Table of Contents What is Huddle House? 3 A History of Delicious Food, Served From the Heart 7 What are my Startup Costs? 9 What Our Franchisees Can Earn 13 Who We re Looking For 19 Menu Research and Development 22 Next Steps 25!2
What is Huddle House? Guests love the Southern hospitality, 24-hour breakfast and classic comfort food Huddle House is a Southern diner franchise known for our round-theclock breakfast, Southern hospitality and being the best place to gather in any hometown. After more than 50 years in business, we ve earned our status as an iconic brand. Our crowdpleasing menu of favorites is available any time guests want and business thrives in small towns, suburbs and exurbs. The breakfast portion of the menu accounts for more than half of sales, which is awesome because breakfast items generally have higher margins than food typically ordered in other dayparts. With our efficient and affordable building design, we out-maneuver other food concepts by operating in small towns and rural population centers. Entrepreneurs who open a Huddle House can do big things for a small town by offering a much needed community gathering place and local hangout. But our timeless and traditional model also translates just as easily in the suburbs and exurbs, providing a wealth-building opportunity for multi-unit operators. We re seeing lots of growth in new areas now for that very reason. Our collective buying power, centralized supply and focus on lower-cost, higher-margin breakfast foods provide a great earnings opportunity for franchise owners. Our smaller market strategy, where land is still plentiful and affordable, allows franchisees to build significant equity through purchasing both land and building, paid for by proceeds from restaurant operations.!3
If you re looking to break into foodservice for the first time, experienced multi-unit franchisees will often tell you they built a significant portion of their wealth through real estate acquisition. The model of buying land and building has become cost-prohibitive in many larger cities. Many chains don t know how to operate profitably in towns of under 20,000 residents where land is still available at a reasonable price. Huddle House has a long history of profitably penetrating smaller communities and creating wealth through cash flow generated by restaurant operations as well as equity in both land and buildings. Of course, our business footprint is flexible. We can fit into urban and inner-city storefronts and residential shopping centers, as well as freestanding buildings in rural communities or truck stop locations. Breakfast is all dayparts While more and more QSRs are focusing their efforts on capitalizing on breakfast, there aren t that many full-service restaurants whose brand means breakfast to a large number of regular customers. Our breakfast menu items constitute more than half of sales in a typical Huddle House, and with higher margins on breakfast items than many other menu offerings, franchisees are able to deliver great food at an excellent value while maintaining strong margins. It s part of our unique charm that guests love they know they can get biscuits and gravy or a loaded omelet or a golden waffle any time of day or night.!4
Opportunities for growth The first Huddle House was opened in Decatur, Georgia, in 1964, and more than 50 years later, our Any Meal. Any Time. philosophy still draws brand fans and new guests. Today we re a thriving franchise with 400 units nationwide, a strong presence in the South and an increasingly strong foothold in other regions of the country. What does this mean to an investor? Fifty years of brand relevance and long-term sustainability means we are as relevant today as we were 50 years ago. How many iconic restaurant brands from 50 years ago stay iconic? And with 400 locations, we have a scalable model that is battle-tested with time. Our flexible restaurant models provide opportunities to a range of investors, from the entrepreneur who wants to improve his hometown community to the experienced multi-unit operator looking to diversify his portfolio. Huddle House produces cash flow and builds significant equity when combined!5
with a real estate play. Plus, our diner franchise model is scalable, meaning franchisees can do it again and again, building more cash flow and equity. We ve significantly lowered our initial investment, we re offering major incentives for multiple units, and we re increasing our sales and top end, says Huddle House franchise CEO Michael Abt. We re working on improving our franchise margins, making us one of the most attractive food franchises in the market today.!6
