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Business Observer Friday, Apr. 12, 2019 2 months ago

The accidental franchising plan

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Making no bones about it, Fort Myers-based Rib City is slow cooking its growth strategy. It’s a sweet recipe for success.
by: Andrew Warfield Lee-Collier Editor

Tracking the 30-year history of Rib City draws parallels to the preparation of the signature item in the restaurant’s name: purposefully slow, steady and with meticulous attention to detail. What began as a single location in Fort Myers in 1989 has grown to 14 corporate stores in Florida and 12 franchise locations spread nationwide, from Virginia to Washington state. 

And all done without turning up the heat.

But while growth has been slow, it has not been insignificant. The company now has some 850 employees spread across corporate and franchise locations, and did $38.5 million in revenue in 2018, up 13.2% from $34 million in 2016. 

Founded by Paul Peden and now operated by his son, Craig, Rib City is the lone survivor of multiple concepts they launched in addition to their 45-year-old fine dining restaurant, The Veranda, in downtown Fort Myers. 

“Pretty much over any concept we've tried in the last 40 years, we found Rib City to be the most practical for us for growth and for long-term return on investment,” says Craig Peden, 49. “Everybody loves good barbecue.”

Growth was as slow and intentional as the Rib City’s imported Danish baby back ribs, which take seven hours to prepare from package to plate. Most of that time is spent being smoked over blackjack oak, the ideal complement to the sweetness of the meat, Peden says. That approach mirrors Rib City’s pairing of patience and purposeful preparation for company growth.

While it may appear unusual that the closest franchise store is in Tennessee with additional locations in far-flung states like Virginia, Colorado, Missouri, Ohio and Washington, Peden offers a simple explanation. Some are places where regular Southwest Florida seasonal customers who became franchisees live the rest of the year. 

“They approached us and asked if they could put a franchise store in Colorado,” Peden says of the first Rib City franchisees, 20 years ago. “They came down here every winter for a couple of months every year. That's how we stumbled into the franchise business. It was a great opportunity, but it literally fell into our laps. We’ve learned a lot about franchising since then.”

Such as?

'We treat the franchises like our family, and we don't want to sell out family our for a quick buck. When they come to Rib City we want them to be with us for 20 and 30 years and have their own success.' Craig Peden, Rib City

“I learned how naive I was about the franchise business. That first one was our guinea pig,” Peden says. “We improved vastly on our training and our record-keeping and communications with the franchisees. It was different dealing with other owners rather than me just going in and telling them how to do things.”

As the franchise operation has grown, so has the corporate store count. With 14 locations stretching from St. Petersburg to Estero, Peden eyes the gap between St. Petersburg and Venice for growth, including Sarasota, Punta Gorda and Port Charlotte. He’s also developing a quick-serve concept of smaller stores and menus with counter service that may be ready to launch by fall 2019.

A Rib City franchise costs $50,000 plus 4% gross revenues. Peden says a typical second-generation location costs an average of $300,000 to $400,000 in capital investment. The all-in price of a new construction location varies based on local market conditions and construction costs. To facilitate franchising, the company headquarters is in the same building as a corporate store off Daniels Parkway in Fort Myers, providing the continuity of in-store and classroom training in one location.

The franchise costs are intentionally low, Peden says, to help ensure success. The fee just more than covers training and travel expenses.

Although positioned to more aggressively pursue franchises, Peden says Rib City remains committed to grow slow. 

“It's been a learning curve for us,” he says. “We’re a lot better now than we were five years ago, and we were better five years ago than we were 10 years ago. We treat the franchises like our family, and we don't want to sell out family our for a quick buck. When they come to Rib City we want them to be with us for 20 and 30 years and have their own success. We want to keep it controlled because I have seen too many places grow too fast and just lose control. That is never what we intended.”

What is intended is a family-style dining experience in a quiet, casual atmosphere. Only one location has a bar, but beer and wine are otherwise available. 

“I want you to leave here thinking that was very good food at a very competitive price and you’re full,” Peden says. “And I want to come back because you had such a good time.”

That, he adds, is the formula for longevity.

“I can’t wait,” Peden says, “to see what the next 30 years bring.”

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