SOARING SALES

Franchisor puts expansion on its
$40 million a year menu!

Stew Stolz, left, and Bob Bagnell and two of the main movers and shakers at Trufoods. The company owns some of the most popular food franchises in the world including Wall Street Deli, Pudgie's Famous Chicken and Ritter's Frozen Custard.

TRUFOODS, LLC, parent company of some of the most highly regarded food franchise names in America, including Wall Street Deli, Arthur Treacher’s Fish & Chips and Pudgie’s Famous Chicken and, most recently, Ritter’s Frozen Custard, is embarking on an all-out expansion plan for the four brands.

Since acquiring three of the brands in August of 2007, CEO and Chairman Andy Unanue has been busy, adding 38-unit Ritter’s Legendary Ice Cream to the company’s portfolio in April and recently bringing in a new senior management team. The operator or franchisor of roughly 100 locations nationwide, TRUFOODS, LLC has annual systemwide sales of approximately $40 million.

Unanue is a former vice president and chief operating officer of Goya Foods, which was founded by his grandfather and is known as the nation’s largest Hispanic-owned food company with annual sales of more than $1 billion.
Unanue says the company’s new strategy is to focus on growing these excellent brands to their full potential and possibly acquiring others in the future.

“My purpose is and always has been to build a portfolio of brands that will grow,” Unanue said. “Companies with systemwide revenues of $10 million to $50 million fall into that category, but we will also look at larger concepts if they are attractive to us.”

With no definitive timetable for future acquisitions, Unanue said TRUFOODS, LLC would concentrate on growing its current brands, particularly Wall Street Deli and Ritter’s and the company is targeting area developers as well as single-unit operators for growth.

“It’s my hope to grow all of TRUFOODS, LLC existing brands organically, doubling or tripling our number of units over the next five years,” Unanue said. “Nationwide expansion is our long-term goal, but by starting out in markets where our concepts already have strong brand recognition, we will have a better idea of what products and initiatives will be most effective in the future.”

TRUFOODS, LLC’s new senior executives are all longtime food service industry veterans including COO Stew Stolz, CFO Bob Bagnell and Bob Ritter, director of franchise development.

Stolz and Bagnell were formerly with a Princeton, New Jersey-based Panera Bread franchise group that grew from nine to more than 30 locations during their tenures. Stolz served as director of operations and Bagnell as CFO. Stolz also previously served as COO of Salon Development Corporation, which operated a chain of hair salons in states throughout the Northeast, while Bagnell spent five years as a regional CFO for Boston Market.

Ritter was with the Indian-apolis-based company started by his parents, John and Bonny, in 1990. He had led the company since September 2004 prior to its acquisition by TRUFOODS, LLC.

“All three have long and diverse backgrounds in food service. Stew has the ability to understand what we need to do to make our franchisees happy, while still making our business successful and profitable,” Unanue said. “Bob Bagnell will be managing our cash flow and also building relationships with banks so we can help our franchisees gain financing, if necessary. Bob Ritter, meanwhile, has transitioned into a development role, working with franchisees on the local level while also exploring how to best grow our brands.”

Wall Street Deli and Ritter’s Legendary Ice Cream each present exciting growth opportunities for TRUFOODS, LLC. With 22 units located primarily in airports, downtown office buildings, hospitals and college campuses, Wall Street Deli once had more than 200 locations. One of Unanue’s immediate goals is to bring the concept back to the Northeast, while also strengthening the brand’s presence in “captive markets” such as airports.

Wall Street Deli currently has three airport locations – Salt Lake City, Atlanta and Birmingham, Alabama – and all are thriving. “We have great growth potential in captive markets, especially if we are located beyond airport security checkpoints where options for tasty, fresh food are limited,” Unanue said. “We would love to expand our airport presence either with company stores or franchisees who have the ability to gain airport locations.”

TRUFOODS, LLC expects to add six to eight Wall Street Deli locations within 12 months and is currently focusing on building in the New York Tri-State area. In addition to its captive-audience locations such as airports, traditional in-line restaurants present another growth vehicle for Wall Street Deli, with the first one expected to open in the New York City area in early 2009. “We’re just looking to broaden our horizons and our ability to grow the brand,” Ritter said.

Ritter’s Legendary Ice Cream, whose frozen custard is considered by many to be the creamiest, best-tasting ice cream they’ve ever tasted, is similarly well positioned for growth. With locations throughout Midwestern states, along with Florida, Texas and Arizona among others, projections call for six to eight Ritter’s to open within 12 months.

Growth will focus on existing markets, but Ritter said small-town communities throughout the Midwest present another growth option that has largely been ignored by Ritter’s competitors.

“We want to capitalize on these small towns,” Ritter said. “There are so many of them throughout the Midwest where Ritter’s could become ‘the’ ice cream shop for that town.”

Conversely, large markets outside Ritter’s Midwestern roots fall in love with its legendary ice cream, too, given its success in Surprise, Arizona (outside Phoenix), four locations in Florida with more planned, and Katy, Texas (Dallas).

“We feel Houston is a great market for us,” Ritter said. “Our lone franchisee there has seen sales go up 20 percent each year for the last five years. He is clamoring for us to add more locations.”

Added Unanue: “It’s a great product and one of the best, if not THE best ice cream out there.”
Co-branding Wall Street Deli and Ritter’s is a likely evolution, given that Wall Street Deli primarily caters to a breakfast and lunch crowd, while Ritter’s busiest times are evening and weekends. The two brands would complement each other extremely well in airports.

“As real estate costs continue to go up, it’s a great way to utilize the footprint,” Ritter said. “Combining both would allow us to capture a much, much bigger day part.”

While today’s economy is certainly affecting consumers and the restaurant industry alike, affordably priced dining options such as Wall Street Deli and Ritter’s are finding themselves in a favorable position. Casual dining restaurants are taking the strongest hit as consumers turn to less expensive alternatives.

“People aren’t going to spend $10 or more on gas to get to a restaurant and then spend another $60 to feed three people when there are less expensive options,” Unanue said. “People come to Wall Street Deli for breakfast and lunch and I don’t think it has gotten to the point where people are brown-bagging it more. They still want to have a nice lunch and get a good sandwich and maybe enjoy some Ritter’s ice cream, too.” •

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