Perkins is Ready to Grow, Fresh From Pandemic and Bankruptcy
Michael Abt, CEO at Huddle House, said that Perkins’ brand was not “fundamentally broken”. Huddle House bought Perkins from bankruptcy in September 2019. He explained that the business’ core was strong, although under-managed, over-leveraged, and lacking an effective growth plan.
Bankruptcy removed the leverage, and, to quote Peter Ortiz, Chief Development Officer, it was difficult not to think of a better growth strategy. He stated that “when I arrived, there wasn’t one selling franchises.” The application form and the brochure were all that was needed.
Ortiz has begun rebuilding Perkins’ franchise sales department as part of his push to grow Perkins. He said it would be complete by the end of July with all advertising channels for lead generation, swag, and a discovery program.
Although the ultimate goal is to expand the Perkins brand throughout the United States, Abt, who also serves as CEO of Perkins, said that the company’s initial focus is on markets with high-reputation brands like Minnesota and Florida.
The company’s triple strategy includes expanding existing franchisees, adding franchisees, and cross-selling between Perkins and Huddle House. Ortiz stated that a Huddle House operator contacted him recently to inquire about Perkins being brought to two markets in Tennessee or Florida.
Modernization initiatives also included expanding the bakery, investing in a food-development program, and adding a digital marketing strategy. Abt stated that Perkins’ advertising was limited to television and radio.
Although the purchase was completed in October 2019, executives pointed out that it took time to control a 300-unit operation. Abt stated that they were only just finishing the acquisition in March 2020 when COVID-19 arrived in the U.S.
Perkins was purchased by Huddle House to help grow the brand. However, the pandemic forced Perkins to stop all plans. They used the time to pay off the capital costs that the previous owner had delayed and integrate Perkins’ IT with Huddle House.
Also, they launched a new point of sale system. They brought the brand to Olo to make it easier for operators to place orders online and deliver third-party goods.
Perkins has introduced a new, delivery-oriented store design after the pandemic. Although it has not added drive-thrus to the recent locations, they will have pickup windows, waiting for takeout orders, and designated parking spaces for delivery drivers.
Both Ortiz and Abt declined to share their growth forecasts, but they were both optimistic. Ortiz stated that people call his calls, although it is difficult to reach people in my business. However, he said, “People are returning my calls.”
Ortiz said, “We have long-standing franchisees within the system that are willing to grow with us.” Ortiz is currently working with some of the largest franchisees in the brand to identify expansion opportunities. They together represent 75 of the 218 Perkins franchised units. Perkins corporate operates 85 stores. Abt indicated that the company might also be interested in franchising.
Perkins will explore both conversions and ground-up development and other non-traditional locations such as military bases, universities, and hospitals. Abt states that hotels are the only non-traditional location in the Perkins system.
Abt stated that the average unit volume is “approaching 2 million.” He also said that the company plans to issue an updated franchise disclosure. Franchise Times’ October 2020 analysis of its FDD showed that Perkins’ average unit volume was $1,500,540 from May 1, 2019, through April 28, 2020.
Ortiz, who joined Perkins and Huddle House as vice president of franchise development at Qdoba in March 2021, was previously employed for six years at Focus Brands. Ortiz replied that he would “look at his resume” when asked about the upcoming store openings. Perkins was my previous employer. I’m doing what I did before at Perkins.
Although they share a headquarters, Perkins & Huddle House are still separate businesses. Perkins Restaurants and Bakeries cost $1,520,400 to open. Franchise fees of $70,000 to $90,000.
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