Drive-Thru Chain Shrinks To Grow

By Dave Winzelberg |  Jul 09, 2012

Checkers jumps smaller space obstacles to expand its locations.

The double drive-thru is a characteristic feature of Checkers restaurants nationwide of the last 25 years. The problem, however, is the 25,000 square feet needed to build the driveways was not always easy to find in more crowded areas, keeping the hamburger chain from getting some prime locations.

So for the Tampa, Fla.-based Checkers, necessity became the mother of invention. To increase market share, the company decreased the size of its stores, developing two new store formats and a modified version of its traditional double drive-thru to grease its expansion into denser suburban and metropolitan markets.

The shrink-to-fit business strategy is paying off. Checkers recently introduced new inline and end-cap restaurant models that can fit into spaces as small as 1,200 square feet. The new models also cost a lot less to build, making it more attractive for franchise expansion.

The numbers prove it out. The new 2,000-square-foot space designed to fit the end-cap space in a shopping center has a single drive-thru. The build-out costs for that model runs between $400,000 and $450,000 - about half of the $850,000 average build-out of the double drive-thru. A better bargain is the inline store. That build-out can cost as little as $300,000.

The lower cost will also help the corporation's bottom line. Checker's CEO Rick Silva said about 300 of Checkers' 800 restaurants are corporate-owned and that the smaller restaurants will help the company save money when it builds its own stores.

The privately owned Checkers doesn't reveal sales numbers, but Silva said that the company saw year-over-year growth during the past three years. He said Checkers finished second only to McDonald's in comparable same-store sales in 2011.

Meanwhile, since metropolitan areas are the company's target markets for growth, Checkers' new store models show that even in fast food, sometimes less is more.

DAVE WINZELBERG - David Winzelberg is an award-winning reporter who spent 20 years writing for the New York Times. He currently writes for Long Island Business News.

This article originally appeared on The Atlantic Online as part of the Investing In A Better Tomorrow program.

Content may be produced by outside parties not affiliated with Bank of America. Opinions or ideas expressed are not necessarily those of Bank of America, Merrill Lynch Wealth Management, U.S. Trust or Bank of America Merrill Lynch, nor do they reflect their views or endorsement. These materials are for informational purposes only. Bank of America, Merrill Lynch Wealth Management, U.S. Trust and Bank of America Merrill Lynch do not assume liability for any loss or damage resulting from anyone's reliance on the information provided.


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