Brazilian-style churrascaria Fogo de Chao Inc. rose into the Top 10 Growth Chains ranking this year, taking the No. 8 spot in the Latest Year, from No. 24 in the Preceding Year.
The Dallas-based steakhouse operator showed a 22.6-percent increase in U.S. systemwide sales in the Latest Year, increasing to $199.1 million, from $162.4 million in the Preceding Year.
The first Fogo de Chão restaurant opened in Porto Alegre, Brazil, in 1979, and the first U.S. unit opened in 1997, in Addison, Texas. Fogo de Chão now has 26 units in the United States, 10 locations in Brazil and one joint-venture restaurant that opened in May in Mexico.
Keys to growth
Initial public offering. On June 19, Fogo de Chao Inc. made its public debut on the Nasdaq market, pricing its shares at $20 and raising about $88 million. The company said it would use proceeds from the IPO to pay down debt and fund growth.
Future growth. Fogo de Chao CEO Larry Johnson said the company was looking at 10-percent company-owned unit growth going forward.
“We think that is something that is achievable and manageable,” Johnson said. “And we think there is tremendous white space out there. In the U.S., we think we can do another 100-plus stores.”
Johnson said growth would be in a combination of existing and new markets.
Smaller, flexible units. In the past, Fogo de Chão units were typically about 10,000 square feet, with between 280 and 400 seats.
“In the last couple of years, we’ve re-engineered the kitchen and made it more efficient,” Johnson said. “We’ve put more space in the front. We’ve been doing newer stores that are smaller.”
In downtown Los Angeles, for example, Fogo de Chão opened a 7,200-square-foot restaurant, and in San Jose, Calif., the company opened an 8,800-square-foot unit.
“Most of the stores we’ll be building in 2016 will be in the 8,500-square-foot range,” Johnson said. “We know we can be very compact and still go into 10,000-square-foot stores in appropriate markets.”
High average check. Fogo de Chão plans to continue its upscale-casual approach, which with an average check of about $59.
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