A proprietary training support system has helped Culver’s grow into a 372-restaurant chain in 16 states.

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When John York made the decision to exit an increasingly stressful manufacturing sales job in corporate America, one of the first career options that came to mind was running his own restaurant franchise.  

After exploring his options, York decided Culver ’s was the right fit. “We looked at other chains, but we chose Culver’s based on the environment,” the first-year franchisee notes. “They had an inviting atmosphere and a huge variety of product and great service and we felt that we would do well in our hometown of Crawfordsville, Ind. We were looking for a niche and [the restaurant] was just something that seemed like it would draw people in.

“I spent a lot of time early on trying to schedule my meetings to meet Culver’s owners, and I would ask them point blank, ‘What do you think of this organization and how well does it support them?’”

In April 2007, York opened his first Culver’s franchise in Crawfordsville, a Midwest town with a population just under 15,000, and one that has developed an affinity for the quick-service restaurant’s All-American fare. “We are very satisfied with how things are progressing,” York notes. “I have met my projections for the first year and have even slightly exceeded our projections.”

For York, “opening the restaurant was an opportunity to break away from corporate America. It’s becoming extremely globally competitive, and I felt I had more to offer in terms of leadership. It gave me the opportunity to be an entrepreneur.”

Fresh Approach
Although not a newcomer in the market – Culver’s has been in business for 24 years – the restaurant’s concept remains fresh in more ways than one.

To start, Culver’s menu is built on serving only fresh, cook-to-order foods. The menu includes its original ButterBurger and frozen custard, as well as garden salads; dinner entrees such as chicken, North Atlantic cod and shrimp; and favorites such as Philly ribeye steak and beef pot roast sandwiches; as well as a wide variety of seasonal specials, kids’ items, sides and desserts.

Craig Culver and his wife, Lea Culver, along with his parents, Ruth and George Culver, launched the company when they re-opened a former drive-in root beer stand in Sauk City, Wis., in 1984. Three years later, with a list of people interested in owning their own locations, Culver’s began franchising and quickly grew its geographic reach. At the end of 2007, 372 Culver’s restaurants were open in 16 states.

But despite the growing number of locations, Culver’s does not have the market saturation of its larger competitors, nor does it intend to reach that level anytime soon. As President and Chief Operating Officer Phil Keiser puts it, “Culver’s is about quality food. Our food is cooked to order and always fresh. That will not change. One of the other pillars has been the franchising model of owner/operator. It’s been a critical success factor – having that person who signs the front of the check instead of just the back of it. They have to pay the loan and they take a more intense view of the business.”

Although Keiser says he sees a lot of trends emerge and fizzle in the franchising food industry, “consistency, execution and quality never go out of style. Because we are in between the casual dining and quick service categories, we have to watch trends in both areas. We have to ask ourselves: How can we make a quality proposition to those guests in each market to make them consider Culver’s?”

Franchise-Driven
Culver’s depends on its franchise system to grow its brand. Even under pressure from a tightening economy, the company intends to increase its sales, locations and customer base well into the future.

“With any business, as you grow, you have to continue to evolve in terms of product and product delivery,” Keiser says. “We look at growth in two different ways. You can have growth by adding restaurants and by having sales growth within existing restaurants. We look closely at comparable sales for restaurants that have been open for 12 months or longer, and that’s a bigger deal than if we try to open up several new restaurants. I’d rather open a few restaurants and do it right for our guests.”

Getting it right is something Culver’s has done since the beginning. Keiser says Culver’s has never had a restaurant fail, primarily because it invests significantly in ongoing support and training. In 2007, the chain opened 21 locations and Keiser thinks it’s on track to reach that same number this year, even with a slow economy.

Although most locations are scattered throughout the Midwest, Culver’s has opened stores as far south as Texas, as far east as Ohio, and is now preparing to enter the Phoenix area. But stepping out of its core market is something it remains cautious about doing, Keiser says. “[Phoenix] was a leap for us,” he admits. “We use a fresh custard mix and fresh ground beef, and both are proprietary blends. If we don’t have a certain mass of restaurants, it makes distribution and marketing costs very difficult. To make our distribution work, we want to open anywhere from six to eight restaurants in the Phoenix area.”

Because the company is heavily dependent on its network of suppliers and distributors, Keiser says Culver’s views those relationships as partnerships rather than strictly transactional exchanges. “We view [suppliers] as partners. At the distribution level, Sysco Corp. and Gordon Foods have been invaluable and are really our last stop for quality, they have been great partners and they have helped us grow,” he notes.

Support System
Although restaurant experience isn’t a prerequisite to owning a franchise, Culver’s does look for people with business savvy and an ability to connect with people and the communities in which the restaurant is located. Each new franchisee currently pays an individual franchise fee of $55,000 to acquire a Culver’s franchise for the basic 15-year term of the franchise agreement.

“We’re a little different in that the single-unit agreements change the kind of people that we are looking for,” Keiser says. “We look for people with the same values and beliefs that we have, and as a part of that evaluation process, we make sure that they are qualified financially.”

Potential franchisees who meet the financial requirements undergo a six-day, 60-hour evaluation week where he or she has the chance to interact at one of Culver’s family owned locations.

At the end of the evaluation, Craig Culver, Keiser and Vice President of Operations and Training Jeff Bonner review performance and conduct final interviews.

According to Bonner, once a franchise agreement has been signed, franchisees complete a 16-week training course. Through a comprehensive training support program, new franchisees are taught at Culver’s Learning Support Center in Prairie du Sac, Wis., on how to operate a restaurant. New franchisees participate in a 16-week training course that consists of 12 weeks of both classroom and restaurant training. In addition, a new franchisee will partake in two restaurant openings, which includes two weeks at each opening, for a total of four weeks.

Franchisees are assigned one of 20 franchise business partners (FBP) who are responsible for continued in-the-field support throughout the life of the business. Each FBP is assigned to a region and oversees between 20 and 25 restaurants at once. “They are our primary support team members in the field, and we limit their span of control to 25 restaurants, when the industry average is more like 100 [restaurants],” Bonner notes.

Making Adjustments
Culver’s remains optimistic about what the future holds, and if past success means anything, it should be able to weather any economic cycle.

“We have opened as many as 41 [restaurants] in one year, and that dropped down to about 21 in 2007, and this year we plan to do another 20 to 22 new openings,” Bonner adds. “We could get back up to 30 in 2009, but as far as yearly growth, it is what it is. We’re going to do it right, one restaurant at a time.”