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The current economic downturn has given Rick Ivey's business a boost.
The former executive chef who founded Virginia Barbeque says his franchises are being snapped up because they're small and relatively inexpensive to start.
And it doesn't hurt that developers such as W.J. Vakos Companies are willing to help shoulder build-out costs so they can fill their shopping centers.
"Our restaurants are 1,200- to 1,500-square-feet," Ivey said from his office in the Beaverdam area of Spotsylvania County. "That's a nice strip-center location, and they're available everywhere."
Ivey opened his first Virginia Barbeque in 2000 and now has nine of the fast-casual franchises across the state and one in Delaware. Two more planned for Arizona and Maryland, and one will open soon in Isle of Wight County.
AREA HAS TWO FRANCHISERS
His restaurant company is one of two with Fredericksburg-area ties that have franchised their businesses. The other is Vinny's Italian Grill Corp., which is owned by the Vitale family. The family opened its first Vinny's Italian Grill & Pizzeria in Leavells Square in Spotsylvania County in 1998.
Vinny's Italian Grill Corp., now based in Lexington, has five of its family-friendly, sit-down restaurants in the Fredericksburg area and 10 others around the state.
"We have seen a difference in the business [due to the economy]," said Vice President Vince Vitale, "but we're still meeting our numbers. People still have to eat. We've managed to maintain our customer base. Our reputation also helps us."
Despite the increasing cost of food and gas, the restaurant industry in Virginia is expected to show a 4.8 percent increase in sales growth this year, according to the National Restaurant Association's 2008 Restaurant Industry Forecast. That's nearly a half percent higher than the projected industry average increase of 4.4 percent.
"While 2008 will bring some economic challenges, consumers remain hungry for the variety, convenience and socialization restaurants provide," according to a prepared statement from the association.
REINING IN COSTS
Ivey, who was named the Fredericksburg Regional Chamber of Commerce's Entrepreneur of the Year in 2006, has come up with a number of ways to keep his franchisees' expenses down.
These include using a federally inspected smokehouse in Siler City, N.C., to prepare all of Virginia Barbeques' meats and ship them to the restaurants. That not only ensures that the chain's pork, beef and chicken barbecue is cooked according to Ivey's specifications, but eliminates the need for each restaurant to have its own expensive smoker.
"We've found that we've really trimmed down what's inside the restaurant kitchens," he said. "We have a convection oven to heat up the product, and the autofry, our most expensive appliance at $9,000, eliminates the need for [an exhaust] system. It's a state-of-the-art fryer."
He also uses the Virginia Barbeque in Ladysmith as a training center for new franchise owners and their employees. That may shift to Southpoint II unless he can find a franchisee to take the space Vakos Companies is offering him there.
"If we don't find a franchisee, we will open a Virginia Barbeque there ourselves in about six months," he said. "We would still use Vince Miller, the Ladysmith franchisee, as the corporate trainer."
SHARING THE PROFITS
Ivey sells Virginia Barbeque franchises for $20,000 and tells franchisees it will cost from $36,000 to $202,000 to open a location.
Virginia Barbeque normally takes 6 percent of each location's royalties. But that percentage is cut in half for "area developers," who buy several franchises for an area, run a few and sell the rest.
"That way we don't have to hire an employee to be district manager," he said. "That's the area manager's job."
Many of the ideas for running Virginia Barbeque have come from talking to other entrepreneurs in the International Franchise Association, Ivey said. They've also helped him expand an early goal of opening about 50 locations to his latest of having 5,000.
"Our headquarters is in the barn that was our first commercial kitchen," he said. "The goal is to turn it into our corporate office. We want to stay right where it all started."
CHANGING WITH TRENDS
Unlike Ivey, the Vitale family aren't newcomers to running restaurants.
They've been in the business for more than 40 years, starting with a chain of Sal's Pizzas that ran from New Jersey down to Georgia. Then they noticed restaurant trends were starting to change.
"People wanted more economical ways of going out for dinner," Vitale said. "They wanted a family atmosphere and a reasonable price."
The Vitales, whose roots are in Palermo, Italy, experimented with family recipes and came up with Vinny's, which is named after Vitale's grandfather. They opened the first one in Spotsylvania because it was such a fast-growing county.
"Once we found success with the first restaurant, we decided to expand," Vitale said. "Once we'd opened six stores, we decided to franchise."
They hired a franchise lawyer to do the necessary paperwork and drew up a list of approved distributors for the foods franchisees would need.
"We use a lot of imported products that are delicate," Vitale said. "We prepare most of our stuff from scratch."
Running the chain has had its challenges, he said. That's included having to come up with special dishes to cater to diabetics and people on low-carb diets. One such dish, chicken rusticana, is still on Vinny's menu.
"It comes with vegetables instead of pasta, and the chicken is grilled instead of fried," Vitale said.
Vinny's Italian Grill Corp. sells its franchises for $25,000, and offers an equipment package with everything down to the salt shakers for $150,000 to $200,000. Training is done on site.
The company plans to maintain its business during the recession, then expand once the economy picks up.
"Our goal is to move further into Northern Virginia by the end of the year," Vitale said.
Cathy Jett: 540/374-5407
Email: cjett@freelancestar.com
