Dive Brief:
- Nathan’s Famous is targeting restaurant operators struggling to meet pre-pandemic sales goals as part of its latest franchising initiative, the company announced Wednesday.
- Nathan’s will offer potential franchisees a 50% reduced franchise fee — typically $30,000 — if they convert their shuttered or currently opened restaurants into a Nathan’s unit.
- New franchisees that sign up for a conversion will also benefit from additional revenue from Nathan’s ghost kitchen brands Arthur Treacher’s and Wings of New York, according to the press release.
Dive Insight:
As part of the conversion program, new franchises would have access to a range of flexible restaurant designs, equipment and infrastructure. Nathan’s offers freestanding units with drive-thrus that range form 2,000 to 3,000 square feet, inline units with drive-thrus that range from 1,700 to 2,500 square feet and a 500 to 900 square feet Nathan’s Express format.
Operators would also gain access to the chain’s time-saving technology innovations. In April, Nathan’s began testing Let us Nudge technology at 15 units. Let us Nudge offers table turnover technology to gently nudge customers during busy times by offering incentives to give up their tables after a meal.
Nathan’s has been pushing for additional growth through ghost kitchens over the past few years, opening its 100th ghost kitchen unit in 2021.The company has virtual kitchens operating at 229 locations across 18 states and four foreign countries, according to an SEC filing.
Franchise sales were up by over $5 million to more than $34 million during the 26 weeks ending Sept. 25, 2022, according to an earnings release. Comparatively, franchise sales topped $28 million during the 26 weeks ending Sept. 26, 2021. New unit development has been relatively slow, with four new franchised units opening during the first half of the fiscal year. The company said in its 10-Q that it had 234 franchised units as of Sept. 25, 2022.
Nathan’s financial qualifications include a net worth of $1 million and liquid capital of $500,000 for free-standing or inline units with drive-thrus. Its royalty payments are 5.5% and its marketing fee is 2%, according to its website.
