Tsatas family's 22-outlet chain takes on Rotisseries St-Hubert
Running a restaurant is one of the most popular business dreams. Every aspiring entrepreneur thinks that he would be a natural until he tries it. Not surprisingly, there are lots of entrants into the market and failure rates are high.
So when an upstart player like Scores Restaurants Canada, opens 22 chicken and ribs outlets in less than 10 years, it pays to ask what they are doing right.
"There are a lot of reasons for our success," said Steve Tsatas, the chain's vice-president (operations). "Experience, good location and excellent franchisees are all part of it. But the truth is, to succeed in this business, you've got to get everything right."
So far, it looks like Scores, --which Tsatas, his father Nick and his brother-in-law Nick Poulakis, founded in 1995, with the opening of their Sherbrooke St. location, --has done everything right. Since then, the family has franchised outlets throughout Quebec and sales are on track to top $50 million this year.
Scores' success is particularly impressive when you consider that the chain is thriving, despite the fact that it is going head-to-head with the much larger Rotisseries St-Hubert, long considered the Quebec champion among full-service chicken restaurants. But that didn't scare Tsatas.
"We knew (St-Hubert) was popular. But we also knew that they didn't have much direct competition and we sensed an opportunity," Tsatas said.
The Tsatas family has been in the industry ever since Nick Tsatas founded his first restaurant in the mid-1960s. He then built a mini-empire by buying and selling numerous establishments. Family holdings now include two Laval reception halls, --the Château Royal and Le Palace,-- as well as Capital Traiteur, which holds the catering contracts for the Palais Des Congrès de Montreal and the Centre des Congrès de Québec.
Nick and Steve Tsatas visit innumerable restaurants to keep abreast of trends. So when they founded Scores, they had a good idea about where they were going.
"We wanted the salad bar to be the center of each restaurant," Steve Tsatas said.
"When the client walks in, he can start eating right away. He doesn't have to wait for the waitress to bring the meal," Tsatas said. "That's important, especially during lunch hour, when people need to get in-and-out fast."
The Sherbrooke Street location was an immediate hit, and the chain began expanding rapidly. Initially the restaurants were all family owned. But Tsatas began getting calls from other restaurant owners who wanted to get in on the action. Eventually demand became so hot, that by 1999, the family began franchising existing restaurants. At $900,000 for a turnkey operation, the restaurants aren't cheap, but according to one holder, the Scores organization provides excellent support.
"They only accept franchisees who have restaurant experience and who know how to work," said Manny Gagaoudakis, co-owner of Scores-Longueuil, which opened in April, in a building formerly occupied by a Swiss Chalet. "But they give a good training program and they have excellent procedures in place."
Franchisees need to put down at least 40 per cent of the fees up-front. Scores will help them arrange financing for the rest. Franchisees also get management support, location consulting and what Steve Tsatas said is a "proven success formula." Franchisees pay head office a 3.5 per cent royalty on sales, coupled with a 3.0 per cent marketing fee, which covers advertising development and media costs.
The chain hit a major speed bump in 2002, when co-founder Nick Poulakis died of a stomach cancer at age 42, an event that hit Steve Poulakis hard.
"He was my brother in law and we liked each other very much. But we also complemented each other perfectly in business," Tsatas said. "It was a big loss."
Full service restaurants have been going through a tough time recently. According to data supplied by the Association des Restaurateurs du Québec, sales in the sector increased 6.2 per cent during 2003 to $3.7 billion. However the number of restaurants also increased by 5.0 per cent to 5,962. That means same store sales actually decreased when inflation is taken into account.
But the industry sales trends didn't effect Scores. Despite the setback caused by Poulakis's death, the team pushed on. According to Demetri Tsigos, Scores' director of network expansion, three more openings are planned within the next six months. And the chain plans to add another three or four outlets each year for the foreseeable future.
However Tsigos doesn't want new restaurants to draw clients from existing locations, so he only sees 15 or 16 potential new Scores sites in Quebec. After that further expansion of the brad will have to take place in Ontario.
That creates a big problem for Tsigos, because many franchisees -several of which own more than one outlet -- are itching to get their hands on more locations. And franchisees like to have their restaurants close to one another.
To help satisfy franchisee demand, Scores managers are planning a Bar and Grill concept tentatively named Madison's, that is slated to draw a more upscale crowd. The first new unit, which will be located on Volta St. in Boucherville, is slated to open this September. The new banner will give franchisees an opportunity to own a another restaurant in the same area, without cannibalizing existing sales.
"If our franchisees want to grow faster, why shouldn't we give them the chance?" Tsigos said.
Sidebar: Tsatas's management strategy
o Develop family-oriented casual dining restaurants centered
on chicken and ribs meals
Photo caption: According to Steve Tsatas, Scores' salad bar, --which is used by 80% of its clients, -- is a big part of the chain's success.
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