Growth Chains: Dickey’s Barbecue Pit

Family-owned Texas-based concept takes barbecue national


fast-casual barbecue


more than $200 million 
(projected 2012)


LEADERSHIP: Roland Dickey Sr., chairman; Roland Dickey Jr., chief executive


COMPETITION: fast-casual restaurants

48 contiguous U.S. states


Until recently, barbecue chains have faced the stiff headwinds of regional preferences in their efforts to expand into a nationwide brand. But Dickey’s Barbecue Pit is one concept with growth that is smoking.

Dickey’s is no spring chicken. It was founded in 1941 in Dallas, although the concept didn’t start franchising until 1995. Since then, growth had been steady — until it exploded over the past couple of years.

In 2011 alone, Dickey’s added 66 stores and ended the year with 203 units. As of mid-March, Dickey’s had 218 units in 42 states, and the company expects to pass 300 units by the end of this year.

“Barbecue makes some people nervous,” said Roland Dickey Jr., chief executive of the family-owned chain. “They think they don’t understand barbecue. There’s a fear of barbecue, so we don’t have a lot of competition. We’re in a nice window where astute franchisees are coming to us and looking for a good option.”

The company expects to have an estimated $200 million in annual systemwide sales by the end of the year, all based on an average check of $9.75 for a wide variety of barbecued meats.

“We’ve had some requests to go international, but we’re not interested in that, yet,” the 38-year-old Dickey Jr. said.

The business plan emphasizes simplicity, he added. The menu offers eight meats, 10 vegetables, three kinds of bread, two desserts and free ice cream. 

“That’s our whole menu,” Dickey Jr. said. “We don’t want to be all things to all people. Just figure out what you want to go with, and be a master of that craft.”

Dickey’s was established in 1941 by the father of Roland Dickey Sr., who launched the family business as a Dallas bar that had the amenity of a brick barbecue pit in the back.

“Eventually, the food sales overtook the beer,” Dickey Sr. said. “Back then, it was a sandwich business. Now, sandwiches represent a smaller portion of our sales, and it’s more plates, or dinners with meat and two vegetables. People just don’t want the bread.”

About a third of the units now serve beer, Dickey Jr. said, with the option offered where it makes economic sense.

The father-and-son team, talking amid the twang of country tunes that fills the restaurant, said they seemed to have hit on a formula that overcomes some of the regional taste hurdles of the past.

“We were warned that we would come into some regional challenges because of the different styles of barbecue out there,” Dickey Jr. said. “One example is North Carolina, where we’ve got eight stores, and we’ll open eight to 10 stores this year. They have more vinegar-based sauces, with barbecued pork. 

“Texas is two-to-one beef to pork. In North Carolina it’s two-to-one pulled pork over beef brisket. The product mix changes, but our core menu doesn’t change,” he said. “In fact, right now, pork prices are a lot better than beef prices, so it works to the margin side even better.” 

The sauce is sweetened to appeal to tastes in the South and Midwest.

Dickey Sr. said the dining population is more traveled than in the past, and that has helped Texas-style barbecue gain a toehold nationally.

“Brisket is really breaking out,” Dickey Sr. said. “Historically, it hasn’t been as well-known outside of Texas. It’s carnivore gold, here. But other parts of the country are catching on to it.”

He added that barbecue seems to “have a universality to it: It’s meat slow-cooked over hard wood.”

Dickey’s sauce is based on tomato paste, rather than the 
vinegar-mustard style of the Carolinas and Deep South, Dickey Sr. said. 

“We offered the mustard and vinegar sauces, but the tomato-based [sauce] drove it out of the stores.”

The Dickeys also said the self-service, counter-order concept fits well with barbecue. 

“We had a full-service restaurant in Albuquerque, [N.M.], for 10 years. We did it as an experiment,” Dickey Sr. said. “We never lost money, but we never got the return for our efforts.”

Typical Dickey’s Barbecue Pit spaces cover 1,800 square feet to 2,200 square feet in strip malls, with 60 to 80 seats. Demographics call for 30,000 residents in the trade area and $60,000 average annual household income, with substantial auto traffic.

Dickey’s works to keep unit occupancy costs at less than about $5,000 a month. Build-out costs range from $60,000 to $400,000, Dickey Jr. said, but they “typically fall in the range under $200,000.”

The company looks to recruit active investor-owners. 

“We want them hands-on,
every day,” he said.

Franchisee fees are $15,000 per unit, and renewals are $10,000, the company said, with royalties at 5 percent of sales and marketing fees at 4 percent.

The daypart sales mix is 60 percent lunch and 40 percent dinner, with catering and to-go making up about 18 percent of sales and growing, Dickey Jr. said. 

The model is attractive to franchisees, the Dickeys said, because stores generally close at 9 p.m.

The company has a dedicated, centralized catering ordering line. 

“Family-pack sales between 5 p.m. and 7 p.m. are big for us,” Dickey Jr. added.

“Barbecue seems to appeal naturally to men, but we spend more of our marketing dollars on promoting chicken and turkey and things like that. Women and children really make the dinner decisions,” he said. 

Dickey Sr. said that when he started in the business, it was about 18 percent female customers, but that number now hovers around 42 percent.

The company has 76 individual franchisees, and it has set up what it calls its three-week “Barbecue U” at its Dallas headquarters for new franchisees. Dickey’s also has been talking with community colleges about creating an accredited culinary education program for barbecue.

The father and son said they think barbecue is well-positioned, especially among the growing number of so-called better-burger franchise concepts. 

“We look at the proliferation of franchises in the better-burger segment, and we see the competition getting so fierce,” said Dickey Jr.

“It’s exciting taking fast-casual barbecue coast to coast,” he added. “It’s hard to find something that hasn’t been done before in this day and age, so it’s pretty darned cool. You have to be passionate about it, and barbecue people are passionate.”

Contact Ron Ruggless at [email protected] [4].
Follow him on Twitter: @RonRuggless [5].