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Why Huddle House and hotels make perfect bedfellows

Hotel owner didn’t have to search long when looking for the best breakfast franchise for sale

Neil Mistry is an experienced hotel operator with Quality Inn by Choice Hotels, and has been in the hospitality business for almost two decades. He owns one hotel in Athens, TN, and another about 13 miles away in Sweetwater, TN. When he started looking around for a restaurant franchise for sale to compliment his property in the small town of Sweetwater, he didn’t have to look too far. Many restaurant franchises wouldn’t even consider the Sweetwater location, because, with a population of around 6,500, it’s just too small. But small towns happen to be Huddle House’s place to shine. This is Mistry’s story.

NEIL MISTRY
NEIL MISTRY

What you were looking for in a restaurant franchise partner for your hotel?

I was definitely looking for something big, you know, something like maybe Ruby Tuesday or Chili’s, that kind of thing. But the reason we don’t have something like that is because the location I have, no franchise wants to come to that location. This is a very small town.

What’s the population?

The city of Sweetwater has about 6,500 population. Most big franchises want a minimum population of at least 10,000 or more.

How did you find out about Huddle House as an option?

We used to have a Cracker Barrel in town that left and went from Sweetwater to Athens, so there wasn’t any name-brand restaurant in the town. We had the land, and so when I was looking, I was looking for something like a family-oriented kind of business. Something that could bring family together. I started Googling.

When I was looking for something family-oriented I landed on Huddle House. I said, you know, let me go and see what Huddle House is all about. Before that I was very close to doing Arby’s in the same location, but the process was taking so long, in the end we didn’t go for it. When I landed on Huddle House I saw the new prototype that they just launched, and I thought, hey, this could be a good fit for Sweetwater. It’s more like family dining, and the new prototype has appealing colors and design and I kind of liked it.

Why was the Evolution design in particular so appealing?

This is the third hotel that I’ve owned, and I had the opportunity to build one. When I build one, I’m all about colors and the new building and new location. In today’s market, everybody’s changing, they’re doing facelifts. If you look at Arby’s, if you look at McDonald’s, if you look at Burger King, they all did something to catch new people, to capture Millennials. So this is more something that caught my eye, and I see that vision. We had land already open and available and the town was ready.

A Huddle House branded graphic reads “$1,002,796 | Average Unit Volume for top 50% of Evolution design franchised units. 40.6% | Gross margin for top 50% company owned units. Single and Multi-Unit opportunities in towns as small as 5,000 population.” Fine print below the graphic reads: 1. Figure reflects the Average Annualized Unit Volume of the top 50% Evolution design franchised restaurants (89 of 177) that were in operation at least 4 months during HH’s fiscal year from April 30, 2017 to May 1,2018. Of these 89 restaurants, 35 or 39.3% surpassed this sales level. 2. The Gross Margin is derived from the Net Sales, less the average Food and Paper Cost of 29.4%, Crew Wages of 18.2%, and All Other Payroll Cost of 11.8% for the top 50% Company Owned restaurants (6 of 12) operated by HH for the past two full years as of the fiscal year ended May 1, 2018. Some outlets have earned these amounts. There is no assurance you will do as well. See Item 19 of our August 9, 2018 Franchise Disclosure Document for complete details. © 2018 Huddle House Inc. This does not constitute an offer to sell a franchise. The offer of a franchise can only be made through the delivery of a Franchise Disclosure Document (FDD). Certain states require that we register the FDD in those states. This communication is not directed by us to residents of any of those states. Moreover, we will not offer or sell franchises in those states until we have registered the franchise (or obtained an applicable exemption from registration) and delivered the FDD to the prospective franchisee in compliance with applicable law.

What has the reception been like in the town?

They were all excited as soon as they heard that Huddle House was coming. They were waiting for ground to be broken and they were waiting for the doors to be opened. There was a very good healthy response. Matter of fact, it was such a good response that even the competition thought about it and put a Waffle House in a neighboring town.

How have your hotel guests been responding? Have you seen any sort of uptick in your occupancy rates?

Yes. I see a lot of guests coming in now and noticing it, so the likelihood for them to return and stay here is higher. They love it, they love it.

The hotel has been here since 1990, so we have a lot of regular customers that come to this area to stay with us. They will definitely be appreciating the convenience of the restaurant next door. And of course, as time goes we believe we’ll see an increase in occupancy, so it’s a win-win.

How has the response been from the people of Sweetwater?

All the local communities are coming in and then we are also getting people from the neighboring communities such as Athens (TN). I’ve seen people come all the way from Louden, which is about 13 miles away in the other direction. Also we see people who pull over during the lunch hour. They take the exit off I-75 and then they see our sign, and they say, “Oh, there’s a Huddle House, let’s go down there.”

Nice, very nice. And tell me a little bit about your management structure. Have you hired a general manager or are you doing any of the oversight yourself?

We do have a general manager, and we also hired two assistant managers, so they are all on site and they are working as a team. We also have some shift leaders now to overlook some of the shifts.

And how has Huddle House corporate helped you train these folks?

A team came from corporate that stayed locally here at the hotel for 8-10 days before our soft opening, and then another 10 days after that until everything was getting settled in. I think we had three weeks total where trainers came out and stayed and trained us and pushed everybody in the right directions.

Do you think you’ll be opening more Huddle House franchises?

Yes. We’re going to be doing a second location shortly. The response is good here. Now what I want to try to do is go into a bigger market and open one up over there to see what kind of response we can get in a bigger market. And then after that we can decide which market works better.

Where will your second location be?

We’re looking to do something in Cleveland (TN), which is also off I-75. Cleveland has something like 40,000 – 45,000 population just for the city; the county is probably 100,000, maybe more.

What would you say if another hotel owner called you up and said “I’m thinking about bringing a Huddle House into or next to my hotel.” What would you want them to know?

I would definitely let them understand that this is going to be a win-win situation for both sides. It’s having a second business next door that’s going to feed your people, feed the hotel, and the hotel is going to feed back to the restaurant, so it will be a win-win situation.

Looking for a restaurant franchise for your hotel?

A family restaurant franchise like Huddle House in your hotel on adjoining property can not only create another revenue stream for you, it has the potential to boost occupancy rates. We invite you to explore our research pages to learn more about our franchise offering. You can also examine our sales performance by filling out the form on this page to receive a Huddle House Franchise Information Report. We look forward to hearing from you!