FDD Talk 2021: Slim Chickens Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Slim Chickens franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Slim Chickens franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Slim Chickens franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Slim Chickens outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Slim Chickens’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average and median gross sales for the 56 franchised Slim Chickens Restaurants that were open and operating for the full 2020 fiscal year and are representative of the current prototype Restaurant under development, grouped by annual gross sales level (> $3,000,000, $2,000,000 to $3,000,000, $1,500,000 to $2,000,000, and < $1,500,000)

• 2020 average, median, high, and low gross sales per week for the 4 new franchised Slim Chickens Restaurants that opened in 2020 and operated for at least six months in fiscal year 2020

• 2020 average gross sales, cost of goods sold, labor costs, paper costs, and total controllable income for the 8 affiliate-owned and operated Slim Chickens Restaurants that were open and operating during the full past fiscal year ended January 3, 2021, grouped by annual gross sales level (3 Slim Chickens Restaurants that achieved the highest gross sales during the 2020 fiscal year; 4 Slim Chickens Restaurants that achieved the next highest gross sales for the 2020 fiscal year; and 1 Slim Chickens Restaurant that achieved the lowest gross sales for the 2020 fiscal year)

Section I – Background Information

20 Things You Need to Know About the Slim Chickens Franchise

Bolsters Franchise Development Team to Fuel Growth

1.  In late July 2020, Slim Chickens announced the promotion of Jackie Lobdell to vice president of franchise development and the hiring of two director-level franchise development team members. The new team members, Chris Wyland and Eric Brown, will report to Jackie Lobdell and support her franchise growth strategy. Both positions are new and were created as demand for the fast-growing concept continues to grow among multi-unit groups.

2.  Sam Rothschild, COO of Slim Chickens, said, “We are ecstatic to continue expanding. Jackie’s promotion, alongside the introduction of these two experienced hires, will do just that. Jackie’s love of the brand, determination and infectious attitude has been an integral part of what has fueled the growth of our franchise system. Now is the time to enhance our efforts to reach even higher levels. I can’t wait to see what her team accomplishes in the coming months.”

3.  Since joining Slim Chickens in 2018, Lobdell has grown the development pipeline by more than 40 percent with some of the nation’s foremost multi-unit franchise groups. Through her leadership, Slim Chickens’ development pipeline sits at more than 400 units, well on the brand’s way to meeting its goal of 600 restaurants over the next 10 years.

4.  Lobdell is a multi-year award winning sales professional with 25 years of experience. Prior to heading up franchise development at Slim Chickens, Lobdell served as a director of franchise development for FOCUS Brands, where she was instrumental in growing the McAlister’s Deli concept through multi-unit franchising, ultimately being a key player in expanding its footprint to more than 400 units through multi-brand partners.

5.  Brown joined Slim Chickens from Inspire Brands where he gained experience in franchise sales working with Rusty Taco, Buffalo Wild Wings, Arby’s, Sonic, and Jimmy John’s. Wyland joined the brand following his role as franchise sales director at Capriotti’s. The bulk of his experience comes from his time creating and franchising multiple concepts over the past decade. “Both Chris and Eric have the enthusiasm and experience needed to help Slim Chickens thrive,” explained Lobdell. “I know they will be assets to the team and I am especially excited to welcome them onboard.”

6.  Since February 2020, the brand has inked eight multi-unit agreements representing 49 new franchise restaurants. The deals, all signed with experienced franchisees and groups, are set to bring Slim Chickens restaurants to key markets across the country, including several cities throughout Alabama and southern Tennessee; Dallas; Cleveland; and cities throughout Montana.

7.  Building on the momentum of the new franchise agreements signed in recent weeks, Slim Chickens has opened six restaurants since the start of the year and has another 15 restaurants slated to open through December. New locations are set to open in markets across the country, including states like Florida, Colorado, New Jersey, Texas, Maryland, and Washington, to name a few. Several restaurants are under construction in the United Kingdom, as well.

Experiences Explosive Growth in 2020

8.  At the end of December 2020, Slim Chickens reported that the brand was closing out 2020 on a high note: the brand had inked multi-unit franchise agreements for 150 units in 2020. In what was a precarious 12 months for the restaurant sector, Slim Chickens proved itself to be a brand with incredible staying power and a top pick for the nation’s most experienced franchise groups.

9.  Notably, Slim Chickens signed multi-unit agreements that will bring the brand into new markets across the country. Some of the more notable deals include agreements for 12 units in Georgia, 23 units in Tampa, 10 units in New Mexico, and 22 units in North Carolina.