A History of Delicious Food, Served From the Heart The story of Huddle House is the story of community, service and great Southern comfort food John Sparks was working at his Decatur, Georgia, diner one evening in 1964 and thinking about his new idea for a chain of Southern-themed diners. He knew he wanted a friendly, welcoming atmosphere with good food at a great price, but he didn t know what he would call it. A group of high school boys came in, fresh from football practice, and gathered in the corner. As they leaned in together, talking and laughing, one of them still had a football in one hand and a helmet in the other. They looked, Sparks thought, like they were in a huddle. And that s when it hit him: Huddle House was the perfect name for his restaurant chain. Over 50 years later, Huddle House is the hub in some 400 communities across the United States, a place where folks gather before the Chamber of Commerce meeting or for brunch after church or anytime at all. We still rule the small-town markets we started in, because we re especially important in towns that don t have dining options other than fast food. We also do well in larger urban areas, interstate travel centers and college towns. Wherever you find Huddle House, you ll find people who value community and Southern-inspired comfort food and servers who greet you by name and pour your coffee just the way you like it. Any Meal. Any Time. That Any Meal. Any Time. motto has been part of our philosophy for the last five decades. Huddle House s unwavering commitment to outstanding Southern hospitality, generous portions, affordable prices create pull-demand that creates high-frequency regular customers. Our unit-level economics can sustain single-unit owners who want to provide that community gathering spot for their hometown or entice experienced multi-unit owners looking to diversify their investment portfolios. In addition, many of our franchisees own their building and land, building significant equity in real estate holdings.!7
While we ve held true to the same core values over the years, we ve learned to be nimble and change with the times. Our updated Evolution restaurant design features a look that s bright, colorful and reminiscent of America s classic neighborhood diners. A modern logo adorns signs and menus. Breakfast classics like fluffy omelets and golden waffles join updated classics like stuffed hashbrowns. Franchisees generate revenue through all day parts: breakfast, lunch, dinner, late night, and weekends. No matter what the daypart is, everything on the Huddle House menu is always available.!8
What are my Startup Costs? Start your own breakfast franchise for less than those other guys When you take a look at the Huddle House franchise startup costs compared to the initial investment required by the competition, things stack up nicely. Starting your own Huddle House franchise costs less than franchises like IHOP and Denny s, and is accessible, unlike corporate-owned Waffle House. We have flexible restaurant formats, which means startup costs vary, ranging from $378,190 to $1,856,570. Factors that influence the startup costs include leasing vs. buying land and constructing a building, remodels on existing restaurants and openings of former restaurants.!9
Item 7 from our latest Franchise Disclosure Document details some of the expenses you should anticipate: ITEM 7. ESTIMATED INITIAL INVESTMENT OPTION I: Standard Unit Purchase of Land, Building, Signs and Equipment Expenditures Initial Franchise Fee1 Low Amount High Amount Method of Payment Due Payment Made To One Payment When you Execute the Franchise Agreement HHI $25,000 $35,000 16,500 33,500 Training fee ($4,990) before construction start; remainder before opening HHI (for training fee); Suppliers, Transportation, Food and Lodging Real Estate (Land) 168,000 300,000 Seller Site Development 143,000 310,000 Progress Payment Contractors or Excavators Improvements 160,000 549,000 Contractors Equipment3 and Seating 110,000 265,000 Financed or As Incurred or HHI Signs and Décor4 20,000 68,000 Site Plan/Engineering Drawings 8,000 18,000 0 750 Suppliers of Transportation, Food and Lodging Smallwares, Opening Inventory and Uniforms 35,000 45,000 or HHI POS System6 15,500 25,000 Lump Sum 245 275 Monthly and Monthly thereafter Computer Related Security Services8 1,200 2,000 Annually and Annually thereafter Grand Opening Promotion 3,000 5,000 As Incurred 45 45 Monthly Monthly Miscellaneous10 Opening Costs 4,000 6,000 Lump Sum, HHI, Governmental Authorities, Utilities Additional Funds for 3 Months11 12,500 20,000 As Incurred As Incurred Employees and Training Fee and Travel and Living Expenses While Training2 Travel Expenses for Opening Guide Meeting5 Help Desk and Maintenance7 Customer Feedback Program9 Totals12, 13 $721,990 723,000 $1,856,570!10
