Three years after participating in his first Discovery Day, Bill Christy, along with his business partners Mike and Kathy Hendershott, signed an agreement with Teriyaki Madness to open five locations in the Chicago area.
When Christy first studied the brand, he liked most of what he saw: the concept, the food of the people. But the company was young and relatively unproven. “The timing just wasn’t right,” Christy said.
Fast forward to 2021 and Teriyaki Madness has matured. There are now over 100 Teriyaki Madness locations in the United States and Mexico, and the company has demonstrated impressive resilience to pandemics. According to CEO Michael Haith, the company saw 18% same-store sales growth during the pandemic. Average gross sales, however, fell about 6% from 2019 to 2020, to $ 1,079,488, according to point 19 of the franchise backgrounder.
The macro may have changed, but the mic is still what Christy loves the most. As part of their due diligence, Christy and the Hendershotts visited a nearby Teriyaki Madness. The food was consistently excellent and the trio were impressed with the succession of positive customer interactions they observed.
The trio’s interactions with Teriyaki Madness headquarters reaffirmed their confidence in the brand. Much of the leadership came from established franchisors – Maui Wowi, Smashburger, and Toppers Pizza – and everyone they spoke to was passionate about the brand. Christy observed the same passion when they met the franchisees of Teriyaki Madness.
“It felt like a two-way interview,” Christy said of her interactions with the company. While he was interviewing Teriyaki Madness to see if he wanted to become a franchise, they interviewed him to see if he was a good candidate. He liked that the company wouldn’t let just anyone open a franchise.
Christy and the Hendershotts have met as part of their mutual business. Christy owns three hand and stone massage centers and facial spa in the Chicago area, and the Hendershotts own five. A few months after Christy opened her first location, Mike Hendershott called Christy and the two had lunch, setting the stage for a business partnership, Christy said, was a boon for both companies.
The trio can’t wait to connect to a network similar to Teriyaki Madness. According to Haith, the brand is doing everything possible to create a community of franchisees, sharing the financial performance and best practices of each store. Learning customer names, a seemingly simple trick to retain loyalty, is one such best practice that’s now common at Teriyaki Madness establishments.
Despite the brand’s maturity, Teriyaki Madness does not focus on signing multi-unit deals with experienced franchisees. “We built the organization to help people become entrepreneurs,” Haith said. Cultural fit, a customer-centric mindset and passion for the brand are more important than a specific business experience.
With this in mind, Haith acknowledged that signing agreements with experienced operators “makes our lives a bit easier”.
Christy became interested in franchising after stepping down as CEO of Xentris Wireless, a manufacturer and distributor of mobile accessories. As CEO, he traveled a lot and relied on massages to stay flexible after hours on the road or in the air. After a thorough investigation that involved her initial rejection of Teriyaki Madness, Christy signed a three-unit deal with Hand & Stone, which has more than 400 locations.
As a young Hand & Stone franchisee, Christy was surprised to find that running a small business is often more work than running a large business. At Xentris, he had a team of people to rely on. As a new franchisee, all of this work fell on his shoulders. More scale means more corporate staff, which makes the trio’s multi-unit deal with Teriyaki Madness more appealing.
Teriyaki Madness owes much of its recent success to its “impressive tech stack,” said Haith. The company entered the pandemic with a robust digital presence, with native orders and white-label delivery offerings. The company has also benefited from the understanding that Asian food travels well, Haith said, fostering brand discovery throughout the pandemic.
Haith sees huge potential in the Midwest. Teriyaki Madness’ two existing restaurants in the Chicago area are among the best performing units in the system, on track to achieve $ 2 million in revenue for 2021. He attributes part of the success to a lack of competition. While “teriyaki is ubiquitous on the west coast,” it’s a new concept further inland.
According to Haith, the closest domestic competitor to Teriyaki Madness is Chipotle. The two are not direct substitutes, but both offer customers a fully customizable and potentially healthy meal in a bowl format.
The investment range for a new Teriyaki Madness location is $ 327,000 to $ 678,000, including a franchise fee of $ 45,000.