Financing

Largest Jack in the Box franchisee makes strategic investment in fast-casual Nick the Greek

The founding team retains a minority stake and will continue running the growing 48-unit gyro-and-souvlaki franchise concept.
Nick the Greek interior
The fast-casual Nick the Greek chain operates mostly in California. /Photo courtesy of Nick the Greek.

The 48-unit Nick the Greek chain has been acquired by YTG Enterprises LLC, an affiliate of the largest domestic Jack in the Box franchisee, the company announced Monday.

Terms were not disclosed.

Anil Yadav, CEO of YTG’s parent company Yadav Enterprises Inc., said the Fremont, Calif.-based company took a controlling interest in the San Jose, Calif.-based Nick the Greek to add another growth-minded franchisor to his portfolio, which now includes about 600 restaurants.

Yadav, who is the largest Jack in the Box franchisee in the U.S. with about 230 units, last year acquired the 149-unit Taco Cabana chain, with plans to grow that brand as a franchisor.

He also owns a portion of the global TGI Friday franchisor and Yadav serves on the Fridays’ board. In that case, Yadav is both franchisor and a franchisee.

Richard Pawlowski, CFO of Yadav Enterprises, said in an interview with Restaurant Business that the company is moving away from being strictly a franchisee to investing at the franchisor level.

“We feel with Anil’s level of experience, we think we understand what makes a good franchisor,” he said.

The plan is to benefit from the shared infrastructure, purchasing and systems, while still allowing the franchisors to operate as separate companies, Pawlowski said.

Under YTG, Nick the Greek will continue to be run by its founding management team, which retained a substantial minority stake. The founders include three cousins, all named Nick Tsigaris, after their grandfather, in the Greek tradition, though they are identified as “Big,” “Little” and “Baby” Nick.

Co-founder and president “Big” Nick Tsigaris said it was time for the brand to take on a strategic investor that could bring the support of established infrastructure and systems—and potentially experienced franchise operators.

“We hit a point when we reached about 50 units and sat down to discuss it, and we decided to work with a strategic partner to help facilitate our growth and expand more rapidly, and avoid missteps that can happen along the way,” said Tsigaris. “This is our first go-round with franchising, and we’ve heard stories about how things can go wrong.”

The Nick the Greek brand was attractive to Yadav because of its great food, simple operations and hospitality, Pawlowski said—but also strong unit economics. The brand is known for its gyros and souvlaki.

“It’s great food, differentiated but accessible, that is delicious, and we think it has tremendous opportunity to grow at a national level,” said Pawlowski. “Greek food is universally regarded as delicious. It’s different enough that it stands out a bit, but it’s accessible. The flavor profiles are familiar.”

Nick the Greek operates mostly in California, but units have opened recently in Nevada and Missouri. But about 70 units are currently under development and will bring the brand to Arizona, Utah and Texas, and more are planned around Kansas City, Mo. About 39 of the 48 units are franchised, but the plan is to also grow company-owned locations.

System average unit volumes are about $1.5 million. Restaurants, which are typically about 1,500- to 1,800-square feet, cost in the $400,000 to $600,000 to develop, before allowances, and the average check is about $25-$26, with some units offering beer.

Yadav also operates franchise locations of Denny’s, a few Corner Bakery units and Sizzler. The company also operated El Pollo Loco units, but exited from that brand in May, Pawlowski said.

UPDATE: This article has been updated to correct the Taco Cabana unit count.

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