OPTION II: Standard Unit Lease of Land, Building, Signs, and Equipment (Non-Resale Units and Resale Units) Expenditures Low Amount High Amount Payment Method Due Payment Made To When you Execute the Franchise Agreement HHI Training fee ($4,990) before construction start; remainder before opening HHI (for training fee); Suppliers, Transportation, Food and Lodging $25,000 $35,000 One payment Training Fee and Travel and Living Expenses While Training2 16,500 33,500 Real Estate First Month s Rent3 4,500 8,000 Monthly HHI or third-party Landlord Equipment First Month s Rent 1,500 3,500 Monthly HHI or third-party Landlord 500 1,000 Monthly HHI or third-party Landlord or HHI Suppliers of Transportation, Food and Lodging 275 Monthly and Monthly thereafter Initial Franchise Fee1 Signs - First Month s Rent4 Smallwares, Opening Inventory and Uniforms Travel Expenses for Opening Guide Meeting5 POS System6 Help Desk and Maintenance7 35,000 45,000 0 750 15,500 245 25,000 Lump Sum Computer Related Security Services8 1,200 2,000 Annually and Annually thereafter Grand Opening Promotion 3,000 5,000 As Incurred Monthly, HHI, Governmental Authorities, Utilities As Incurred Employees and Customer Feedback Program9 Miscellaneous10 Opening Costs Additional Funds - 3 Months11 Totals13 (for a non-resale Unit) 45 45 Monthly 4,000 6,000 Lump Sum 12,500 20,000 As Incurred 119,490 185,070 0 500,000 $119,490 $685,070 Additional for Resale Only: Business Good Will - For a Resale Unit Only1 Totals11,12 for a Resale Unit!11
OPTION III: Standard Unit Lease of Land and Building; Purchase of Equipment, Signs and Leasehold Improvements Expenditures Low Amount High Amount Payment Method Due Payment Made To One Payment When you Execute the Franchise Agreement HHI Training fee ($4,990) before construction start; remainder before opening HHI (for training fee); Suppliers, Transportation, Food and Lodging Monthly Third-party Landlord $25,000 $35,000 Training Fee and Travel and Living Expenses While Training2 16,500 33,500 Real Estate First Month s Rent3 4,500 8,000 Improvements 133,000 449,000 Progress Payments Contractors Equipment4 and Seating 105,000 256,000 Financed or As Incurred or HHI 18,000 51,000 5,000 15,000 0 750 Suppliers of Transportation, Food and Lodging Smallwares, Opening Inventory and Uniforms 35,000 45,000 or HHI POS System7 15,500 25,000 Lump Sum 245 275 Monthly and Monthly thereafter 3,000 5,000 As Incurred 900 2,000 Annually and Annually thereafter 45 45 Monthly Monthly 4,000 6,000 Lump Sum, HHI, Governmental Authorities, Utilities 12,500 20,000 As Incurred As Incurred Employees and $378,190 $951,570 Initial Franchise Fee1 Signs and Décor5 Site Plan/Engineering Drawings Travel Expenses for Opening Guide Meeting5 Help Desk and Maintenance8 Grand Opening Promotion Computer Related Security Services9 Customer Feedback Program10 Miscellaneous11 Opening Costs Additional Funds - 3 Months12 Totals13,14!12
What Our Franchisees Can Earn Explore average franchisee earnings for 2016 in Item 19 from our FDD Part of researching a new franchise should always include a close look at the income potential. At Huddle House we pride ourselves on a high level of information transparency, and to that end we have gathered and made public store-level historical financial performance and sales information in the Huddle House Franchise Disclosure Document (FDD). Part 1: Annualized Unit Volumes for Franchised Restaurants The below table compares the Evolution design franchised restaurants to the Non Evolution design franchised restaurants, and show the highest, average, median and lowest Annualized Unit Volumes for each category. All newly developed Huddle House restaurants have the Evolution design. The term Evo is often used to refer to a restaurant with the Evolution design. The Annualized Unit Volume (also known as annualized sales), is the DSA (daily sales average) multiplied by 365 days. If a restaurant was open fewer than 365 days, the!13
Annualized Unit Volume will exceed the actual sales volume. The DSA is the restaurant s actual sales, without sales tax, divided by the number of days the restaurant was open. The term Median restaurant used in this Item 19 means the restaurant with the middle result. For example, if there are 21 restaurants, then the 11th restaurant is the median. If there are 22 restaurants, then the 11th and 12th restaurant s average is the median. There are 324 Huddle House franchised restaurants included in the tables, encompassing all the franchised restaurants that were in operation at least 4 months during HHI s fiscal year (May 1, 2016 to April 29, 2017), and were also open the last day of the fiscal year (April 29, 2017). The tables exclude 25 restaurants that were either open less than 4 months, or not open on April 29, 2017. Each group in the table (Evolution restaurants and Non Evolution restaurants) is sub-divided into the top 20%, middle 60%, bottom 20%, and total overall, based on Annualized Unit Volumes. Restaurants remodeled after October 31, 2016 are not included in the Evolution restaurants group. They are included in the Non Evolution restaurants group because they were not remodeled the majority of the year. Of the 145 franchised Evolution restaurants, there are 29 restaurants included in the Top 20%, and of these 13 (44.8%) had Annualized Unit Volumes greater than the Top 20% average of $1,144,531. Of the 145 franchised