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Church’s Chicken Enlists NAI Global for Expansion Plan
Real estate services provider will assist Atlanta-based chain with targeting sites for franchise development.

Atlanta, Georgia–based Church’s Chicken has partnered with NAI Global, a Princeton, New Jersey–based corporate and commercial real estate services provider, to target new sites for franchise expansion in Philadelphia, Denver, and Seattle as well as bolster the chain’s presence throughout Texas and Los Angeles.

“It is a soup-to-nuts level of service for our franchisees on our behalf,” says Doug Pendergast, Church’s executive vice president and chief franchise officer.

NAI, which has 375 offices in 55 countries, and Church’s franchise development, he explains, will work together to assist franchisees in locating new store sites for either conversion of existing buildings or the construction of new restaurants.

“We will lead the effort to identify the target markets and high-potential trade areas,” Pendergast says. “Then, NAI Commercial Jacksonville [Florida] will take the lead, find sites, and help franchisees negotiate the price of those sites. NAI will be an extension of our internal real estate department.”

Although the main goals of the collaborative effort are to blaze new trails and continue to “build out and defend our strong holds in markets like, Dallas, Houston, and Los Angeles,” according to Pendergast, equally important is protecting the interests of franchisees.

“We have to make sure our franchisees are getting attractive returns on investments, whether it’s through the building conversion program, the relationship with NAI, or a program that uses remanufactured equipment,” Pendergast says. “These things are designed to protect the franchisees’ return on investment. The better their return, the more restaurants they open and that drives our fees and our royalties.”

In 2007, Church’s set a company record for total restaurant openings in a single year (59 restaurants in the United States and 40 restaurants internationally). It now operates more than 1,600 locations in 19 countries with sales exceeding $1 billion.

As a rule of thumb, says Pendergast, Church’s strives to secure 20 percent of the quick-serve restaurant chicken segment in a given market to “feel like we have a sufficient scale.”

“We are going to want to help the franchisees and those who are there develop those markets so they can get to critical mass,” he adds. “If we only had two restaurants in Philly, we are no different than a mom and pop. The quantity of restaurants we open depends on the market. Critical mass in Memphis is different in Philly.”

In fact, Church’s just completed converting a former Payless Shoe store in Philadelphia into a restaurant that also houses a Dairy Queen. Ideal footprints for freestanding restaurant locations, according to the company, range from 800 to 2,200 square feet.

“Visibility and access to the site are also key factors, and well over half of the restaurants we open in a given year are conversions,” Pendergast says. “The returns on investment have been impressive, compared to a new facility.” Added value and even greater return on investment come from converting facilities that were once occupied by other quick-serves, allowing Church’s to reuse the existing equipment in that facility.

Although there is no specific time frame for the relationship between NAI and Church’s, the chicken chain has already opened 65 restaurants this year, with the largest number in the Houston and San Antonio areas.

These things are designed to protect the franchisees’ return on investment. The better their return, the more restaurants they open and that drives our fees and our royalties.”

Chuck White, CEO of NAI Jacksonville, says NAI’s global reach will allow Church’s to concentrate on new and existing store opportunities.

“This is exposure for Church’s and exposure for NAI Commercial Jacksonville,” White says. “It’s very positive for us to land an account like this because we get to know so many people within our network. There are a whole lot of inherent things that we can put on our collective resume because of this relationship.”

White estimates that there are 10 to 15 franchise deals in the works in the United States, and NAI is assembling a team that will explore and intensify Church’s international reach.

Church’s already operates franchises in Canada and several Latin and South American countries, including Costa Rica, Guyana, and Venezuela. Church’s Texas Chicken brand chain can also be found in Indonesia, Jordan, Kuwait, Russia, Saudi Arabia, United Arab Emirates, and the United Kingdom. And according to www.churchs.com, Texas Chicken will soon open in India.

“They are good to work with and very realistic with their processes and what’s involved,” NAI’s White says. “We are off to a great start.”