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Retail and Real Estate
Checkers ready to jump into Las Vegas
By Brian Wargo / Staff Writer

With more than 800 restaurants in 28 states and the District of Columbia, Checkers is the nation's largest chain of double drive-thru restaurants.
Courtesy Photo

Checkers restaurants, a fast-food chain with more than 800 locations nationwide, has chosen a franchisee with two decades of experience in the industry to introduce its brand to the Las Vegas market.

"Actually, he chose us," said Ron Levondosky, executive vice president of franchise at Checkers.

Nick Nasrollahi, who spent 19 years with Jack In The Box restaurants, has signed on to develop 20 new Checkers in Vegas, along with his partner David Meldrum. When Nasrollahi decided he was ready to get into the business as a franchisee, he looked at several opportunities before approaching Checkers.

"I'm very familiar with fast food, and what I liked about Checkers is they have variety, yet they're a simple concept and the food is great," Nasrollahi said. "With the cost of real estate, the smaller footprint also makes sense because land is not cheap."

The smaller locations are a key point of emphasis to potential franchisees.

The franchise sales pitch describes the restaurants as "700 square feet of burger flippin', deep fryin', double drive-thru fun." In addition to the break on real estate costs, the company says the half-acre sites also make the restaurants easy to operate and typically reduces overhead costs.

The double drive-thru concept, which, not surprisingly, greatly increases the amount of vehicle traffic, also appealed to Nasrollahi.

Two drive-thru windows are essential to Checkers' business model because the restaurants have only a walk-up window and no inside seating. The design typically includes an outside seating area, with umbrellas shading the tables, which makes the concept a good fit for a warm-weather city such as Las Vegas.

Checkers merged with Rally's, a chain with a similar concept, in August 1999, expanding the company's reach into the Midwest and West. The company has changed Rally's to Checkers in some markets, such as Detroit, but maintains the Rally's brand in other areas. In June 2006, the company went private through a merger with Taxi Holdings Corp., an affiliate of Wellspring Capital Management LLC, a private equity firm.

Nasrollahi plans to move fast in introducing the brand to the Las Vegas Valley. He anticipates opening his first restaurants early next year, probably in North Las Vegas, and hopes to have at least eight locations by year's end. While he does not have exact locations yet, the small footprint and the building design should allow him to move quickly once a site is located.

Checkers uses modular buildings that are delivered to the site pretty much intact.

"People could drive by one day and see nothing, then drive by two days later there is a Checkers restaurant sitting there," Nasrollahi said.

The lease agreement allows him eight years to bring the 20 restaurants into the market, but he hopes to beat that deadline and expand on the number of locations.

"The growth in Las Vegas is awesome and competition is tough but with our experience and knowing the market the way I do, I think this will be a win-win situation," Nasrollahi said.

Levondosky agrees.

He said Nasrollahi's interest comes at a time when the company is aggressively looking to expand into the region and it feels fortunate to get someone with his knowledge of the industry.

"We love to get a mix of investors, but having someone with his experience in a new market for us is great," Levondosky said.

Typically a Checkers franchisee signs an agreement that allows them exclusive rights to a market for a certain period of time, another idea that appealed to Nasrollahi.

"That was one of the main reasons I chose them," Nasrollahi said. "By having control of the whole Las Vegas market, I can pretty much guarantee consistency in all of the locations."

Most people, Nasrollahi said, identify all of a chain's restaurants with the name on the marquee, so a poor franchisee can negatively impact an entire market.

The standard cost for a Checkers franchise is $30,000, with a 4 percent royalty fee. While costs vary because of fluctuating real estate prices, Levondosky said the average cost to open a restaurant is between $700,000 and $800,000.

The company's zeal to expand into new markets has allowed Meldrum and Nasrollahi to reap an additional benefit.

"David and Nick are kind of unique because they are what we call a new market program so the franchise fee is $10,000," Levondosky said. "We reduce that fee so they can apply the $20,000 to marketing."

With its modular construction design, it's not surprising that Levondosky calls the program pretty much a turnkey operation, but franchisees, especially one with Nasrollahi's experience, do have some input.

Franchisees generally choose their own locations, which are approved by the company. They operate from the standard menu, which is typical fast food fare, with the exception of crisp, seasoned, battered French fries, which have a unique flavor. Signature hamburgers include the Champ, the Checkerburger and the Big Buford.

One area where franchisees are allowed some latitude is with the implementation of breakfast items. The company is hoping to expand its product line to include breakfast nationwide and Nasrollahi plans to try a breakfast program here.

This is a 24-hour town, so it makes sense to have breakfast items," he said.

Levondosky said the company is not sure what breakfast items will become a permanent part of the Checkers menu, but with the emphasis on drive-thru, it will likely be products that are easy to handle while driving, such as breakfast burritos.

The company also has a NASCAR burger, which is not surprising since it is in its third year of an exclusive agreement with the auto-racing giant. The checkered flag that is part of in the company's logo made the sponsorship a natural fit.

Levondosky says the arrangement has certainly increased the name recognition of the brand, but has not yet achieved the spike in sales the company had hoped for when it entered into the agreement.

While he is not sure if the agreement with NASCAR will be renewed, Levondosky agrees the term "start your engines," will continue to be a rallying cry for many Checkers customers.

Mark Hansel covers retail and real estate for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at (702) 259-4069 or at hansel@lasvegassun.com.

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