Evolution restaurants, there are 87 restaurants included in the Middle 60%, and of these 42 (48.3%) had Annualized Unit Volumes greater than the Middle 60% average of $743,919. Of the 145 franchised Evolution restaurants, there are 29 restaurants included in the Bottom 20%, and of these 17 (58.6%) had Annualized Unit Volumes greater than the Bottom 20% average of $461,369. Of ALL the 145 franchised Evolution restaurants, 66 (45.5%) had Annualized Unit Volumes greater than the average of $767,531. Of the 179 franchised Non Evolution restaurants, there are 36 restaurants included in the Top 20%, and of these 14 (38.9%) had Annualized Unit Volumes greater than the Top 20% average of $864,616. Of the 179 franchised Non Evolution restaurants, there are 107 restaurants included in the Middle 60%, and of these 48 (44.9%) had Annualized Unit Volumes greater than the Middle 60% average of $569,164. Of the 179 franchised Non Evolution restaurants, there are 36 restaurants included in the Bottom 20%, and of these 19 (52.8%) had Annualized Unit Volumes greater than the Bottom 20% average of $345,144. Of ALL the 179 franchised Non Evolution restaurants, 80 (44.7%) had Annualized Unit Volumes greater than the average of $583,530.!14
Part 2 Operational Results for Company Owned Restaurants The above table shows comparable selected average costs for Huddle House, Inc. s ( HHI ) Huddle House Restaurants ( Company Owned Restaurants ), for the 2017 fiscal year. Comparable is defined as a Huddle House Restaurant that was operated by HHI for the entire 2017 fiscal year from May 1, 2016 through April 29, 2017 (See the below Notes for information regarding the definitions and the categories of expenses shown.) Certain costs such as employee benefits, vacations and manager salaries may be higher in Company Owned Restaurants. The cost of managers varies significantly based on location and other factors. Often, Franchisees manage (at least in part) their own restaurants. For Food and Paper Cost, 6 of the 12 Company Owned Restaurants that are included (50.0%), have Food and Paper Cost greater than the average of 28.7%. The median result was also 28.7%, the highest was 30.5%, and the lowest was 26.4%. For Crew Wages, 7 of the 12 Company Owned Restaurants that are included (58.3%), have Crew Wages greater than the average of 18.9%. The median result was 19.2%, the highest was 22.8%, and the lowest was 16.5%. For All Other Payroll Cost, 7 of the 12 Company Owned Restaurants that are included (58.3%), have All Other Payroll Cost greater than the average of 13.2%. The median result was 13.7%, the highest was 17.6%, and the lowest was 8.9%. For Gross Margin (also known as Gross Profit), 6 of the 12 Company Owned Restaurants that are included (50.0%), have Gross Margins greater than the average of 39.2%. The median result was 39.8%, the highest was 43.4%, and the lowest was 30.9%. Part 2 Operational Results for Company Owned Restaurants Notes!15
1. Part 2 provides selected costs of Company Owned Restaurants. Each category stands alone; meaning the store with the highest expense in one category may not be the same store with the highest expense in the next category. The weighted average costs are shown as a percent of Net Sales, and is calculated by dividing the total cost of all 12 restaurants for each of the categories, by the total Net Sales of all 12 restaurants. Net Sales is Sales excluding promotions, discounts, employee meals, and sales tax. 2. The following terms are used in Part 2, and have the following meanings: a. Food and Paper Cost means the cost of food, beverage, and paper supplies used in the operation of the Huddle House Restaurant. The Food and Paper Cost is based on the same item cost that a franchisee would pay for the same items, if the items are bought from Huddle House, Inc. Our Company Owned Restaurants, for our 12 restaurants that HHI operated for the entire fiscal 2017 year (May 1, 2016 through April 29, 2017), had an average Food Cost of 26.7% of Net Sales (Sales excluding promotions, discounts, employee meals, and sales tax), and an average Paper Cost of 2.0%, totaling 28.7.%. b. Crew Labor means the hourly labor cost of non-managerial staff working at the Huddle House Restaurant, including overtime. The 12 Company Owned Restaurants operated the entire fiscal year had an average Crew wage cost of 18.9%. c. All Other Payroll Cost average of 13.2% includes manager wages of 7.0%, payroll taxes of 3.5%, employee benefits (health insurance and cost related to 401k plans) of 1.3%, worker s compensation insurance of 0.7%, employee bonus of 0.4%, and vacation and holiday pay of 0.3%. d. Gross Margin of 39.2% is calculated by taking Net Sales (as defined in Part 2, #1 above) at 100.0%, less the average Food and Paper Cost of 28.7%, Crew Wages of 18.9% and All Other Payroll Cost of 13.2%. 