a game of chicken

RCC Holdings is tapping into Chester’s potential in the Southwest.

By John Lofstock, Editor

Mark Rose is particular when it comes to choosing his foodservice partners. So when he saw a steady stream of customers at a Chester’s counter operated by one of his competitors, he realized he had just found his new fast-food brand.

Rose, president of RCC Holdings in Tucson, Ariz., operates 26 convenience stores in Arizona, Nevada and California under the Shell and Chevron Food Mart brands. Five of the units are travel centers, which contribute handsomely to the company’s foodservice revenues.

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“As I watched some of the major travel center operators, I could see they were doing a lot of business with Chester’s chicken,” Rose says. “Anytime I walked into a Love’s [one of Chester’s largest co-branded franchisees] there was a line of people to get fried chicken. That was an attractive selling point.”

Rose first ventured into the food business by partnering with Subway, a relationship that has grown steadily over the past five years. He now operates 16 freestanding Subway units and five co-branded sites. His experience with Subway taught Rose some valuable lessons, the most important of which is not to force foodservice into markets already saturated with fastfood restaurants.

“I hate to sound like a broken record, but you have to pick the right location to maximize profitability,” Rose says. “I am hesitant to go into metropolitan areas with a fast-food program because there are too many choices for the consumer’s dollar. It’s difficult to get customers to eat lunch at a gas station when there is a QSR nearby. But when there is less competition, the c-store becomes a destination and branded partners help drive that business.”

RCC Holdings’ latest strategy has focused on growing the travel center business, a concept that meshes with Rose’s desire to have minimal neighboring competition.

“Commuters need gas or to use the restroom so they look at our sites as a one-stop shop to also pick up lunch or a snack,” he says. “This creates a profitable consumer segment —a captured audience with money to spend and a variety of needs.”

An unintended byproduct of the Subway-Chester’s offering at Rose’s travel centers—both concepts are in all five of his travel plazas—is the synergy the two brands have throughout the day.

“Chester’s adds sales to Subway because its presence makes our stores a better destination for families and truckers. We have something for everyone,” Rose says.

“Combined, both brands also boosted c-store sales. Our concern was that we would cannibalize food and c-store sales, but it was just the opposite.”

The complement of the two brands also ensures a balanced offering throughout the day, including fill-in snacking occasions. “Subway historically is not big at the dinner daypart, but Chester’s is, and by adding a breakfast biscuit to its menu, Chester’s also has strong morning sales,” Rose says.

“Subway is dominant at lunch.”

Retailer requirements
The cost of installing Chester’s was “very reasonable,” Rose says. “They try to keep the price of admission as low as possible, and that was among the first thing that piqued my interest. Other big-name franchises are a lot more expensive.”

Depending on store size and format, the total investment ranges from approximately $72,500 to $260,000 for c-store locations.

“If you qualify for financing, the total cost requirement will range from $50,000 to $100,000,” says Russ Cooper, president of Chester’s International. “The investment covers all costs, including construction, equipment and signage, initial inventory and grand opening advertising.”

The franchise fee for Chester’s cstore units is $15,000 and the monthly royalty fee is 4% of the restaurant’s gross sales. The amount contributed to the advertising fund does not exceed 2% of the restaurant’s gross sales, Cooper says.

Although Chester’s does not offer financing directly, it works with operators to find sources that provide equipment leasing, conventional financing and Small Business Association (SBA) financing.

On average, c-stores are able to open the restaurant within three months of signing the franchise agreement.

Training was another important issue for Rose, who admits he had limited experience with chicken fryers. Chester’s maintains a training facility at its headquarters in Birmingham, Ala. Franchisees are instructed on the point-ofsale system, managing the store, food cost control, labor control and many other key elements of operating a restaurant. Plus, they receive a minimum of four days of hands-on instore schooling on how to operate equipment and prepare the products.

“We are committed to Chester’s in all of our future travel centers,” Rose says. “At this point we are only limited by finding good locations.”