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Checkers jumps in new direction

The Tampa chain looks at a new prototype, minus the dual drive-throughs, as it aims for big growth.

By SCOTT BARANCIK, Times Staff Writer
Published October 18, 2007

The Checkers at 100 34th St. S in St. Petersburg is the company's traditional look, but future stores could have a new look.
	[Atoyia Deans | Times]

ADVERTISEMENT BEFORE: Hot 'n Now was a Midwestern fast-food chain that at its peak had more than 150 locations nationwide, reaching as far as Florida. It filed for Chapter 11 bankruptcy in 2004. AFTER: Partly because of real estate costs, Checkers is allowing some franchisees to convert other brands' buildings, even if it means one drive-through instead of two. BEFORE: This Krystal restaurant was bought out of foreclosure and reopened as a Rally's. AFTER: Checkers and Rally's restaurants typically do not have indoor seating.

Checkers Drive-In Restaurants is slaughtering some sacred cows in preparation for what may be its biggest growth spurt ever.

Long known for its prefab, cookie-cutter buildings and signature dual drive-through lanes, the 824-store Tampa chain is exploring a host of construction alternatives designed to attract new franchisees and enter previously impenetrable markets:

• Eva Rigney, a new franchisee in central Kentucky, purchased four Krystal burger restaurants out of foreclosure this year and already has reopened three of them as Rally's, Checkers' other burger brand. Total savings: more than $1.5-million. Other recently converted Checkers properties include a former Hot 'n Now restaurant in Pontiac, Mich., and a coffee shop in central Georgia.
• An Orlando architecture firm is designing a prototype Checkers restaurant that would sit at the end of a strip mall, with indoor seating and a single drive-through lane. The traditional Checkers or Rally's, built on a half-acre lot, is a modular building of less than 1,000 square feet that has two drive-through lanes but no indoor seating.
• The same Orlando firm is drafting a walk-in-only model for high-density urban areas. It would reside on the first floor of mid-rise and high-rise buildings.

"What's driving that decision is just the cost of real estate today in some parts of the country," director of franchise development Don Miller says. "You have to be adaptable."

That's especially true when shifting into high-gear growth mode like Checkers. Though the company and its franchisees added only a couple dozen stores over the past two years, Miller says he hopes to open 80 in 2008, more than 100 in 2009, and perhaps 6,000 by the time he's done.

That Checkers is even contemplating such breakneck expansion is surprising. When the company's management took it private last year with the help of New York-based Wellspring Capital Management, then-CEO Keith Sirois explained that its slow-but-sure growth model was incompatible with Wall Street's recklessly aggressive expectations.

Within seven months, however, Sirois was out, and Miller, a recently arrived Dunkin' Donuts veteran, was helping Checkers prepare for rapid expansion. "Keith was smart to stop, fix what was broken, get the economics worked out, and then bring in somebody like myself," says Miller, 60.

Rigney, the Kentucky franchisee, says she rejected several alternative franchises, from Dunkin' Donuts to Huddle House, before settling on Rally's. Founded in Louisville and acquired by Checkers in 1999, it had a loyal local following. And company officials were open to the conversion idea: slap on a neon sign, checkerboard motif and some stainless-steel piping and, roughly $60,000 later, a new Rally's would be born. Today, Rigney says she's pleased to be earning a 25 percent profit.

Checkers' newfound real estate flexibility is hardly revolutionary, Miller acknowledges. Fast-food competitors like McDonald's and Burger King have operated that way for years. But given the significance Checkers has attached to the double drive-through concept -- it even sponsors speed contests between NASCAR pit crews -- it simply took the 21-year-old company a few extra laps to come around.

"If we're going to grow and expand," Miller says, "it's got to be about the food."

Scott Barancik can be reached at barancik@sptimes.com or (727) 893-8751.

[Last modified October 18, 2007, 01:30:39]