reason not to bank with us,” says Young. “We’re limited in the amount of loans we can make, in the number of locations and the number of ATMs. All of that only feeds into the notion that minority banks are somehow less than the major banks. This merger represents an opportunity for us to go beyond that.”
HD: Tasty Deal For Fast Foodpreneurs
DK: New management team lands 100 Churchs restaurants
BY: Paula M. White
TX: In what’s being touted as the largest single acquisition of restaurants in the fast food industry, the Atlanta Franchise Development Co. (AFDC), an African American management team, recently acquired 100 Churchs Chicken restaurants across the country in a deal valued at $32 million. It’s the largest single franchise transaction in Churchs’ 45-year history.
Following 18 months of deliberations, the six-member team, which holds a majority interest in AFDC, walked away with 29 restaurants in Chicago, 21 in St. Louis, 19 spread across Detroit and Flint, Michigan, 12 in Indianapolis, four in Richmond, Virginia, and 15 in various markets in Ohio. Last year’s combined sales for these locations were $54 million. AFDC President and CEO Dwayne Heard projects sales will reach $60 million in 1997. The purchase was financed by Greenwich, Connecticut- based Franchise Mortgage Acceptance Corp., a subsidiary of Imperial Credit Industries Inc. focusing on franchises.
“We chose Churchs Chicken because of its brand strength and commitment to reinvest in American cities,” says Heard. “As we move forward, we’ll be implementing many programs, from reimaging restaurants and building in empowerment zones to providing employee ownership opportunities.”
Heard was formerly an operating partner with Host Marriott/Taco Joy Inc. where, in a joint venture deal, he managed 32 food and beverage units on four concourses at Hartsfield International Airport in Atlanta. From 1985-93, Heard was a partner at H&H Management Consultants, where he worked with franchise chains including McDonald’s, Burger King and Checkers. H&H Management covered various facets of restaurant and retail franchising, including site selection, construction, training and daily operations. Under Heard’s direction, Checkers opened 11 restaurants in Atlanta and three in Philadelphia in two years.
That experience will be vital as Churchs seeks to attract new customers, an effort that will be buoyed by $8 million earmarked by AFDC to fund extensive image enhancing programs and upgrade the physical appearance of many stores. Technology upgrades will include new point-of-sale cash registers. Also, as part of the deal, AFDC will build an additional 105 stores in the same markets over the next seven years.
According to the 1996 Market Trend Year-End Report, Churchs Chicken held about 6.3% of the chicken fast food market in 1996, compared with 46.3% for the market’s major player, Kentucky Fried Chicken. Other players are Boston Market (16%) and Popeye’s (8.5%). In terms of growth in number of U.S. units, Churchs is actually outpacing KFC. Churchs expanded its outlets by 2.5% last year’ while KFC reduced its locales by 1.4%.
Kara O’Brien, an analyst with the International Franchising Association in Washington, D.C., notes that rapid expansion may be