Golden Corral parent agrees to franchise acquisition plan

Nation's Restaurant News, August 30, 1993 by Bill Carlino

RALEIGH, N.C. -- Investors Management Corp., the privately held parent of the Golden Corral steak-house chain, has completed an agreement forming a new franchise group that will purchase 26 existing Golden Corral restaurants and build an additional 47 units of its Metro Market concept.

The five-year development pact calls for Corral Midwest Inc., a Kansas City, Mo.-based franchise concern, to open Golden Corral's mammoth, 440-seat Metro Market units throughout Indiana, Illinois, Iowa, Kentucky, Missouri, Kansas, Oklahoma, Nebraska and Tennessee.

Financial terms of the agreement were not disclosed. Ownership stakes in Corral Midwest are held by Investors Management Corp., Citicorp Venture Capital and several members of Corral Midwest management.

Corral Midwest, now the largest franchisee in Golden Corral's 420-unit system, will be headed by nine-year company veteran Bill Pintner. Pintner, 39, will serve as president and chief executive.

"In all likelihood we'll probably open more than 47 units," said Pintner, a former district manager for Southland Corp. Pintner began with the family steak-house chain as an area supervisor in Utah. He was most recently a division president with responsibility for 100 Golden Corral restaurants, both company-run and franchised in Western and Midwestern markets.

"We're hopeful we can get the first one open by the end of the year," he said.

Pintner added that the initial Metro Market unit opened under his company's auspices will likely be sited in either Tulsa, Okla., or St. Louis.

An executive of Golden Corral Corp. hinted that Corral Midwest might become a publicly held concern in the future.

The 26 Golden Corral units involved in the Corral Midwest transaction are part of the company's 1982 purchase of 193 Sirloin Stockade restaurants--a Hutchinson, Kan.-based competitor.

Following the acquisition, about 100 Sirloin Stockade units were converted to the Golden Corral concept. After shuttering 20 underperforming Sirloin Stockade stores, 50 units were then sold by Investors Management to its Golden Corral subsidiary. The remaining stores were retained by IMC and operated under the Golden Corral banner through a licensing agreement with Golden Corral Corp.

Investors Management eventually sold the trademark and future development rights for the franchised Sirloin Stockade restaurants to a group headed by Gale Premer, currently chairman and chief executive of Sirloin Stockade.

Corral Midwest's Pintner estimates annual sales from the 26 units at about $30 million. The 26 units are standard-sized Golden Corral restaurants, rather than the gargantuan 11,500-square foot Metro Market units -- the chain's designated growth vehicle.

The creation of Corral Midwest Inc. is the latest chapter in the 20-year old company's accelerated franchising push it began several years ago. According to Golden Corral management, franchising will play an integral part in achieving its oft-stated mission to become the nation's dominant family restaurant chain by 1997.

Included in Golden Corral's growth outline is a target opening of some 500 Metro Market units or GC-10 models, 60 of which will be company owned.

Recent Metro Market franchise development agreements include a 14-store pact with The Winston Group of Atlanta and an 18-unit agreement with Golden Partners, a franchisee headquartered in Fort Smith, Ark.

Golden Corral also recorded its first international opening at the end of July with the unveiling of a Metro Market unit in Juarez, Mexico, to a Juarez investor who will erect a total of five units. Meanwhile, a partnership in Monterrey, Mexico, has signed to open eight units.

In addition to an a la carte menu, Golden Corral's Metro Markets offer "Golden Choice," a 140-item all-you-can-eat food bar and "Brass Bell Bakery," a bake station offering fresh yeast rolls, cookies and muffins every 15 minutes.

Unlike the early Golden Corral units in the mid-1970s, whose decor of oversized wagon wheels and waitress "steerettes," connoted red-meat consumption, the Metro Market stores emphasize the buffet, which can be ordered separately at $4.99, or bundled with an entree. Currently, about 80 percent of Metro Market customers either order the buffet separately or combine it with an entree.

The Metro Market concept was developed after shifting consumer tastes and increased segment competition stunted the chain's growth in the mid-1980s. Golden Corral subsequently conducted exhaustive consumer research to gauge customer preferences.

"We let the customers tell us what they wanted," explained Golden Corral president Ted Fowler Jr., regarding development of the Metro Market. "We responded to the things they told us. And they told us they wanted more choices. A vegetarian would feel just as comfortable with the selections at our food bar as a meat and potatoes person. When people aren't coming to a theater, you don't close the theater, you change the movie."

Designed for markets with populations of at least 50,000, the GC-10 Metro Market units annualize at about $3 million per year with much of that coming as a result of food bar sales. According to Fowler, bottom-line success with food bars is twofold: menu management and sheer volume.