10 foot walk-in cooler, a walk-in freezer, upright refrigeration that allows staff easy access to ingredients during production, hot-holding cabinets and sinks.
While Wing Zone uses mostly fresh items, including its chicken wings, the individual stores make all menu items to order. That eliminates the need to hold things for long periods of time but also introduces a need for Wing Zone to educate patrons about how its menu differs from other quick-serve concepts. “We have to help people understand that our product is prepared to order,” Friedman says. “It can be a lunch, a dinner or a party platter.”
Much like the company's business model, the menu is focused but flexible. “We only cook 10 items but we have 25 different wing sauces,” Friedman points out. “We do a ton of research and development to make sure we get a real consistent product. We also want to have a menu that is not one item. We want to be able to service the lunch order or the family of four or even a tailgate party.”
Instead of getting caught up in the latest food fad, Wing Zone uses three criteria to evaluate whether to add a menu item:
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Can the item be fried or grilled?
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Is it simple to prepare?
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Is it easily and quickly duplicated?
Using this approach allows Wing Zone to maximize its investment in labor. “In order to be efficient, we have some trained people back there that are able to do a lot of things,” Friedman says.
In addition, Wing Zone exhibits a strong awareness of the growing number of consumers that have food allergies. As a result, the chain's web site breaks down each menu item and the potential exposure to allergens it might present a customer. To help provide accurate information, Wing Zone works with a vendor who breaks down products by calories, potential allergy exposure and the like.
“We get a lot of positive feedback from it,” Friedman says. “My partner's wife has food allergies. And we have a great franchisee in Florida whose kids have a lot of food allergies. We had customers asking about this, too. It felt like the right thing to do and if customers want the information, why not give it to them?”
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| With menu items that staff cook mostly in a fryer or on a grill and because the majority of customers consume their food off-premise, Wing Zone stores do not require excessive amounts of warewashing equipment. |
While Wing Zone remains very true to its roots as a take-out and delivery business, that's not to say the allure of running a full-service restaurant is not without appeal to Friedman. “I have young kids and when you bring them into one of our restaurants they look at you and say, 'Dad this is it. Where are the TVs?'” he jokes. “It's glamorous to have a full-service restaurant but the key to the restaurant business is to keep it simple and stick to a model that works. Plus, I have always been a believer in whatever your segment is you have to be great at it.”
Although he still operates four Wing Zone restaurants, Friedman seems to have clearly embraced the company's new role as franchisor. However, it's his roots as an independent restaurant operator that keep Friedman grounded and focused on providing value to the company's franchisees.
“They have to be successful and profitable,” Friedman says. “One of the most important responsibilities of the franchisor is to utilize our buying power. Franchisees should not be able to buy better individually than as a group.”
Along these lines, to help franchisees operate more efficiently, Wing Zone worked with the chain's suppliers to lock in chicken prices for 12 months and secure frying oil prices for a year. The chain takes similar steps when it comes to procuring foodservice equipment. “We believe that we are saving franchisees five to six points on their operating costs due to our buying power,” Friedman says.
In turn, this provides franchisees with security they might not otherwise be able to obtain on their own. “With what's going on right now, there's no protection for the independent restaurant owner,” Friedman says. “They are at the mercy of the market. So, when you are part of a franchised restaurant concept you have some protection.”
Unit Economics
In addition to locking in favorable pricing for its franchisees, Wing Zone continues to adjust its focus accordingly to address the challenges of the day. “There's no doubt that throughout the industry visits by the average customer are down,” Friedman says. “If someone was eating out five days a week and it's now down to three, you don't want to be one of the two they gave up.”
So instead of adding units, Wing Zone continues to work with franchisees to improve each store's economic performance. “It's not going to be a record year for sales and profits for anyone in the restaurant business, which is why we are so focused on customer counts and satisfaction levels,” Friedman says. “You have to watch your labor more and you are not losing more than an acceptable allowance of food. The economy will get better and when it shakes out you want to make sure your brand and market share is stronger than what it was.”
