KBP Ranks #4 in Franchise Times Restaurant 200

Last year was one of progress for JRI Hospitality, as the Freddy’s Frozen Custard & Steakburgers franchisee rose in the Restaurant 200 ranking, despite ongoing economic challenges.

With its 81 Freddy’s units, JRI hit $150 million in sales in 2023 to put it at No. 115 on Franchise Times’ list of the 200 largest restaurant franchisees.

Josh Muller, JRI’s chief financial officer, said the group dealt with the economic realities of 2023—from inflation to a limited workforce and other post-pandemic issues—and noted financial indicators to start 2024 are positive.

“Upward pressure in both commodities and labor eroded margins heavily in 2023, but have since generally stabilized for 2024,” Muller said. “Taking price in early 2024 has helped bring margins back into line this year, though there are exceptions for states enacting higher minimums, which continues to put pressure on profits as prices are adjusted to reflect the new wage.”

Those higher wages in states such as California pushed JRI to improve what it can control, namely the service and consistency of employees. In 2023, Muller said the group began investing more in employee recruitment, retention and culture, which he said has “paid dividends,” spring-boarding operations for a strong 2024 thus far.

The National Restaurant Association’s 2024 State of the Restaurant Industry report noted 45 percent of operators need more employees to meet customer demand, and the workforce is expected to grow by 200,000 jobs.

Muller, meanwhile, said inflation has taken an encouraging turn over the last several months. Over 2023, overall inflation was cut in half, falling from 6.4 percent at the start of the year to 3.4 percent at the end. The inflation rate at press time was 3.3 percent.

In the food away from home category, inflation started 2023 higher than the overall rate, at 8.2 percent. It fell over the course of the year, to 5.2 percent at the end of 2023. It dipped to 4 percent in May 2024.

"Overall, we predict a smooth remainder of 2024, with some cooling inflation and resulting interest rates, which affects not only our guests, but our cost of investment in new locations,” Muller said. “Of course, with it being a major election year, there will undoubtedly be some shakeup this fall that influences policy and sentiment for 2025."

Ranking shifts and newbies

Total Restaurant 200 revenue in 2023 hit $54.9 billion, up 3 percent from the group’s $53.3 billion in 2022. Those sales came from 32,991 total units, a drop of 446 locations and the first store count decline in the past decade.

Flynn Group, which dropped “Restaurant” from its name last year after acquiring a portfolio of Planet Fitness gyms, remains solidly at No. 1 with $4.6 billion in sales from its 2,805 restaurants. Its unit count in Pizza Hut, the group’s largest brand, rose from 944 to 1,252. Its other brands are Applebee’s, Arby’s, Taco Bell, Wendy’s and Panera Bread.

Four franchisees join Flynn above the notable billion-dollar threshold: Sun Holdings, Dhanani Group, KBP Brands and Haza Group.

Absent from this year’s top five is Carrols Restaurant Group, which was No. 3 in last year’s rankings. Carrols had 1,023 Burger King units in 23 states to go along with 60 Popeyes stores. Restaurant Brands International bought Carrols in May for $1 billion, the largest franchisor acquisition of a franchisee since Triarc Cos (Arby’s) purchased RTM Restaurant Group and its 775 Arby’s locations in 2005 for about $700 million.

Another name not included at the top is Pacific Bells, as the franchisee of Taco Bell and Buffalo Wild Wings rebranded to Anchor Point Management Group. (Pacific Bells remains a subgroup.) The franchisee jumped to No. 8, with sales growing from $762 million to $786 million. Along with its existing brands, the group added four 7 Brew locations.

7 Brew was a notable addition to another group’s portfolio as MIC Glen—formerly K-Mac Enterprises and still led by CEO Tina Reagan—finished the year with 25 units of the drive-thru coffee concept. Those stores join its 344 Taco Bells and eight Whataburgers in doing $639 million in sales to put the company at No. 16.

Percentage-wise, the company experiencing the most sales growth was No. 141 RREMC Restaurants. Sales for the Denny’s and Hurricane Grill & Wings franchisee grew by 75 percent, to $113 million.

Among the notable newbies are New York-based YCH Wendy’s, which burst onto the list at No. 95 thanks to $180 million in sales from 83 Wendy’s restaurants, and No. 104 Quality Brand Group, which did $167.5 million in sales from 155 Dunkin’ stores and three Buffalo Wild Wings Go restaurants.

While many in the Restaurant 200 rose in the rankings, there were a few that slid back. Among them was Ampex Brands as the large Yum Brands franchisee dropped from No. 24 to No. 34, largely the result of its KFC count falling by 27 and its Pizza Hut count by 38. Northwest Restaurants went from No. 27 to No. 36, meanwhile, as sales fell below $400 million and its unit counts in Taco Bell, KFC, and Yum multi-brand locations declined.