Some have accused David Rutkauskas of trying to “franchise Tulsa,” and he isn’t denying it.
The founder of Beautiful Brands International Inc., which owns Camille’s Sidewalk Café, FreshBerry Frozen Yogurt Cafe and Coney Beach, recently added three Tulsa institutions to its portfolio of brands.
Earlier this year, Jeff Castleberry, owner of Caz’s Chowhouse, at 18 E. Brady St.; Sean and Kristie Savage, owners of Crusty Croissant at 3629 S. Peoria Ave.; and Candy Dunn and Paula Underwood, owners of Café Ole at 3509 S. Peoria Ave., all signed franchise agreements with Tulsa-based BBI. Dixie Cream Donuts and Rex’s Chicken, both based in Tulsa, signed on last year.
Although BBI also has franchise agreements with restaurants based in California and Texas, Rutkauskas has appeared lately to seek out Tulsa brands willing to sign on the dotted line.
“Someone told me, ‘Dave, you’re franchising Tulsa,’” said Rutkauskas. “And I’m like, ‘Yeah, maybe I am.’”
Rutkauskas said 90 percent of the restaurants in his portfolio have come to him looking for franchise agreements. But lately, it appears as though BBI is seeking out brands. Although Café Ole approached him, Rutkauskas went to Caz’s Chowhouse, Crusty Croissant and KEO, although its owners turned him down.
Rutkauskas said he approached Caz’s Chowhouse and Crusty Croissant because they “fit nicely into our portfolio.”
“Actually, one of my great employees told me about Caz’s,” Rutkauskas said. “I checked it out and was like, ‘I like this.’ It’s down-home, feel-good food, and there’s nothing like that out there in the marketplace.”
Castleberry, who has owned Caz’s Chowhouse for five years and Caz’s Pub, just across the street, for more than 10, said he hadn’t considered franchising his restaurant before Rutkauskas offered him a deal, and he wouldn’t be doing it without BBI’s help.
“They did the initial contact via e-mail, and it’s something we really hadn’t thought about,” said Castleberry. “We were questioning if it was a mass marketing e-mail, but having followed those guys and watching how successful they’d been with their own concepts, we had to follow up.”
After two months of meetings, research and contract negotiations, Castleberry signed on to franchise through BBI.
“They have a system in place and know how to run that system,” Castleberry said. “It’s been proven in the number of stores they’ve sold and their lack of litigation.”
BBI and Caz’s Chowhouse are in the process of completing paperwork, and Castleberry said he hopes to have attracted some franchisees and be working toward opening the first store by the middle of fall or end of the year.
Although the name, menu and décor will stay essentially the same, BBI is working on a new Web site for the restaurant as well as signage that can be more easily replicated.
“We always have final say as far as what happens,” said Castleberry. “[BBI’s] responsibility is to take care of legal issues, write the disclosures and provide guidance on trademark info and manuals.
“They go out an sell our brand, help franchisees find locations and help with the build out. They walk them through the entire process until the space is ready to open. Then it’s turned over to us. We provide training at our location and their location. Our job from then on out is to provide support. We’re in control, but BBI gives us tremendous support.”
Close to Home
Rutkauskas said the convenience of franchising restaurants in his hometown has made it easier for him to sell them to potential franchisees.
“When we bring prospects in from all over the world, the synergy of BBI being headquartered in Tulsa … makes it easy on everyone,” said Rutkauskas. “They come to Tulsa, spend time with us and our team of people, and then we make the short drive to the restaurant.”
He also said his company has “good synergy” with the restaurants in Tulsa it’s chosen to franchise.
“We know very well the kinds of concepts we can rule out and the ones we can have success with,” he said.
In choosing a restaurant to franchise, Rutkauskas said he considers the food first.
“If you don’t have good you can forget about it,” he said. “When Camille’s first started, it was just a box in the mall. We couldn’t have grown if we didn’t have good food.”