3. There are additional types of expenses that operators are likely to incur, and which will be applied after determining the Gross Margin. For the Company Owned Restaurants in the Table above, these expenses included the following: Royalty fees payable to HHI (4.75% of Net Sales) Contributions to the Advertising Fund (in Fiscal 2017, these were 2.5% of Net Sales, but are now 3% of Net Sales), and required local advertising expenditures (0.5% of Net Sales). Rent expenses For the 12 Company Owned Restaurants included above, in Fiscal 2017 the average rent expense was 7.3% of Net Sales, the median was 7.4%, the high was 10.0%, and the low was 4.8%. Controllable expenses For the 12 Company Owned Restaurants in Fiscal 2017, the average of controllable expenses was 13.1% of Net Sales for expenses including utilities, repairs & maintenance, operating supplies, contract services, small equipment, office supplies, uniforms, and credit card fees. The median result was 12.9%, the high was 17.9%, and the low was 9.9%. Other fixed costs For the Company Owned Restaurants in Fiscal 2017, the average of Other fixed costs was 1.5% of Net Sales for expenses including property taxes, property insurance, and professional fees. The median result was 1.3%, the high was 2.5%, and the low was 0.9%.!16
There will also be additional types of expenses, cost and deposits that you are likely to incur in operating a franchise, such as: franchise fees (initial fees, transfer fees and renewal fees), equipment lease fees; franchisee compensation over and above that earned from the operations of the Facility business (such as a salary that you may draw); debt service; facilities and property maintenance (and reserves for future maintenance and replacement of equipment); business and regulatory fees and licenses; ongoing and supplemental training expenses; legal and accounting fees; bookkeeping and other professional services; security deposits; and utility deposits. HHI recommends discussing all of these points with your accountant to be sure that you understand all of the costs that you will incur in running your business. 4. Company Owned Restaurant expenses may be higher than franchised restaurant expenses due to franchised restaurants choosing to remove or reduce certain expenses, such as employee benefits, vacations, manager cost, overnight mail cost, employee screening, etc. 5. The information included above is a historic financial performance representation based on Huddle House, Inc. s Company Owned Restaurants. Part 3 Annualized Unit Volumes for all Restaurants open at least 4 months This section is similar to Part 1, in that it shows the Annualized Unit Volumes, as defined in Part 1. The above table shows the average Annualized Unit Volumes for all 354 Huddle House Restaurants, of any design, that were in operation at least 4 months during HHI s fiscal year (May 1, 2016 to April 29, 2017), and were also open the last day of the fiscal year (April 29, 2017). The table excludes 26 restaurants (25 franchised restaurants and 1 company owned restaurant) that were either open less than 4 months or not open on April 29, 2017. The above table is divided into 2 groups: Company Owned Restaurants and Franchised Restaurants. Of the 30 Company Owned Restaurants, 16 (53.3%) have Annualized Unit Volumes greater than the average of $704,760. Of the 324 Franchised restaurants, 143 (44.1%) have Annualized Unit Volumes greater than the average of $665,876.!17
The Huddle House system average Annualized Unit Volume for all 354 Huddle House restaurants that are reflected in Part 3 above was $668,700 for fiscal 2017. (This average is the total Net Sales divided by the number of days these restaurants were open and then multiplied by 365). Of the 354 restaurants, 158 (44.6%) achieved Annualized Unit Volumes greater than that average. For both Part 1 and Part 3, the total number of franchised restaurants included is 324. Part 3 also includes 30 Company Owned Restaurants, making the grand total 354. There were actually 380 restaurants that reported Sales during our fiscal 2017 year (May 1, 2016 through April 29, 2017). However, 21 restaurants closed during the year (excluding 1 that closed at the end of the day on April 29th), and 5 restaurants that were open on April 29th had less than 4 months of Sales. These 26 restaurants were excluded from the 380 restaurants, making the total included 354. Of the 354 restaurants that are included, all were open on April 29, 2017, and had Sales for at least 11.5 months, except for 3 restaurants that had Sales for approximately 11 months, 4 restaurants that had Sales for approximately 10 months, 2 restaurants that had Sales for approximately 8 to 9 months, and 2 restaurants that had Sales for approximately 4 to 5 months. All of these are included in the overall system averages. Additional Notes to Item 19 Please note that this Item 19 includes financial performance information relevant to HHI s standard Huddle House Restaurants. Some Huddle House Restaurants have achieved the results summarized above. Your individual results may