In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Huddle House franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Huddle House franchise, based on Item 7 of the company’s 2018 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Huddle House franchise, based on Items 5 and 6 of the company’s 2018 FDD
- Section IV – Number of franchised and company-owned Huddle House outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
- Section V – Presentation and analysis of Huddle House’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- FY 2018 average, median, high, and low annualized unit volume for the 177 Evolution Design Huddle House Restaurants (new and remodeled) and the 131 Non-Evolution Design Huddle House Restaurants, encompassing all the franchised Restaurants that were in operation at least 4 months during Huddle House’s 2018 fiscal year (April 30, 2017 to May 1, 2018), and were also open the last day of the fiscal year (May 1, 2018)
- FY 2018 average food and paper costs, crew wages, all other payroll costs, gross margin, royalty fees, advertising fund contributions, local advertising, rent expenses, controllable expenses, and other fixed costs for the 12 company-owned Huddle House Restaurants that were operated by the company for the past two full years, as of the end of the 2018 fiscal year
- FY 2018 average, median, high, and low annualized unit volume for the 36 company-owned and 308 franchised Huddle House Restaurants of any design that were in operation at least 4 months during Huddle House’s 2018 fiscal year
Section I – Background Information
12 Things You Need to Know About the Huddle House Franchise
Strengthens Executive Leadership with New Director of Real Estate
1. At the beginning of 2018, Huddle House announced the appointment of Carl Jenkins as director of real estate. As Huddle House’s new director of real estate, Jenkins is responsible for assisting franchisees in identifying potential franchise site locations that will allow for maximum profitability and brand recognition.
2. Michael Abt, CEO of Huddle House, said, “Carl Jenkins is the perfect fit for the Huddle House team. He joins us with an expansive amount of commercial real estate experience, giving him excellent comprehension of strategic real estate sites that will allow our current and prospective franchisees to build and maximize their business’ potential.”
3. Prior to joining Huddle House, Jenkins spent more than 28 years in the commercial real estate industry, serving in various real estate roles for Advance Auto Parts, McDonald’s Corporation, and Panda Restaurant Group, where he supported both corporate and franchise development. Jenkins has ambitious goals of increasing both the number of new store sites and the average unit volume of stores by providing stronger real estate support and site selection.
Overhauls Burger Menu
4. In early November 2018, Huddle House rolled out a completely overhauled burger menu. The new burger line, named Big House Burgers and Melts, highlights quality ingredients to help Huddle House deliver on its mission of bringing friends and family together over delicious food, served from the heart. The updated burgers will feature Huddle House’s signature burger seasoning on each burger patty.
5. Customers can choose from any of the following savory Big House Burgers and Melts:
- HuddleBurger – Served on a toasted brioche bun, this mouthwatering burger consists of two seasoned patties stacked in between two pieces of cheddar cheese. Upgrade this burger with bacon or two more patties to make it a “Triple”.
- Classic Patty Melt – Melted together on Texas toast, this melt is served with grilled caramelized onions, garlic mayo, two seasoned burger patties, and American cheese.
- Double Mushroom Swiss – Loaded high with a mix of sautéed mushroom and caramelized onions, this burger is served with breaded fried onion rings, Swiss cheese, and two beef patties.
- Mega Bacon Cheeseburger – Crafted with the bacon lover in mind, this burger is made with two layers of bacon and cheddar cheese sandwiched between two burger patties.
- Black Bean Burger By Gardein™ – A delicious meatless burger made from black beans layered between a grilled and buttered brioche bun and melted cheddar cheese.
6. All Big House Burgers and Melts are served with a choice of French fries, sweet potato fries, tater tots, and newly-introduced seasonal fresh fruits. Fresh fruits will also be available to guests a la carte and include cantaloupe, grapes, and pineapple as well as rotate in seasonally appropriate fruit. The new burger menu is now available at all Huddle House restaurants across the country.
Launches New Website
7. At the beginning of October 2018, Huddle House launched a sleek, revamped version of its website. The new website was designed to increase operational efficiency and improve functionality for customers. New features include an interactive menu, a simplified registration process for Huddle Up Rewards, a robust restaurant locator, and details on current deals and promotions. Additionally, the redesigned website introduces a new online ordering feature, which will roll out to all locations in the coming months.
8. Alison Delaney, chief marketing officer for Huddle House, said, “We wanted to create a simpler, more accessible website that was all about clearly communicating who Huddle House is, what we do and how our customers can easily access more information. We are always looking for new and innovative ways to serve our customers better, and our new Huddle House website will accomplish that.”
9. Huddle House was first opened in April 1964 by John Sparks in Decatur, Georgia. Sparks wanted to open a 24-hour eatery that also served as a place for football fans to eat after games on Friday nights. Sparks’ wife named the restaurant after the act of huddling in football. Sparks started franchising the Huddle House concept in 1966 and continued to open restaurants primarily in the Southern part of the United States.
10. In the early 2000s, Huddle House revamped its image, building new restaurants modeled on diners from the 1950s. Huddle House also updated its logo, employee uniforms, and menu, adding such items as chicken wings, butterfly shrimp, and children’s offerings to its breakfast and sandwich selections. The company also developed a line of “Big House” platters.
11. In 2006, Huddle House was acquired by Allied Capital, which was itself acquired a few years later by Ares Capital. In 2012, Ares Capital sold Huddle House to Sentinel Capital Partners, which still owns the brand today.
Entrepreneur’s Franchise 500
12. Huddle House did not rank on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Huddle House franchise costs, based on Item 7 of the company’s 2018 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Huddle House’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 357
- Outlets at the End of the Year: 358
- Net Change: +1
- Outlets at the Start of the Year: 358
- Outlets at the End of the Year: 328
- Net Change: -30
- Outlets at the Start of the Year: 328
- Outlets at the End of the Year: 315
- Net Change: -13
- Outlets at the Start of the Year: 11
- Outlets at the End of the Year: 12
- Net Change: +1
- Outlets at the Start of the Year: 12
- Outlets at the End of the Year: 30
- Net Change: +18
- Outlets at the Start of the Year: 30
- Outlets at the End of the Year: 36
- Net Change: +6
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
Part 1 – Annualized Unit Volumes for Franchised Restaurants
Evolution Design Restaurants (New and Remodeled) – 177 Restaurants
Top 50% (89 Restaurants)