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With Large Slim Chickens Deal, Full-service Operators Tackle First Franchise
09/20/2023
FHG Slims, a newly formed division of Finney Hospitality, signed a multi-unit deal last year to open 14 Slim Chickens across nine counties in Michigan, including Lansing, Grand Rapids, Kalamazoo and the surrounding areas in the western and central parts of the state.
Finney Hospitality Group could have chosen any number of fast-casual chicken concepts for its first foray into franchising. In the end, the Bloomington, Indiana-based company chose Slim Chickens because, as Chris Martin, vice president of operations, said, “We wanted to partner with somebody that would support and enable us to grow fast. Plus, they are just an outstanding food brand with great customer service.”
FHG Slims, a newly formed division of Finney Hospitality, signed a multi-unit deal last year to open 14 Slim Chickens across nine counties in Michigan, including Lansing, Grand Rapids, Kalamazoo and the surrounding areas in the western and central parts of the state. The first-time franchisee is targeting Grand Rapids for the first restaurant, with an opening in late spring or early summer of 2024 and a goal of developing no less than one location per year after that, according to Martin.
“Finding the perfect location for our Slims and then finalizing those real estate deals is going to take time,” he said. “But the great thing about Slims is that they totally committed to making this work and not pressuring us to open until we secure perfect real estate locations.”
In Finney Hospitality, founded by Nathan Finney in 2012, Slim Chickens found an experienced restaurant operator to help lead the brand’s expansion in the state. (Elsewhere in Michigan, a group of Jimmy John’s franchisees is developing Slims in the Detroit and Ann Arbor markets.) The Finney portfolio includes five non-franchised bar and restaurant concepts in Indiana—Social Cantina and SmokeWorks among them—mainly concentrated in the Bloomington market, with one of the bar concepts in Dublin and Columbus, Ohio, and another looking to break into Tennessee in 2024. The group also owns a car wash in Bloomington.
Martin said there are no plans for Finney Hospitality to franchise any of its own concepts and it has not ruled out adding other franchises. For now, the focus is on opening Slim Chickens, which they believe has enormous potential.
“Our own brands are very successful and certainly we could have just gone on and done our own thing,
” Martin said. “But when you find a product that you’re 100 percent comfortable with and that you can grow pretty fast—well, it’s just a good business solution.”
Martin said so far he has been “blown away” by how selective Slim Chickens is as it helps the group find the right real estate.
“They are building the brand the right way,” he said, and added, “We’ve spent the last 18 months trying to find the right real estate for our Slims locations because we want the first one to be a home run, with the second, third, fourth, fifth, all of them being the same. Just like us, Slims doesn’t want to make sacrifices and compromises on site locations and that gives us a lot of confidence that we picked the right brand to partner with.”
Slim Chickens got its start in 2003 in Fayetteville, Arkansas, and started franchising in 2014. It has more than 230 restaurants in 30 states and in the United Kingdom. Thirty-plus units have opened this year, according to Jackie Lobdell, vice president of franchise development, with another 40 on track to open by the end of the year.
On a global scale, Slim Chickens is growing its presence throughout the U.K. and Europe with Boparan Restaurant Group, the master franchisee that has more than 30 locations open and plans for at least 50.
The brand’s southern-style food is co
oked to order, with a menu featuring chicken tenders, salads, sandwiches, chicken and waffles, chicken wings and side items, alongside 17 house-made dipping sauces. Slim Chickens has an initial investment range of $1.6 million to $4.4 million, according to the company’s franchise disclosure document, with average gross sales in 2022 of $2.5 million.
Martin said Finney Hospitality is aware of how competitive the fast-casual chick
en segment is in Michigan with Chick-fil-A, Raising Cane’s Chicken Fingers, Zaxby’s and others growing there. Still, his group believes Slim Chickens was the right choice for its first franchise.
“I think in five to 10 years from now, there’s going to be a couple of thousands of Slim Chickens across the United States. It’s a pretty impressive organization of franchisees and franchisors and we’re excited to be a part of it now,” Martin said.