differ. There is no assurance that you ll sell or earn as much. Actual results of any particular restaurant are dependent on a variety of internal and external factors, none of which either HHI or a franchisee can estimate, such as competition, taxes, interest rates, the availability of financing, general economic climate, demographics, geographic location, commodity prices, changing consumer preferences, the franchisee s business and management skills, and the franchisee s own commitment to its business. A new franchisee s Huddle House Restaurant results are likely to differ from those of established Huddle House Restaurants. Among other things, HHI recommends that you make your own independent investigation and evaluation of the potential performance of your Huddle House Restaurant, and consult with your attorney, accountant and other advisors before signing any franchise agreement. HHI suggests that you develop and review with you professional advisors a pro forma cash flow statement, balance sheet and income statement, and that you make your own financial projections regarding sales, costs, customer base, and business development for your own Huddle House Restaurant. Written substantiation of the data used in preparing these sales and related amounts is available upon your reasonable request. Other than the preceding financial performance representation, HHI does not make any financial performance representations. HHI also does not authorize its employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing Huddle House Restaurant, however, HHI may provide you with the actual records of that Huddle House Restaurant. If you receive any other financial performance information or projections of your future income, you should report it to HHI management by contacting Melissa Rothring, 5901-B Peachtree Dunwoody Rd NE, Suite 450, Sandy Springs, GA 30328 (phone: 770.325.1372; fax: 770.325.1316; email: mrothring@huddlehouse.com), the Federal Trade Commission, and the appropriate state regulatory agencies.!18
Who We re Looking For Huddle House franchise owners run the gamut from hometown entrepreneurs to multi-unit investors The Huddle House franchise model accommodates both serial restaurateurs and multi-unit franchisees as well as single-unit investors looking to break into foodservice. There are plenty of franchise concepts out there that only want franchisees willing to immediately commit to multiple locations, says Christina Chambers, Vice President of Franchise Development. There are other franchises that just don t have the longevity and the proven systems in place that Huddle House has, and they re not equipped to support the kind of growth capacity that a savvy multiunit owner can bring. At Huddle House, we embrace both single and multi-unit owners. We know that some franchise owners want to improve their hometowns, create jobs and create that central gathering place that they can be proud of, while others are looking for a smart brand where they can scale up quickly and lock in protected territories in top markets. We believe there s room for everyone at the table. Meet Huddle House franchisees Robert Wiggins Jr. opened a new Huddle House location in 2015, but the concept wasn t exactly new to him. Some 25 years prior, Wiggins and his father had built the first Huddle House in Hazlehurst, Georgia, only to sell the location after several years. Wiggins subsequently invested in various food franchises, but when he heard that Hazlehurst was once again without a Huddle House after the original location closed, he jumped at the chance.!19
I was familiar with the old Huddle House concept, but it s changed a lot over the years, Wiggins says. The actual layout of the building itself is different, and the quality of food is definitely better. They really stress the quality now. The experienced foodservice franchise owner, who owns franchises with Pizza Inn, Dick s Wings and Hardee s, is so pleased with the direction of our brand and the community reception to the new Hazlehurst location that he s already considering expanding. Huddle House does big things for little towns, particularly since we thrive in places that other franchises reject as too small. 18 units in the first 6 years When he was considering buying into the Huddle House system back in 2007, Gregg Hansen already had foodservice franchising and multi-unit retail experience under his belt, so he understood clearly what he wanted. He also knew what he didn t want specifically, he didn t want to recreate the wheel. With a stable brand that already had proven systems in place, Hansen would be free to build his own team of people to execute those systems, which would allow him to grow as large as he wanted to. To date, he s up to 18 locations in 7 states. We still have four folks from that first location we opened in 2007 who still work for us, and I think it is a tribute to them and a tribute to us, Hansen says. We love to promote from within, so as we have grown from 2 locations to 18 locations, we have added obviously a couple of layers of management, and all of those layers of management have folks that have been with us for 6 years, 7 years, 8 years. It has been a joy to watch those people grow up with us.!20
