Prospective franchisees have taken notice of the program’s success.
“I feel like there's nothing like this in the industry at this level, and people are very excited about it,” Goldman says. “And the fact that we're going to expand it so we can have more people be members and get the benefits and all those different things, it's pretty exciting. But we've had some Royalty members just anecdotally who I know who say, ‘We should open one of these here or there.’ But to be fair, they haven't gone through the full process, but the ones that have gone through the process, the handful, they all talk to us about Royalty, because they just think it's a neat program. They want to understand the benefits, they want to understand the margins and all of those things.”
The brand has 12 units across Montana, Wyoming, Idaho, Utah, and Colorado. Future target markets include North and South Dakota, Nebraska, Colorado, Arizona, and Utah. Goldman says a couple of operators have asked about DMAs closer to the East, but Rib & Chop House already turned them down because it knows it doesn’t have the ability to properly service geographies that far away—at least not right now. The CEO says the steakhouse wants to be thoughtful about growth as opposed to “take a check and say, ‘Yeah, we’ll open anywhere.’”
Rib & Chop House’s goal is to sign deals for five to 10 restaurants in 2023. Next year will be dedicated to garnering interest, converting that into commitments, and going through training and real estate. Then starting in 2024, the brand hopes to open roughly three to five stores and each year afterward. Goldman and his team arrived at that number knowing that pace of opening can vary—someone may have a site that can open in three to four months while another project may take two years depending on land development and construction. After the slow ramp up, Goldman envisions a future where Rib & Chop House can open more than 25 units per year.
In five years, the CEO says there will likely be a 50/50 split between corporate and franchise stores, with about one to two company-owned locations opening per year. If franchising goes the way Rib & Chop House thinks it will, then that footprint will become the larger of the two over time. As far as how corporately run stores will look, Goldman says the brand is putting its money where its mouth is. Its most recent opening was only 5,400 square feet. Next year, the company is opening two stores—one is 5,400 square feet and the other is 6,000.
“We were able to prove it out where it's profitable,” Goldman says. “We can still do great sales, and we're just running better numbers because we have found efficiencies that we didn’t have before. When we had these requirements of 7,000 square feet, it does limit where you can go and what markets you can go to and then also the numbers you have to do versus what you need to do with 5,000, 6,000 square feet. It really does change because the build-out complexity and investment changes and then operational cost changes.”
Rib & Chop House is looking for operators with casual to fine-dining experience and the financial wherewithal. The chain will begin with agreements calling for one to two locations because of the operational complexity that comes with running a steakhouse; it’s why Goldman prefers not to go for quick-service and fast casual backgrounds. Eventually, Rib & Chop House will get more systems in place to help with scaling, but for right now, it needs franchisees to act more as owner-operators. But that’s not to say they’re on their own. Rib & Chop House is already working on pairing some potential groups with district operators and general managers.
“We want to be the growth engine for these franchises,” Goldman says.