Butterburger, Anyone? Find out why fast-food newcomer Culver's is overcoming consumers' initial reactions.
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Elizabeth and Ashley, my 9-and 12-year-old daughters, wereadamant: "Butterburgers? That's gross, Daddy." Therewas no way they were going to ride with me for an hour, each way,to try a restaurant featuring frozen custard and Butterburgers. Iexpected this objection as I, too, had imagined a cold stick ofbutter sandwiched between two buns, but reviewing new concepts ispart of Daddy's career.
I explained to my daughters that we were going to a Culver'sFrozen Custard, a somewhat upscale fast-food restaurant, becauseit's part of a young franchise chain experiencing phenomenalgrowth in the upper Midwest. In fact, it's the No. 1 custardfranchise-- No. 175 overall--in Entrepreneur's 1999Franchise 500®. We were headed to one of only three locationsin Texas. Although Culver's has more than 55 locations inWisconsin, I couldn't see how the concept could survive inTexas with an unknown name and limited marketing impact. Then wetasted our first Butterburgers.
Wow! That's the only word for it. The people at Culver'sknow how to make a burger. By using fresh ground chuck that'sleaner than the beef used by many other fast-food chains andputting it on a buttered, toasted bun, Culver's made one of thebest burgers I've ever had. The girls were ecstatic as theyslurped away at the custard flavor of the day, made fresh at thestore. The fries were tasty and the servers delivered our meal toour table. I didn't think it possible, but Culver's hasredefined quality in fast food.
The Culver's revolution was started in 1984. Father-son teamGeorge and Craig Culver had been driving to Milwaukee for years tosatisfy their frozen custard cravings; so when an opportunityarose, they opened their own custard restaurant in Sauk City,Wisconsin. In 1987, they added a second store and beganfranchising. Now the map on Culver's place mat is covered withlocations, with 70 franchises as of December 1998; and the companypredicts 100 stores will be open by 2000. Missouri and Nebraska,and perhaps Texas, look like the next frontiers for growth.
Delivering great food at good prices is not without itssacrifices. According to Item 7 in the company's UniformFranchise Offering Circular, franchisees should be prepared tospend anywhere from $923,080 to $1,915,700 to open a facility,depending on land costs and which of the three building styles youchoose (ranging from 3,200 to 3,800 square feet).
During the first three months of operation, you'll probablyneed an additional $200,000 to $350,000 to keep the doors open,which takes into consideration your monthly 4 percent service feeand 2 percent advertising fee. These estimates don't includeany of your financing expenses or your salary. Franchisees areexpected to spend 16 weeks in training at Culver's corporateheadquarters and one of the company's three corporaterestaurant locations, and it's my uneducated guess thatyou'll gain at least 10 pounds during that time.
Average 1998 sales for all existing locations were $1,250,902;unfortunately, the company did not disclose operating expenses.Because of the quality of the food, though, food and paper costsare estimated at 34.8 percent of sales.
Culver's is masterful in the public relations field. Theimage of the operation is that of wholesome American dairyfreshness. It may be advisable to purchase a franchise in an areaadjacent to where other Culver's locations already exist so youcan take advantage of name recognition and goodwill.
For more information, contact Tom Wakefield with CulverFranchising System Inc. at (608) 356-5938 or visit thecompany's Web site at http://www.culvers.com
Todd Maddocks is a franchise attorney and small-businessconsultant. You can reach him at TMaddocks@aol.com