Customer to franchisee Barry Robinson spent most of his early professional life working in an office building right across the street from a Huddle House, and he ate there often. When it came time to leave the retail supermarket industry and start something new, Huddle House kept coming to mind. Robinson had loved Huddle House as a customer, and when he was trying to think of a business he could invest in that would add something back to his adopted hometown of Hahira, Georgia, he kept coming back to Huddle House. "When I had an opportunity to make a career change, I honestly did start with a blank sheet of paper and considered a number of nearby possibilities. But as I started running those possibilities through various filters, Huddle House was the one that just naturally wound up filtering itself to the top. Whenever the focus really became Hahira, Georgia, itself versus other opportunities that were nearby but not in my hometown, Huddle House was just the perfect fit."!21
Menu Research and Development Franchisees drive revenue through 5 day parts: breakfast, lunch, dinner, late night and weekends The Huddle House menu is made up of Southern-inspired comfort food that evokes nostalgia. It s uncomplicated; it s made from ingredients supplied from our in-house supply chain; and it is designed to deliver high consumer value at healthy gross margins to franchisees. That s not something you ll find at most breakfast franchises. The Huddle House menu is all about the comfort food that reminds you of things your mom might cook for you on a Saturday morning in the South. It s all about the nostalgia, those warm, around-the-table moments from a time when people actually sat together on Saturday mornings without spending time on their devices, says Executive Chef and Director of Menu Development Jenn Townsend. I love the Huddle House menu, says Townsend, who has been a food concept owner-operator herself and has research and development experience with Blimpie s and Arby s. I love working on the food, and I love the people who eat our food. Demand, supply and commodities An in-house supply chain helps us keep food costs down and build in protection against the fluctuating price of commodities. We buy food and smallwares in bulk for franchisees and, because we have internal distribution systems, we can break down larger volume shipments for individual franchise partners, which helps protect profit margins and cut down on food waste. This also allows us to award franchises to candidates without any restaurant experience.
Breakfast foods are traditionally cheaper than other dayparts, and with breakfast items constituting 60% of our sales on average, our franchise partners tend to see higher margins. Of all the brands I m associated with, Huddle House has the lowest food costs of any of the brands, says Franchise Partner Robert Wiggins. The awesome thing is there is a ton of eggs in our core heavy-mix items, Townsend says. Eggs are cheap. Our hashbrowns are very popular potatoes are cheap. Food cost fluctuations don t hit us that hard. Fluctuating commodities prices can wreak havoc on many chains and erode margins. Our menu mix and on-staff Procurement Director shelter franchisees from radical swings in food costs. Stuffed hashbrowns aren t something guests are likely to make at home, but they re a perennial favorite. Lower-cost items like eggs and potatoes make it popular with franchisees, too. Mike Lokhandwala, an experienced multi-unit food franchise operator who opened his first Huddle House in Valdosta, Georgia, in 2016, says the popularity of the breakfast menu and the potential of higher profit-margins definitely influenced his decision to invest. With the majority of our sales coming from the first shift, the breakfast shift, that drills down to the breakfast portion making a larger impact on that food cost, so yes, that did influence my decision, he says.
Our menu is simple Huddle House menu is relatively simple, easy to prepare and easy to learn. This minimizes the impact of store employee turnover on the overall guest experience and helps us maintain consistency during training or periods of transition. When asked how Huddle House is unique among breakfast franchises, franchisee Barry Robinson describes us this way: Huddle House has something for everybody when you look at the Huddle House menu. We have everything covered. You ve got the full dinners; the things the kids want like hamburgers, chicken fingers and those sorts of things; you ve got sandwiches; the breakfast. The full spectrum of the menu is covered so that you have something for everybody in the community.
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