10.  Jackie Lobdell, vice president of franchise development for Slim Chickens, said, “This year has been a whirlwind. We kicked things off in January stronger than ever and with more momentum behind us than any other brand in the segment. Of course, things changed in March, but we were able to quickly pivot and support franchisees, and within four weeks our year-over-year sales were up systemwide. This showed prospects that Slim Chickens was the right choice for their portfolio long-term. Now, we’re closing our most successful year ever in terms of franchise sales and have nothing but excitement as we look to continued growth in 2021.”

11.  In addition to the brand’s impressive franchise development pipeline, they have also opened their 116th location. Slim Chickens was able to open 15 restaurants in 2020 and has plans to open over 50 locations by the end of 2021. In addition to bringing on new high-quality franchisees, Slim Chickens has also had several current franchisees expand their territories, which speaks to the strength of the brand.

12.  The brand’s growth in 2020 establishes its position as one of the fast-casual sector’s fastest-growing and strongest brands. As Slim Chickens continues to prioritize growth in 2021, the brand is seeking qualified and experienced multi-unit franchise groups to expand across the county into markets such as Florida, Pennsylvania, Michigan, Minnesota, and Arizona.

Plans to Open More Than 50 Locations in 2021

13.  At the end of January 2021, Slim Chickens announced that it has plans to open over 50 restaurants this year. As the breakthrough fast-casual brand expands around the globe, Slim Chickens, which features dine-in and drive-through footprints in the “better chicken” segment, is set for an explosive 2021. Internationally, franchise restaurants will continue to open across the United Kingdom as well.

14.  Aside from the dedicated fan base, Slim Chickens has proven itself to be a brand with incredible staying power and a top pick for the nation’s most experienced franchise groups. Notably, Slim Chickens closed out 2020 having signed over 150 multi-unit agreements with 16 groups that will bring the brand into new markets across the country.

15.  While 2020 was a difficult year for the restaurant industry, Slim Chickens finished with just under 14% positive comp store sales growth and systemwide revenue growth of over 35%. The brand also grew its franchise system by 30% in 2020.

16.  Jackie Lobdell, vice president of franchise development for Slim Chickens, said, “In March of 2020, we were able to quickly pivot and support franchisees, and within four weeks our year-over-year sales were up systemwide. This showed prospects that Slim Chickens was the right choice for their portfolio long-term. We’ve closed our most successful year in terms of franchise sales and are excited to continue the momentum as we look to drive growth in 2021!”

17.  Slim Chickens works well in traditional and non-traditional environments alike. The brand opened several non-traditional venues in 2020, including restaurants at universities, stadiums, and military bases. The brand entered nine new markets in 2020. Lobdell added, “This year is going to be a landmark year for Slim Chickens. We are set to grow our brand in new markets while continuing to expand our footprint in regions where we are well-known.”

Company History

18.  Slim Chickens was founded in 2003 by Greg Smart and Tom Gordon in Fayetteville, Arkansas. Smart had begun forming the idea for Slim Chickens years before and enlisted Gordon, who had experience in the restaurant industry and was one of Gordon’s best friends, to help him develop and implement the Slim Chickens concept. After coming up with the concept, Smart and Gordon spent months developing the recipe for the brand’s menu, which includes chicken tenders, wings, sandwiches, salads, wraps, chicken & waffles, and more.

19.  The first Slim Chickens location was a success and two years later, a second store opened in nearby Rogers, Arkansas. Over the next few years, five additional company-owned Slim Chickens restaurants opened and franchising began in 2013. Today, there are Slim Chickens across 19 states, as well as international locations in the UK and Kuwait.

Entrepreneur’s Franchise 500

20.  Slim Chickens ranked No. 255 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Slim Chickens franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Slim Chickens’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  50
• Outlets at the End of the Year:  56
• Net Change:  +6

2019

• Outlets at the Start of the Year:  56
• Outlets at the End of the Year:  59
• Net Change:  +3

2020

• Outlets at the Start of the Year:  59
• Outlets at the End of the Year:  78
• Net Change:  +19

Company-Owned

2018

• Outlets at the Start of the Year:  16
• Outlets at the End of the Year:  20
• Net Change:  +4

2019

• Outlets at the Start of the Year:  20
• Outlets at the End of the Year:  23
• Net Change:  +3

2020

• Outlets at the Start of the Year:  23
• Outlets at the End of the Year:  11
• Net Change:  -12

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

Part 1 – Analysis of Historical Gross Sales for All Franchised Slim Chickens Restaurants That Were Open and Operating During the Entire Fiscal Year 2020

• This analysis contains historical average and median Gross Sales incurred in operating existing Slim Chickens franchised Restaurants that were open and operating during the entire 2020 fiscal year.

