In this FDD Talk 2015 post, you’ll learn the following:
- Section I – Background information on the Sizzler franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Sizzler franchise, based on Item 7 of the company’s 2015 FDD
- Section III – Presentation and analysis of Sizzler’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
- 2014 high, low, and average gross sales for all of the 117 franchised Sizzler Restaurants that were open and operating in the U.S. during the entire fiscal year ending May 3, 2015, by quartile (high, medium high, medium low, low)
- 2014 high, low, and average gross sales for all of the 17 affiliate-owned Sizzler Restaurants that were open and operating in the U.S. during the entire fiscal year ending May 3, 2015, by quartile (high, medium high, medium low, low)
- 2014 average gross sales for all of the 124 Franchised Restaurants and Affiliate-Owned Restaurants that were open and operating in the U.S. during the entire fiscal year ending May 3, 2015
- 2014 average direct labor, indirect labor, payroll related expenses, cost of goods sold, utilities, other expenses, repair and maintenance, and total operating costs for all of the 17 affiliate-owned Sizzler Restaurants that were open and operating in the U.S. during the entire fiscal year ending May 3, 2015
- sales impact results of all ten of the Affiliate-Owned Restaurants that were remodeled in the past five years
Section I – Background Information
Sizzler Targets Millennials With Social Media, Menu Overhaul
Sizzler, which popularized the family casual segment decades ago, is working to infuse newness again by wooing millennials through social media campaigns, menu changes and remodeling.
The steak-and-seafood chain began a social media makeover in December 2014, launching corporate-run Facebook and Instagram profiles to deliver consistent messages. Social media is key to reaching millennials, who fall into the vital 18-to-35-year-old demographic.
More Healthy Menu Items
Menu changes and experimental processes are also helping Sizzler target millennials, many of whom want ingredients that are healthier and lower in calories, along with environmental and ethical concerns.
Eighteen Sizzler menu items now meet the standards for Healthy Dining Options by Healthy Dining, which provides nutrition information for restaurant menus and works with restaurants to craft healthier menus. Thirteen menu items are noted as Sodium Savvy Options, and two are Kids LiveWell Options.
Sizzler launched a build-your-own-pasta-dish menu in 2014. Diners choose a pasta type (penne, fettuccine, linguine or cavatappi) and add a sauce (marinara, Alfredo or creamy tomato) and a protein (steak, chicken or grilled shrimp) or vegetables. The chain also tested a salad toss station in some locations.
Viral Video Gives a Look Back at Sizzler in 1991
While Sizzler is trying to appeal to today’s millennials, it also got some attention from a blast to the past when a rather cheesy patriotic Sizzler promotional video on YouTube got a boost from Internet users, particularly on Reddit, in April 2015, and the story was picked up by news organizations.
The video, which is nearly five minutes long, was a promotion for potential franchisees and features baseball-playing kids, sailors and construction workers, as well as burgers and patriotic music.
The video’s reboot, which drew more than two million views, resulted in a Sizzler promotion featuring Malibu Chicken entrees and salad bar for two for $19.91. The chain also donated $19,910 to No Kid Hungry, its partner organization in targeting childhood hunger. Sizzler customers were invited to share their favorite 1990s photos on social media using the hashtag #1991Sizzler; Sizzler featured the best picks on social media.
A Modest Beginning
Sizzler began as Sizzler Family Steak House in 1958 in Culver City, California, as Del and Helen Johnson opened their doors with $50 in the cash register. At first, they offered two types of steak, a side salad and bread.
The Johnsons focused on having diners line up to order their meals, which was more cost-effective. This launched the family casual segment in which servers would bring entrees and sides to tables after customers ordered their food and helped themselves to the salad bar.
The chain focused on steak and combination dinners with salad bar for a number of years before expanding the salad bar into a buffet called the Buffet Court. Trouble came when customers began to opt for the buffet, with its all-you-can-eat shrimp, rather than ordering menu entrees. Sizzler cut corners on its entrees in response, and customers turned their backs. The chain, after closing 75 percent of its locations, filed for bankruptcy in 1996, but bounced back – and went back to its popular salad bar when it emerged from bankruptcy in 1997.
The chain underwent a makeover in the following years that included going back to basics and creating more open space in dining areas. The menu specializes in steak, seafood and burgers, with a large salad bar that also includes hot appetizers and desserts.
Sizzler was sold in 2005 to Pacific Equity Partners, an Australia-based investment firm. Sizzler USA, a U.S. management group, bought the chain from Pacific Equity Partners. The headquarters initially stayed in Culver City, but in 2012 moved to Mission Viejo, California.
With the exception of a location in Kissimmee, Florida and a dozen in Puerto Rico, Sizzler restaurants are confined to the Western U.S.: California, Oregon, Washington, Idaho, Utah, Nevada, Arizona and New Mexico. Of about 140 locations, 123 are franchised.
Sizzler locations outside the U.S. are operated by Pacific Equity Partners.
Among menu promotions was the All American Summer Grill promotion in May 2015, which brought in a new Santa Maria-style grilling technique that locked in seasonings to flame-seared tri-tip beef. The promotion featured steak, steak and shrimp, and a baby back ribs/barbecued chicken breast combo.
Sizzler also brought together some old favorites in February 2015 with three new steak combos: Steak & Ultimate Mac N’ Cheese, Steak & Chicken Broccoli Alfredo and Steak & Cajun Shrimp Pasta.
Sizzler Brings in Van Bruggen as VP of Marketing
Kristina Van Bruggen joined Sizzler as vice president of marketing in October 2014. Van Bruggen brought with her more than 17 years of experience in marketing and advertising, having worked with brands such as PepsiCo and Pepsi Foodservice Division, Pizza Hut and Coors Brewing Company. She most recently worked with TracyLocke in Orange County, Calif., and was the senior agency lead for T-Mobile USA’s national field marketing team.
Section II – Estimated Costs
- Please click here for detailed estimates of Sizzler franchise costs, based on Item 7 of the company’s 2015 FDD.