Bullets: aiming for a shot at the top

Nation's Restaurant News, May 12, 1997 by Jack Hayes

After five years of tactical maneuvering in the price- and promotion-driven sandwich wars, scrappy Bullets Corp. of America is writing a new battle plan aimed at faster and more diversified growth.

Since the "Big Four" burger players have weakened seriously -- and in some markets virtually eliminated -- the once-ubiquitous drive-thru-only competition, executives at Bullets are optimistic that their re-created concept can outflank the majors with a manifold strategy of "nontraditional" food, flavor, store design and operating venue.

"Drive-thru-only was how we learned this business, but it's more a part of our past now than of our future," says Daniel McMurtrie, founder and president of the 42-unit Bullets chain, launched here in 1992.

Finishing 1996 with 280 operating restaurants -- which included its nine original drive-thru-only sites along with a new 2,000-square-foot, 50-seat convenience-store-and-service-station concept -- the chain grossed an estimated $20 million for the year. But with an aggressive expansion strategy for 1997, Bullets expects to use the c-store format as its "primary driver." McMurtrie calls it his "self-contained, sit-down restaurant" -- still offering drive-thru -- yet joined without walls to its c-store or gas station neighbor.

"Today Bullets is looking at a completely different way of bringing food to the customer -- a customer `intercept' strategy,'" McMurtrie says, adding that the company also has designed kiosk and walk-up counter-service units to operate in such nontraditional sites as airports, bowling alleys, food courts and even private schools.

The c-store-and-service-station expansion was launched by the signing of franchise deals with regional operators Minit Mart of Bowling Green, Ky., and Spectrum Stores of West Point, Ga. The 2,400-square-foot convenience-store model, which costs between $425,000 and $500,000 to open, is projected to gross $1.2 million annually. By comparison, the new nontraditional Bullets sites -- kiosk and counter units and so on -- will cost $140,000 to open and gross a minimum of $500,000, McMurtrie says. The average gross for all units now operating is $625,000.

"Our whole model is based on return on investment now," McMurtrie says. "We're looking at building a lot of stores quickly."

But not every veteran drive-thru operator shares McMurtrie's optimism about twinning with c-stores and service stations.

"There are two problems with this approach -- one being that c-store operators aren't equipped to train and manage foodservice labor, the other that a c-store environment weakens your brand individuality," argues Thomas Crosby, chief operating officer for the 13-unit Pal's Sudden Service group based in Kingsport, Tenn. Crosby, who says his units are reporting unheard-of double-digit gains in the "QSR-saturated" Tri-Cities -- Kingsport and Johnson City, Tenn., and Bristol, Va. -- market, believes that if a drive-thru concept is operated and merchandised correctly, then "freestanding" is the correct format for unit growth.

But Crosby endorses Bullets' signature product strategy and praises McMurtrie for hiring widely known food consultants Warren and Larry LeRuth to garnish his menu with distinctive, high-flavored sandwiches. Although a relative newcomer to the quick-service scene, McMurtrie quickly became aware of that need as McDonald's and others began matching the 99-cent quarter-pound promotions that had driven the early growth of the drive-thru-only segment.

"He's got a good set of taste buds, and he can smell opportunity quicker than a lot of people we've met in this business," Warren LeRuth says.

"We had to take some pressure off the burger side of our business," McMurtrie explains, noting that, aside from proprietary seasonings for the Bullets burger and chicken breast sandwich, the LeRuths recently helped him create a cinnamon biscuit -- "Original Cinn" -- set to be launched as a new breakfast line.

"The signature menu is an effective approach -- if you want to survive in this quick-service business you have to find ways to sell standout products for more than 99 cents," Crosby adds.

McMurtrie was led to the LeRuths by his friend and minority partner Bob Basham, co-founder of Tampa, Fla.-based Outback Steakhouse, which has been using the consultants for years. In addition, McMurtrie moved his fledgling chain deeper into the product-brand arena by introducing an Edy's ice-cream dessert program after the first of the year as well as a "reinvigorated" hot-dog lineup with Oscar Mayer. Bullets now is selling Edy's cup-and-cone items with a choice of 22 toppings. Likewise, the expanded hot-dog selection features a wider choice of toppings.

"We're not going to outdo the majors on the 99-cent battlefield. A lot of history has already been written on that subject," McMurtrie says, referring to the drive-thru-only segment's dramatic attrition rate over the past half-dozen years. Nevertheless, the 99-cent Silver Bullet burger has been one of the mainstays of the Bullets menu, along with a sausage biscuit and beef hot dog for 99 cents.