Welcome back to IBJ’s video feature “Inside Dish: The Business of Running Restaurants.”
Our subject this week is Squealers Award Winning Barbecue, a locally grown meat-lovers concept that hopes to make the jump to franchising. It’s a fundamental shift in strategy for founder Jeff Yater, who first got into the food game by hitting the national barbecue competition circuit in the mid-1990s with his grill-enthusiast father, Ron Yater.
“Originally it was a hobby, and we got out on the road,” said Jeff Yater, a 40-year-old native of Fort Wayne. “I traveled with him for a couple years, and then decided to do my own thing. I started competing against him and developed the name Squealers Barbecue. We called ourselves 'a professional barbecue team.'”
In 1999, Yater invested $35,000 (including a $25,000 bank loan) to create a 30-foot cooking trailer with a full kitchen, including refrigeration, sink systems and a smoker that could cook 500 pounds of meat at once.
“That was the original Squealers. We did contests and rib fests all over the country. The last year we did that, we did 23 different cities,” he said.
Determined to spend more time at home with his infant daughter, Addy, Yater decided in 2001 to drop anchor in a Mooresville location in 2001 and establish Squealers as a restaurant. With his grandfather as a co-signer, he landed a $100,000 bank loan, which he used to buy out the owner of a steakhouse in a free-standing site and buy a $12,000 smoker.
“It was a lot of hard work, a lot of stress, short hours at home,” Yater said. “I’d get home at midnight. I’d be up until 2 a.m., then back in here by 7:30 a.m. and then doing it all over again, six days a week.”
The original location was bare-bones from a design standpoint. Over subsequent years, Yater invested some $275,000 to upgrade the location. That included adding now-signature interior touches such as cedar-plank paneling, tin siding and neon signs.
Yater’s master plan was to open multiple locations, so he took aim at the Indianapolis market. Recruiting longtime friend Jim Coldren as a business partner for the nascent chain, Yater secured partial financing for a three-month, $360,000 build-out of Squealers’ second restaurant, located at 5515 W. 86th St.
“Opening Indianapolis was much easier,” Yater said. “The menu was already figured out. The logos were already figured out. The style of the building was figured out.”
Instead of incurring the expense of opening more locations themselves, Yater and Coldren decided to pursue growth by franchising Squealers. In 2008, they engaged Boston-based McGrow Consulting, which specializes in guiding business owners through the franchising process, and have invested about $100,000 so far in the firm’s services. Those include market research, drafting legal documents and creating manuals for potential franchisees, a process that took more than a year.
Franchises have been available for about eight months. Yater and Coldren have fielded some serious inquiries, but so far have sold no franchises. Franchisees would be required to pay a $35,000 upfront fee, agree to fork over about 5 percent of gross sales as royalties, and build and outfit the location themselves. (Yater broadly estimates that the two current Squealers locations together operate at a 10 percent profit margin.)
“Our goal is to sell two franchises this year, with more to come after that,” Yater said. “If that doesn’t happen, we’ll open a new company-owned store in 2012.”
Potential franchise deals are cooking in Tennessee and Alabama, which gives Yater pause.
“[Alabama] is a long way away, and as a startup, that worries me,” he said. “You want to be able to give as much time as you can to these people, so they can be successful. Ideally we’d like to see some here in Indiana, but at this point in the game we have to build more, and if that takes me to Tennessee or Ohio or Michigan or Florida, we’ll go.”
Yater now finds himself performing a new role for Squealers after developing the concept in the kitchen, trading the apron for a button-down shirt.
“I’m trying to promote and sell and talk to people about being part of this family," he said. "It’s a lot more meetings—meeting with marketing people, meeting with PR people, meeting with potential franchisees. You have to be able to get out there and train franchisees. If you are in daily operations at your restaurant, it’s not going to work."
In the video at top, Yater details the origins of Squealers, the development of its two current locations, and the push for expansion through franchising. He also expounds on an unexpected benefit of the planning process—standarizing and streamlining opeations at the existing locations.