• As of the last fiscal year ended January 3, 2021, there were 78 franchised Restaurants open and operating in the United States, specifically in Arkansas (13), Colorado (3), Florida (1), Illinois (2), Kansas (5), Kentucky (3), Louisiana (1), Mississippi, (3), Missouri (6), Montana (1), Nebraska (2), North Dakota (1), Ohio (2), Oklahoma (8), South Dakota (2), Tennessee (3), Texas (21), and Utah (1).

• Of these 78 Restaurants, 66 were open and operating for the entire 2020 fiscal year. 56 of these locations represent the two standard prototypes currently under development and are included in the Gross Sales statements below.

• Ten locations are excluded as they do not represent the standard prototype Restaurant currently under development: two of the locations are non-freestanding facilities without a drive-thru that are located on college campuses and do not operate year round, one is a food truck, two are smaller end-cap locations, one is a freestanding building without a drive-thru, and two are older freestanding buildings not reflective of the current prototype.

• The table excludes 12 franchised Restaurants in the United States that were opened in 2020, and 13 additional franchised Restaurants located in Kuwait and the United Kingdom.

• The following table presents average and median Gross Sales information for the 2020 fiscal year for the 56 franchised Restaurants that were open and operating for the full 2020 fiscal year which are representative of the current prototype Restaurant under development.

• These sales represent the last 52 weeks of the fiscal year.

• The information in the table is derived from Slim Chickens franchisees’ sales reports, and is unaudited and unverified.

Group 1 (Gross Sales > $3,000,000)

• Average Gross Sales:  $3,408,756
• Median Gross Sales:  $3,262,952
• Total Number of Restaurants in Category:  5
• Number of Restaurants Meeting or Exceeding the Average Amount:  2
• Number of Restaurants Meeting or Exceeding the Median Amount:  3

Group 2 (Gross Sales $2,000,000 to $3,000,000)

• Average Gross Sales:  $2,440,547
• Median Gross Sales:  $2,439,049
• Total Number of Restaurants in Category:  10
• Number of Restaurants Meeting or Exceeding the Average Amount:  5
• Number of Restaurants Meeting or Exceeding the Median Amount:  5

Group 3 (Gross Sales $1,500,000 to $2,000,000)

• Average Gross Sales:  $1,800,809
• Median Gross Sales:  $1,823,668
• Total Number of Restaurants in Category:  18
• Number of Restaurants Meeting or Exceeding the Average Amount:  10
• Number of Restaurants Meeting or Exceeding the Median Amount:  9

Group 4 (Gross Sales < $1,500,000)

• Average Gross Sales:  $1,255,142
• Median Gross Sales:  $1,267,326
• Total Number of Restaurants in Category:  23
• Number of Restaurants Meeting or Exceeding the Average Amount:  14
• Number of Restaurants Meeting or Exceeding the Median Amount:  13

• The highest Gross Sales amount for the Restaurants in the above table was $4,002,073, and the lowest Gross Sales amount for the Restaurants in the above table was $901,510. Average Gross Sales for all 56 Restaurants was $1,834,502.

• Slim Chickens does not have full access to, or full confidence in, cost or EBITDA information that it may receive from time to time from its franchisees so as to have a reasonable basis to include their cost or EBITDA performance information with these Financial Performance Representations.

Part 2 – Analysis of Historical Gross Sales for All Franchised Slim Chickens Restaurants That Were Newly-Opened During Fiscal Year 2020

• As noted above, 12 new franchised Restaurants opened in 2020. While Slim Chickens excluded these 12 Restaurants from the above analysis since none of the 12 Restaurants were open and operating the entire 2020 fiscal year, four of these Restaurants were open for the entire second half of the fiscal year. These restaurants were opened between January 9 and May 20, 2020 and therefore all four of these Restaurants operated for at least six months in fiscal year 2020.

• During the last six-month period of the 2020 fiscal year from June 29, 2020 to January 3, 2021, these 4 Restaurants averaged $51,224 per week in Gross Sales per Restaurant with a median of $46,912 per week in Gross Sales. The highest weekly Gross Sales for the 4 Restaurants was $73,423, and the lowest weekly Gross Sales for the 4 Restaurants was $31,838.

Part 3 – Analysis of Historical Gross Sales and Selected Cost Information for Company-Affiliated Slim Chickens Restaurants During Fiscal Year 2020

• This analysis contains historical Gross Sales and selected cost information incurred in operating certain existing company-affiliated Slim Chickens Restaurants.

• The Gross Sales and selected cost analysis were prepared based on the results of 8 affiliate-owned and operated Slim Chickens Restaurants that were open and operating during the full past fiscal year ended January 3, 2021.

• Slim Chickens excluded from the Gross Sales and selected cost analysis 1 affiliate-owned and operated Slim Chickens Restaurant that was operating as of the end of Slim Chickens’ last fiscal year. That restaurant is an older, non-prototype location and does not have a drive-thru, which does not represent the current prototype Restaurant offered for ongoing development.

