Franchising Is Big Business In Food Service, But What About Poke Bowl Style?

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Franchising in the fast food industry is a common phenomenon. Think McDonald's Corp. MCD, Chipotle Mexican Grill, Inc. CMG or Yum! Brands Inc. YUM, owners of the KFC and Taco Bell brands.

It’s also the increasing focus of a newer kid on the block, Muscle Maker Inc. GRIL, and, in particular, for the company’s Pokemoto division.

Pokemoto, which offers Hawaiian poke meals with a modern twist, is a relatively new division for Muscle Maker, and it’s reportedly growing fast with the franchise business model very much the go-to choice for the brand’s expansion in a fragmented sector.

In a recent letter to shareholders, Muscle Maker Chief Executive Officer Mike Roper laid out why the company is focused on franchising for Pokemoto and why that division will drive overall company growth. Muscle Maker, which has signed 37 new Pokemoto franchise agreements since November, has locations operating across five states.

“The management team feels strongly that the Pokemoto brand is a perfect fit for our franchising strategy,” Roper said in the letter. “We believe franchising is a great model as it has the potential to propel growth without our company having to spend its capital on company-owned brick-and-mortar locations.”

How It Works

With Pokemoto franchising, Muscle Maker receives an initial $25,000 fee from the franchisee. The fee provides Muscle Maker with vital capital to aid expansion.  The company does offer discounted franchise fees for multi-unit agreements.

Once a location opens, the company typically receives 6% in royalties based on monthly net sales. There are also vendor rebates, which are typically smaller, adding up to about 1% of the total of net sales.

The company states that it has the required experience in its team to support the franchising model and help expansion. The management boasts people who have run their own franchises in the past, Roper said.

“It is important to note that our management team has extensive experience in franchising,” he said. “We have the knowledge base on how to generate franchise leads/sales but also know the intricacies of building the infrastructure for training, distribution, marketing, operations, etc.”

In a highly fragmented sector such as the poke restaurant concept, there is the opportunity for a company to come in and consolidate, Roper said. 

“The industry is full of independently owned mom-and-pop locations, and we expect that the industry is ready for a company to enter the market and become a significant player in the segment,” he said. “We are positioning Pokemoto with the goal of playing this role.”

Muscle Maker also operates Muscle Maker Grill restaurants and SuperFit Foods, a meal prep model focusing on healthy and diet-specific food options, but it is the Pokemoto franchising model that is the main focus for now.

“The full growth engine will come from franchising and expanding Pokemoto,” Roper said.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.

Picture credit: Nicole Goulart on Unsplash