Last year, McAlister’s Deli® saw widespread development that expanded their franchise system to more than 400 restaurants in 28 states. Entrepreneur listed McAlister’s as one of the year’s fastest growing franchises and included the brand in their Franchise 500 list. Much of that expansion came from new investors buying into the franchise for the first time, but even more can be attributed to continued growth of existing franchisees, who have taken advantage of the franchise’s scalable model to build large multi-unit restaurant groups.
Jeff Shawl, a multi-unit, multi-brand franchisee who owns McAlister’s restaurants in Tennessee and Virginia, said his decision to invest in McAlister’s was largely influenced by the franchise’s capacity for growth.
“We knew we wanted to build up to multiple restaurants, and we had a plan to grow right off the bat,” Shawl said. “McAlister’s was actively looking to develop in territories that had a lot of room to grow, and it was clear that their development team was passionate about growth, so it was a great fit.”
Peak Restaurants, the restaurant group that Shawl operates with his business partners Chris Smith and Don Shawl, currently operates 12 McAlister’s restaurants and has plans to open two more by the end of 2019. Shawl said that as the brand has grown, it’s become easier to find financing to open additional restaurants.
“When we first started with McAlister’s, having a specific plan to grow beyond our first unit made it more feasible to find loans because financers want to know that you have long-term plans to earn more money,” Shawl said. “McAlister’s growth has helped us with finding funding. Banks and real estate brokers all know and like the brand, and they have communicated there’s less risk from their perspective.”
Due to the strength of the business partners at Peak Restaurants and the passionate team members at each restaurant dedicated to the success of the business, along with McAlister’s streamlined and consistent operational model, Peak has been able to consistently scale up its stable of restaurants.
“McAlister’s has an efficient operational model and we have an incredibly strong team, so we haven’t had to adjust our approach,” Shawl said. “That consistency has made it possible to grow. We have district managers for our restaurants who drive our restaurant level teams, so we’ve been able to step back and focus on high-level operations with full confidence that things are running smoothly at each restaurant. The model that’s in place is reliable and our restaurant teams are committed to what both Peak and McAlister’s stands for.”
The consistency of McAlister’s model is facilitated by an ease of operations that makes its restaurants easy and cost-effective to run. Despite boasting one of the more extensive menus in its segment, McAlister’s maintains a lean infrastructure, using many of the same ingredients in all of their simple-to-prepare menu items, all without the use of grills or fryers.
“We make all of our ingredients work hard for us,” said Paul Macaluso, McAlister’s president. “Our menu has been carefully designed to cross-utilize just about every ingredient. All of our produce is used in multiple menu items, so even though our menu is larger than most other restaurants in our segment, we’re working with the same vendors and spending more or less the same on food costs.”
Those considerations have helped McAlister’s owners to focus their efforts on growth rather than day-to-day operations and to reinvest their food savings into new restaurants. Shawl said that model has allowed him and the Peak Restaurants team grow even faster than they anticipated when they first signed on with McAlister’s.
“We originally signed a deal to open 10 restaurants, but the success of the franchise and our restaurant teams over the past 15 years has made it so easy for us to grow,” Shawl said. “We’ve modified our contract a couple of times, and we are looking into opening more restaurants after we fulfill our current agreement.”
According to Macaluso, the growth of multi-unit operations likes Shawl’s is one of the best indicators of the franchise’s health.
“As McAlister’s has grown, we’ve attracted more and more experienced and sophisticated investors, but that doesn’t mean much if they aren’t growing their operations once they’re on board,” Macaluso said. “Our brand is built around operational simplicity and profitability. If our franchisees aren’t growing, something is wrong. Fortunately, year after year we see our existing owners finding more success, opening additional units and expanding into new territories. We’re going to continue to encourage that growth at every opportunity.”