• All of the company-affiliated Slim Chickens Restaurants in this analysis offer substantially the same products and services that a franchised Slim Chickens Restaurant will offer and fall either within the permissible square footage range of the prototype Slim Chickens Restaurants offered in the disclosure document (between 2,400 and 2,800 square feet) or just above/below the current permissible square footage range.

• These company-affiliated Slim Chickens Restaurants are located in Arkansas and Oklahoma. Slim Chickens has its headquarters in Arkansas and a significant presence, and its affiliates have been operating Restaurants since 2003.

• The “Tier 1” designation presents the average and median Gross Sales and selected cost information for 3 Restaurants that achieved the highest Gross Sales and profit during the 2020 fiscal year. The “Tier 2” designation presents the average and median Gross Sales of the 5 Restaurants that achieved the next highest sales for the 2020 fiscal year. The “Tier 3” designation presents the average and median Gross Sales of the Restaurants that achieved the lowest sales for the 2020 fiscal year.

• Certain fees which company-affiliated Slim Chickens Restaurants do not incur (but which you must pay to Slim Chickens under the Franchise Agreement) and certain other differences between the costs of a franchised Slim Chickens Restaurant and an affiliate-owned and operated Slim Chickens Restaurant are reflected in the chart below.

• The information contained in this analysis has not been audited.

Tier 1

• Number of Restaurants:  3
• Average Gross Sales:  $2,745,793  (100.0%)
• Average Cost of Goods Sold:  $753,325 (27.4%)
• Average Labor:  $719,925  (26.2%)
• Average Paper:  $127,129 (4.6%)
• Average Total Controllable Income:  $845,344 (30.8%)

• Royalties:  $137,290 (5.0%)
• Marketing (based on 1.5% of Gross Sales as required in fiscal year 2020):  $41,187 (1.5%)

Tier 2

• Number of Restaurants:  4
• Average Gross Sales:  $2,032,415 (100.0%)
• Average Cost of Goods Sold:  $554,819 (27.3%)
• Average Labor:  $528,968 (26.0%)
• Average Paper:  $91,972 (4.5%)
• Average Total Controllable Income:  $606,663 (29.8%)

• Royalties:  $101,621 (5.0%)
• Marketing (based on 1.5% of Gross Sales as required in fiscal year 2020):  $30,486 (1.5%)

Tier 3

• Number of Restaurants:  1
• Average Gross Sales:  $1,020,568 (100.0%)
• Average Cost of Goods Sold:  $286,416 (28.1%)
• Average Labor:  $322,696 (31.6%)
• Average Paper:  $42,951 (4.2%)
• Average Total Controllable Income:  $176,304 (17.3%)

• Royalties:  $51,028 (5.0%)
• Marketing (based on 1.5% of Gross Sales as required in fiscal year 2020):  $15,309 (1.5%)

• Gross Sales consists of the total sales price of all food products (including take-out, drive-thru, or catering) and all other products and services sold by the Slim Chickens Restaurants, including discounts and excluding taxes collected directly from customers and paid to taxing authorities.

• Cost of Goods Sold consists of food and beverage costs.

• Labor consists of all Restaurant-level salaries and wages for salaried and hourly managers and employees, inclusive of taxes and insurance. It does not include corporate-level general and administrative expenses.

• Paper consists of all disposable products used in the execution of the menu, including cups, napkins, containers, utensils, plates, and other disposable products.

• Total Controllable Income consists of Gross Sales minus Cost of Goods, Labor, Paper, and certain other controllable costs and expenses, including supplies, security, insurance, licenses and permits, utilities and telephone charges, bank service charges, dues and subscriptions, postage, printing, repairs, and uniforms.

• Royalties consists of 5.0% of Gross Sales.

• Marketing consists of 1.5% of Gross Sales. The current Advertising Fund Contribution is 2% of Gross Sales.

• This analysis does not reflect all cost information you will incur in operation of your Restaurants and is designed solely to provide you with certain key performance and cost information for you to determine your potential sales, performance, and costs. This analysis does not include information regarding:

• (a) Interest expense you would incur if you finance any of the initial investment for the Slim Chickens Restaurants;
• (b) Occupancy costs;
• (c) Voluntary advertising, including print, radio, and television advertising costs;
• (d) Miscellaneous non-controllable costs including automobile expenses, equipment, other building expenses, communications, miscellaneous expenses, office supplies, professional fees, refunds, sales tax and meal, and travel and entertainment costs during training.

• Some Slim Chickens Restaurants have achieved the sales and cost results in this analysis. Your individual results may differ. There is no assurance that you will achieve sales or cost results at the levels reflected in this analysis.

Key Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️