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Founded in Fayetteville, Arkansas in 2003, Slim Chickens didn’t even begin franchising until 2013. Fast forward to more recent times, and the brand generated $265 million in system sales between 2019-2021 and operates over 150 locations.
A lot of Slim Chickens’ interior graphics feature brand messaging.The company is developing some new music-themed posters, “and adding some color into the space,”Payne says. There will be five of these available later in the year, and stores can choose which ones to feature — usually three. “The posters are an homage to the blues festival posters of the past and use the Slim Chickens name in fun ways to bring color and whimsy into the stores,” Payne says.
Slim Chickens turns 20 this year, and it’s safe to say the chicken-tenders concept that was started by two friends in Fayetteville, Ark., is all grown up. The company now has over 200 locations open, mostly in the South, with 1,100 restaurants in various stages of development.
Chief operating officer Sam Rothschild joined founders Tom Gordon and Greg Smart a little over nine years ago as the company was opening its ninth restaurant. At the time, Slim Chickens was just starting to franchise and generated about $12 million in annual revenue.
“This year, we’ll eclipse over half a billion,” Rothschild said during a recent interview.
Also in that time, the company has gone from one franchise group to 65, and seven support center employees to over 65. Rothschild attributes this swift clip to Slim Chickens’ core product — hand-breaded, Southern-style, buttermilk-marinated chicken tenders.
“The foundation of our core product, which is the specialty chicken category — there weren’t many people out there doing what we do. There was a tremendous amount of white space and for us, we had a lot of confidence,” he said.
That confidence came from more than just its signature product, however. Once the company began ramping up its growth, it expanded its menu to include wings and craft chicken sandwiches, salads, wraps, chicken and waffles and mason jar desserts. Also, its atmosphere is unique, which Rothschild says helps the concept stand out amid an increasingly crowded space.
“We are a restaurant where people enjoy coming in and hanging out. We have great music — blues, Southern rock. We have televisions where you can watch sports,” Rothschild said. “We call the environment contemporary Southern. And people are enjoying themselves. They are there to share a meal and have some fun — not typically what you get in QSR/fast casual experience, and I think that’s a differentiated experience for us.”
That said, Slim Chickens also has a strong drive-thru, to-go and third-party delivery business. The drive-thru business has always generated more than 50% of the chain’s sales mix, while its delivery and curbside business ramped up during Covid. The company had an app and online ordering prior to the onset of the pandemic, so curbside was added relatively quickly.
“I think that gave us a strategic advantage over some of our competitors because they were behind the 8-ball,” Rothschild said. “All of those to-go parts of the business grew exponentially.”
And when dine-in traffic returned, the company’s to-go business actually increased.
“What happened was all boats rose and our average restaurant volumes in the last year and a half have gone up exponentially,” Rothschild said.
Slim Chickens’ AUVs are now around $3.8 million, driven by strong performances from its new restaurant openings and customer retention, which Rothschild calls “significant.” He attributes this retention to having proven operators, an efficient building, resonate marketing, well-positioned locations, and the quality of the food — “which is what we stand on the most.”
That said, Rothschild doesn’t ignore the confluence of challenges hindering the restaurant industry, and Slim Chickens has not been immune. The company is comp-positive on sales, but down a little on traffic, for instance. That said, the chain’s average consumer is higher income, which has provided some insulation.
Challenges aside, Rothschild expects the brand’s tailwinds to continue and, in the near-term, the company plans to open one restaurant or more a week this year.
“We’re not fighting burgers and pizzas and sandwiches, which have a lot of big players [and are] really saturated. This better chicken category, there’s still a lot of white space. … I see a very long runway for us,” Rothschild said. “As long as the topline sales keep moving, the business model works, our current franchisees will build more restaurants and we’re continuing to attract more franchisees. We’re going to continue to stay very focused and do what we do and get better at what we do.”
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