In the wake of a management-led buyout of Chandler, Ariz.-based Native Grill & Wings, CEO Dan Chaon has set a strategy of balancing corporate-owned unit growth with franchising.
In late September, Chaon partnered with Arizona businessman Brad Williams, who has developed a dozen Freddy’s Frozen Custards and Steakburgers franchise units, and other investors to create Wingtime LLC. The three sisters in the original founding family retain a 10-percent stake in the investment deal.
Founded in 1979 in Tempe, Ariz., the company has grown to 31 casual-dining units in Arizona, Colorado and Texas. Positioned as a family-oriented “polished sports grill,” Native offers more than 20 flavors of wings — that can be ordered individually — as well as burgers, sandwiches and salads.
Restaurants are divided into a bar and dining area, with between 30 and 40 flat screen TVs throughout, offering sports coverage for families and fans.
Chaon, who joined Native in September 2010, talked with Nation’s Restaurant News about the buyout and expansion.
What was attractive about going with private investment rather than private equity or other financing?
The deal was a hybrid between a management buyout on my side and debt financing. I didn’t think I had to go out and look for a private-equity firm. I had the relationship with Brad, because he and I had met through a developer that we used on a site on Arizona. … He was looking to franchise another brand. We hit it off and had shared interests. He was one of three groups interested before we had to go out to the private banking sector. … We did some debt financing and also financing from a small group of people that Brad knew. We put together this small boutique group, and here we are today. We were able to acquire 90 percent of the brand. Ten percent is still held by what we call the legacy ownership, which includes the founding family’s three sisters.
What’s the goal now?
I want to build out the corporate-store structure. I’m a big believer in that. For every 10 franchised stores we open, we’d like to open one corporate store. … This deal will primarily help us expand on the corporate side. It allows it for the first time to have the ability and access to capital to pick up some nice real estate and helps provide a model where we could potentially buy the real estate and build the stores. And most importantly, it gives us the access to capital to go in and seed potential markets, for instance: Colorado, Nebraska, New Mexico. We could build corporate stores and get a foothold. For expansion, that’s where we want our model to be.
What’s currently in your pipeline for new units?
Under construction right now is our first store in South Dakota. That opens on Nov. 24. We have a fourth one in Tucson, Ariz., opening in mid-December. And our first one in Missoula, Mont., will open in the second week of January. We also have plans for a second one in Texas in first quarter 2016 along with our first one in the Boston area and one in Yuma, Ariz.
What are your Boston plans?
We’ve got a regional area development agreement up in the New England states. It was a little bit of a stretch, but the founding family originated on the East Coast and we wanted to have an East Coast presence. We’ve also developed a smaller hybrid express of our full-service restaurant because we know as we go into those higher density urban areas, we will have to adjust our footprint. This group with the rights in Boston clearly understands that. But we think we have the right partner to build that.
Plenty of space in wing segment
How big are the typical stores compared to this new express unit?
Our prototypical unit now is 5,007 square feet, and it seats 237. The express footprint is 1,800 to 2,600 square feet.
What is your check average per person?
It’s about $12.
What do you have in corporate units now?
Before the deal, we had two corporate stores: the one in Tempe [Ariz.] and the one in Colorado. The sisters kept those in their portfolio, so you could say they are “pseudo-corporate” stores. But of the next eight units we’re opening, three will be corporate locations.
What is the typical demographic?
Our sweet spot is probably the 32-year-old to 48-year-old with a family. We do a really good job with larger parties and families.
What’s your bestseller from the menu?
That’s our wings. We have 22 flavors. We have 20 that are our baseline wings, and every quarter we try to rollout two flavors that are fan picked. We still are the only concept out there that will give you separate flavors on the wings. That’s our niche. They can try a single wing with a single flavor.
The brand’s name comes the 1977 Odyssey song “Native New Yorker.” Do you know the score by now?
That’s exactly right. When the founding family was escaping the snowstorms back in 1978 that was the disco song playing. We’re from Buffalo, N.Y. We’re New Yorkers. We still own rights to all that intellectual property. If we have expansion internationally, we think Native New Yorker and the connotation of an East Coast concept will resonate well. It’s a big part of our history.
What are you most excited about with the new ownership?
I think we are in an exciting segment. There is plenty of pie to go around in the wing category. I think because of our culture, doing such a good job with families, we are going to resonate really, really well in the states where we are developing.