That does not mean Wing Zone's content resting on its laurels in the interim. “We need to continue to improve our model and profitability,” Friedman says. “We are looking to develop the markets we are in, build the brand. We don't have to go out there and build 40 or 50 restaurants next year.”
And when the business climate improves, regional growth, namely east of the Mississippi River, will be a priority for Wing Zone.
When some of those new restaurateurs do sign on, they will learn a valuable lesson about what it means to stay true to your roots and understanding the demands of your core customer base.
Facts of Note
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Ownership: Private
Opened: 1991
Headquarters: Atlanta
Company-Owned Units: 3
Franchised Units: 90+
Franchise Cost: Franchise Fee, $25,000;Total Investment approx. $250,000
Typical Unit Size: 1,200- to 1,400-sq.-ft.
Seats: Limited (less than 12):take-out and delivery operation
Average Fleet Size per Unit: 4-5 delivery drivers
Average Check: $16.50
Total Annual Sales: $50 million
Average Unit Sales: $585,000
Average Transactions per Day: 100
Staff: (Average number for a typical unit) 10-12, mostly part-time
Hours: 11 a.m. - midnight
Menu Specialties: Buffalo Wings, 25 Specialty Flavors, Chicken Fingers, Buffalo Shrimp, Salads, Burgers and Chicken Sandwiches
Equipment Investment: $60,000 - $65,000
Chicken Fried Delivery
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| Wing Zone filters its old fryer oil and stores it on premise before pumping it into delivery vehicles that use the shortening as fuel. |
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There's an old adage that goes, one man's trash is another man's treasure. In the case of Wing Zone, it might make sense to alter that phrase to read: “One man's trash is also his fuel.”
That's not to say, of course, that Wing Zone lives off trash or anything of the sort. But what the company has successfully done is lower its overall operating costs by converting something it was literally throwing away, in this case fryer oil, into fuel for its delivery vehicles.
The process is a pretty simple one. A Wing Zone operator will buy a vehicle that runs on diesel fuel and install a special converter that allows the vehicle to instead burn filtered fryer oil. To help facilitate this, Wing Zone installs a special filtering system that fits into the back of a store. When the oil reaches the end of its cooking life, a staff member will transfer it from the fryer through the filter into a couple of 55-gallon drums. When a delivery car needs fuel, a staff member takes a 20-foot-long hose that looks just like one you'd find in a gas station, walks it to the vehicle and commences pumping.
“Gas prices have come down a little but it's still a smart economic decision for us,” Friedman says. “It is a product that we were literally throwing away. We then realized that we could convert diesel vehicles to run on 100-percent recycled vegetable oil.”
While this may seem like a pretty big idea — one that sets the chain apart from other companies — its origins are remarkably humble. “I was reading an article online somewhere about a guy in California that got arrested for stealing used cooking oil outside a restaurant and was using it to run their own vehicle,” Friedman recalls. “I started thinking about how much shortening we throw out and one thing led to another.”
Once Friedman and the Wing Zone team realized they could do something like this and earn a return on their investment in less than one year's time, the decision became pretty simple. “It was a chance to do something that's good for the environment but it was also a chance for us to become more profitable,” he says. “It's actually our obligation. I am actually surprised more restaurants are not doing it.”
Amazingly, Wing Zone continues to roll out this initiative with few hiccups from local governments along the way. “We've checked with a lot of the municipalities and we're doing nothing illegal or anything,” Friedman says. “We also use it as a marketing opportunity and let consumers know what we are doing.”
That's not to say the concept was not greeted with some skepticism. “A lot of people when we first introduced it said, 'Let's see if it works,'” Friedman says. “Some franchisees were all over it and loved it, while others were a little more hesitant.”
In addition to its delivery fleet, Wing Zone continues to look for ways to make its restaurants more efficient while lessening their impact on the environment. The chain specifies high-efficiency equipment and lighting. In doing so, the chain strikes a balance between social responsibility and sound business practices. “Going to high-efficiency equipment may cost more up front but it pays off in the long run and that's more profit for the restaurateur,” Friedman says. “If we can reduce our operating costs by 15 percent, then that's more operating profit.”
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