Restaurant costs have climbed to the point where young, emerging brands have little chance of competing against the big guys as they try to scale.
That’s why Gregg Majewski has created a platform that he says will give emerging operators the sort of support he wishes he had when he was younger and getting started.
Majewski is the founder and CEO of the newly launched Craveworthy LLC, a multiconcept operator and franchisor created in partnership with asset management holding company FG Financial Group Inc.
He is also CEO and the largest single shareholder of Mongolian Concepts, parent to Genghis Grill, Flat Top Grill and BD’s Mongolian Grill—a company that includes operators looking for new growth opportunities.
So far, Craveworthy has acquired two early-lifecycle brands and is creating two more—all with the goal of growth with the help of franchising. And Majewski plans to build and acquire more brands under the Craveworthy umbrella.
Craveworthy is one of a growing number of new platform companies that are bringing together teams of experienced restaurant-industry veterans and sources of capital with founders willing to trade equity for a stable support system to facilitate growth.
In this case, the move also gives operators within the Mongolian Concepts family an opportunity to generate revenue with new brands.
“I want to create a company where my franchisees never have to go anywhere else to be a franchisee,” he said.
Fundamentally, it’s all about synergy, said Majewski, who is also the former CEO of the sandwich chain Jimmy John’s.
Craveworthy brings to the table “muscle power” with more than 200 years of collective industry experience—many with a common thread of having served at Mongolian Concepts—such as VP of Marketing Blake Johnson; VP of Culinary & Supply Chain Becca McIntyre; Senior director of training Cassie Miller; and VP of Development Rich Guckel. Chef Robert Kabakoff, who also worked with Mongolian Concepts, is leading Craveworthy’s menu innovation.
“There’s no way that, back in the day, I would have been able to afford it if I was starting up Krafted, for example, on my own,” he said, referring to the two-unit Krafted Burger + Tap, created by Craveworthy in the Chicago suburbs. “Now I have a group and a team that has just dominated in the restaurant industry. They’ve all done huge things.”
Under the Craveworthy umbrella, the sister brands will also have opportunities for shared buying power and bundling contracts, he said.
The move also marks a change in philosophy as a franchisor, said Majewski.
Franchisors have become reluctant to sell to individual operators because they’d much rather sell to “a multiunit guy that has 30 restaurants” and wants to open 10 more, he said. “You had to be a big, big guy that owns 50 to 100 restaurants to be successful as a franchisee. But that’s never what this industry was.”
Majewski, instead, hopes to sell franchise units to his restaurants’ managers. As an incentive, those who work for Craveworthy for three years, and who want to become owners, can get royalty fees waived for their first year of operation.
“I want my managers to become millionaires,” he said. “I want them to grow and buy their second and third stores. I want to create the American Dream for our team.”
That’s not to say Majewski will turn bigger franchisees away. “But I believe in owner operators,” he said. “If a big guy wanted to come in and invest and build one of our brands, he’d have to prove that he is an owner-operator with real skin in the game.”
So far the only traditional franchise brand under Craveworthy is Wing It On, a wings concept founded by Matt Ensero, who serves as the brand’s president and owns one unit, while another 13 are franchise locations. Another corporate location is scheduled to open soon in the Chicago area, Majewski said.
Budlong Hot Chicken, Craveworthy’s second acquisition with four units and a ghost kitchen around Chicago, will launch a franchising program in March.
Krafted, a small-footprint casual-dining concept, will add another couple corporate units this year before launching franchising by the end of 2023, he said.
And Craveworthy is also developing the Lucky Cat Poke Company, which will have a first brick-and-mortar location in Oak Brook, Ill., in a few months with more to come. But Lucky Cat will primarily be a virtual brand operated out of existing restaurants and ghost kitchen facilities.
Majewski said Lucky Cat has contracts for 50 ghost kitchen outlets scheduled to debut this year.
Poke is a terrific opportunity as an add-on virtual brand for restaurant operators because it’s popular, has a low cost of entry and uses many ingredients that are likely on hand, he said.
“There’s no infrastructure needed except a rice cooker,” said Majewski. “We designed that concept to help drive restaurant sales for everybody.”
Meanwhile, Mongolian Concepts has reignited growth for its largest concept, the more-than 50-unit Genghis Grill, he said. The franchisor sold 24 new units in 2022, and four to six restaurants will open this year, he said. They are the first to open since 2018.
A new Genghis Grill prototype was unveiled last year that will cut restaurant footprints in half, install kiosk ordering to speed service and drive down costs. The company also introduced a new line of curated Valuebowls priced under $8, shifting away from strict customization to drive efficiency.
“I’m thrilled with the work we’ve done on that brand,” he said.
Expect to see smaller restaurants with efficient operations as a theme that will continue.
The days of 7,000-square-foot restaurants are gone, said Majewski. Franchisees need to be able to make money and that means rethinking buildout costs.
Rather than spending $600,000 to $700,000 for a 2,500- to 3,000-square-foot-space, it makes more sense to spend $400,000 for a 2,200-square-foot space that does the same volume, he said. “If the initial investment is doable and affordable, they’ll open up stores a heck of a lot faster.”