Flexible Franchising: How Fat Tuesday Plans to Grow in a New Era

Fat Tuesday in Key West, Florida. Image: Joe Benning / Shutterstock

At the age of almost 40, when many of us feel time creeping up on us and ourselves starting to slow down, Fat Tuesday is ramping up, planning to grow across the U.S.

To do this, the Mandeville, La.-based chain is launching a new traditional franchise offering.

Fat Tuesday is a bar concept made famous by its frozen drinks. It first opened its doors in 1983 and grew heavily in tourist and vacation destinations in the early days, and has since established 29 units throughout the U.S., Mexico and the Bahamas, in cities such as Miami, Philadelphia, Las Vegas, Cozumel, Playa Del Carmen and Nassau.

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Now, it plans to grow to by ten to 15 locations a year in the contiguous 48 states, with a particular focus on college towns (Knoxville, Tenn., is coming online before the end of the year), entertainment towns, and coastal locations. In fact, says director of global franchise development, Danny Cattan, “location is really key for Fat Tuesday. You are looking for high traffic, high visibility areas where people gather for dining.”

The most appealing part of the new franchise option is the cost, says chief development officer, James Vitrano. Fat Tuesday is known as a bar, but sometimes includes a restaurant. For franchisees looking for a low initial investment, the bar-only option starts at $479,000.

What makes this less expensive is mostly there’s no investment in kitchen equipment. The biggest investment is the frozen drink machine, which costs almost $70,000 to almost $90,000. “Other than that, franchisees need to buy some coolers and other minor investments, so they spend around $80,000 to $120,000 on equipment, so it’s a low investment,” Cattan points out.

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Plus, says, Vitrano, the average gross sales for a Fat Tuesday franchise are $1.8 million with an average gross margin of $1.5 million, and average profit after operating expenses is $1 million, with average total labor expense coming in at 16.1 percent.

The flexibility of Fat Tuesday locations is also likely to be appealing. There are units that range in size from 680 square feet to more than 5,000. “Each is unique, and we’re very versatile,” Cattan says.

This isn’t the first time Fat Tuesday has tried its hand at franchising. In the late ‘90s, it experimented, “but we did it all over the place and expanded internationally, but we grew too fast that we stepped back,” says Vitrano. “Now, we’re looking at how we can diversify into a brand experience.”

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The first foray into franchising was also not exactly that, he says, but rather more of a licensing agreement, whereby an operator could sell Fat Tuesday’s name and drinks. The new franchise offering, Cattan says, “is a much more robust program and has guidelines for each store—how it should look, social media guidelines, and an operations manual. This really gives people a full brand to rely upon.”

The Fat Tuesday executive team is open to considering any franchisee who’s passionate. “It’s kind of nice to find a franchisee that can open multiple locations and it’s easier for our operations people, too, but we don’t limit it to that. We don’t usually turn people away, especially if there’s a location in a preferred market,” says Cattan.

“The flexible franchising model is the way companies should go to support the entrepreneurial spirit of folks who are brave enough to open their own business,” says Vitrano. “We want people who want to have a good time, work with a unique brand, and work with people. That’s part of our flexible franchising approach. If it works for them, we’ll find a way for it to work for us.”

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Fat Tuesday is actively looking for franchisees, particularly for specific areas the company would like to expand to, but is very open to offers. “And that’s where our success is—when people have a great experience in one of our locations and then say they’d like to do this,” Vitrano points out.

Another reason Fat Tuesday might be attractive to franchisees is that it’s a forward-thinking company when it comes to technology. It uses proprietary software, “which allows us to be more effective franchisors, meaning we don’t have to necessarily do in-store audits, but can share information via the computer and discuss inventory, or variance issues, or anything that needs to be identified, and we can help franchisees do that very quickly,” says Cattan. “It’s very easy to work in and the system mostly does it for you.”

Resources

Fat Tuesday website

Fat Tuesday Facebook

Fat Tuesday Twitter

Fat Tuesday Instagram

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