Tupelo Honey Looks Small, but Thinks Big

The Southern-flavored chain has fewer than 25 locations, but it's already planted a flag in about a dozen states. This year, revenue will exceed $100 million.

February 27, 2023 Ben Coley

Tupelo Honey has roughly 20 restaurants, but it's already a national brand.

Those locations are in about a dozen states, from Idaho and Colorado to Ohio and Pennsylvania. North Carolina—where the chain was founded—holds the most at four restaurants. How does a small chain cover such a large geographic footprint? CEO Stephen Frabitore attributes it to experience. He spent decades in corporate America before becoming an entrepreneur in 2000 and entering the restaurant business in 2008. He's surrounded himself with a senior leadership team that operates like the "little engine that could."

Tupelo, which serves elevated Southern classics, never wanted to be pigeonholed as a regional concept. Instead, the chain wants to demonstrate its brand, training, tools, and technology across the country.

"I think we bring a unique brand of Southern hospitality and food to the marketplace, and particularly, we get some of these markets like say a Grand Rapids. We're a unicorn there," Frabitore says. "There's nobody really doing what we do, and people get very excited that we're there. Our job of course is to hold up the highest standards possible and deliver on that guest experience because that's everything."

The mindset has worked well for the brand, even during COVID. Similar to the rest of the industry, Tupelo navigated labor, supply chain, and inflationary disruptions, but it still managed to deliver a record year of "controlled and intentional growth," Frabitore says. In 2022, revenue increased 27 percent and guest count lifted 17 percent. And the metric Frabitore is most proud of—systemwide AUV is now over $4 million.

In 2024, Tupelo will cross $100 million in revenue, and that's after starting with one store in Asheville earning $1.4 million annually.

“We're right there with Chili’s and Olive Garden and everybody else, even though we're not a big chain," Frabitore says.

" ... That tells you that when we do our jobs right, the guest responds to us in a meaningful way and is driving metrics," he adds. "I've been in this industry for 15 years now and I know the metrics of publicly traded companies well, and I would say that we've got some of the strongest metrics out there. I mean our store operating profit is over 20 percent as a chain. That’s significant."

A large part of those sales can be traced to consistent staffing. Fifty percent of Tupelo's general managers and 75 percent of its managers have been with the brand for more than six years. More than 60 percent of management positions are filled from within the company. For hourly workers, minimum wage starts at $15 for non-tipped employees. In terms of recognition, there's a tenure award program that crosses every level of employment, including part-time team members. Also, in the fall of 2020, Tupelo formed Project Aspire, a diversity and inclusion program designed to lift BIPOC and female members of the management team. These employees participate in panel discussions and receive 30-plus hours of additional management training in a year.

"I think we've always been very, very focused in this area, and we usually have a great HR team, great operational people," Frabitore says. "We're usually ahead of the game. We track turn viciously. So we're well aware. And I think there was a little bump in the beginning of 2022 where we could see erosion, and we came out of it pretty strong. While the company is always hiring—I think every restaurant company is always hiring at some level—we're in pretty good shape and we're staffed."

Tupelo Honey

As for customers, Frabitore says Tupelo is for anyone from 4 to 94 years old—whether it's dietary restrictions or simply splurging. Its strongest appeal is with 25- to 45-year-olds that are food-forward and enjoy trying new things. That consumer is also 60 percent female and more highly educated. In February, the chain launched a program for its "raving regulars." The brand empowered stores with budgetary money, tools, and marketing programs that will recognize and reward the best customers. That includes secret menu items, participation in focus groups, and tasting new products.

Frabitore says younger generations have particularly taken to its Generation Four prototype, which launched in late 2018 in Denver, Colorado. He describes the slightly smaller 5,500-5,900-square-foot store as comfortable and full of light with a meaningful bar program. Older restaurants, which are required to be refreshed every seven or eight years, have been remodeled with the package and have seen sales jump 20-30 percent. Off-premises isn't too much of a factor, contributing only 6-7 percent of sales. Frabitore says building an experience and one-one-relationship with a customer is difficult "through a styrofoam box."

In 2023, Tupelo will open in Las Colinas, Texas; Indianapolis; and Omaha, Nebraska. Starting next year, the brand will open six locations annually. Other future locations include Rogers, Arkansas; Columbia, South Carolina; Farragut, Tennessee; Kansas City; and a couple of stores in Kentucky.

"We've been very focused on refining our brand, refining the cost of a new store, getting the elements of an upscale-casual store that we want," Frabitore says. "And we really hit the nail on the head with our new stores."

The growth strategy starts with "plowing every dime the company has ever made" back into infrastructure, Frabitore says. Tupelo hasn't taken a dividend or any other money off the table in 15 years. Regions are broken into six-store areas and supported by a senior regional director and culinary director. Those are run by a vice president of operations.

All of it is company-operated with no licensing agreements or franchisees. Don't expect that setup to change in the foreseeable future.

"We really want to control the guest experience," Frabitore says. "We want to train and impact our people. We want to hire to our standards. And with the results that we've been enjoying and everything we've done, it's not like we've accomplished this out of the blue in a year or two. It's been a lot of work for 15 straight years. So I don't think we need to franchise. We're not exploring it. We don't have any interest. We're not doing airports, that kind of stuff. We're not doing any of that. We're focused on our Generation Four stores, our remodels, and what we do."