He pointed out Café Ole, saying the restaurants longevity – it’s been serving southwestern cuisine in Tulsa for 24 years – appealed to his company and will appeal to potential franchisees.
Then he looks at the people behind the business.
“With Crusty Croissant, Sean’s background appealed to me,” he said. “With Le Madeline, he ran the No. 1 store in Dallas.”
What’s In a Name?
Before Crusty Croissant franchises, likely later this year, it will get a new name and an updated menu, Sean Savage said.
The menu will welcome some new items, and the new name will be announced sometime next month, he said.
Savage’s history with Le Madeline is apparent in his restaurant’s menu, and when asked if the similarities between the two bothered him, from a franchising standpoint, Rutkauskas said no.
“Le Madeline has been around a long time,” he said, “and they’ve been stuck at 63 or 65 stores for last 15 years. They’re expensive to build, and the opportunity arose to come in with smaller footprint, lower costs and compete with them and expand the concept out.”
Money, Money, Money
Rutkauskas called his franchise agreements with local restaurants a partnership.
Although he wouldn’t disclose figures, he said it costs the restaurant a certain amount of money to “get their franchise system put together.”
“There are up-front costs for clients to get stuff moving,” he said.
From there, the cost rests on the franchisee, who pays a fee to open the franchise and is responsible for building the restaurant in his or her market, hiring staff, purchasing food and getting the store opened.
The client earns a percentage each week of the food sold at the franchise. Whether BBI earns a percentage of its clients’ royalties is uncertain.
“Partnering with us is the greatest thing a restaurant owner could do if they want to franchise their business out,” said Rutkauskas. “We’ve got the people to do it and the experience. We’ve sold, as of (mid-September), 1,500 franchises in last 10 years around the world.”
Just Say No
One local business did decide to franchise on its own and, so far, has no regrets.
Rutkauskas approached Bill and Zahidah Hyman, owners of KEO, a Southeast Asian bistro at 3524 S. Peoria Ave., about franchising their restaurant through BBI, but the couple declined.
The Hymans owned and operated two Camille’s Sidewalk Café franchises, one in Woodland Hills Mall and the other in Promenade Mall, for five years before opening KEO two years ago.
They said they opened their restaurant with the idea that they would eventually franchise.
“We set it up using principles we learned from being franchisees,” Bill Hyman said.
Those principles include having a policy and procedure for everything, ensuring consistency in food and providing excellent customer service.
“There’s nothing like this restaurant on the market, really,” said Bill Hyman. “Southeast Asian food is getting more popular.”
“People want freshness, they want authenticity, they want more choices,” said Zahidah Hyman. “If you went to Asia, this is what you would eat.”
Bill Hyman said that they turned down BBI’s offer to franchise their restaurant because, by doing it on their own, “we felt like we could control the growth more.”
When asked, Rutkauskas said the decision for BBI not to franchise KEO was “a mutual agreement.”
“Most of the time, we do the turning down,” Rutkauskas said. “If we don’t think it’s the right thing for us financially, we move on to the next thing. With KEO, it was mutually agreeable that it wasn’t the right thing for both of us.”
Bill and Zahidah Hyman said that, in researching franchise companies, including BBI, they found it would cost them between $50,000 and $100,000 to franchise KEO. Working on their own, they’ve spent about $30,000 on the project.
They’ve completed their disclosure agreements and much of the other necessary paperwork and are working on employee handbooks, updating signage and their Web site and putting together a sales team. Bill Hyman said they’d like to have their first franchise in the works by the end of the year.
In addition to franchising the Tulsa concepts, BBI is working on agreements with restaurants in California and Dallas, Rutkauskas said.
“I think you’re going to see some really cool stuff come on board with us,” Rutkauskas said. “Things that have a long history, tremendous success, multiple stores, that have tremendous sales.
“We want to be the worlds best and number-one restaurant development company in the world.” ?