A Rallying Cry for C-store Foodservice Growth

GAYLORD, Mich. — Checkers Drive-In Restaurants Inc., parent company of Checkers and Rally's drive-thru restaurants, is planning to rally around the convenience channel. 

Checkers and Rally's restaurants have long been known as destinations for a quick and tasty meal, but as the company nears its 30th anniversary, it's targeting c-stores for yet another avenue of convenience for its customers.

In November, existing Rally's franchisees Mike and Joyce Stuck opened their first convenience store location in a BP store in Gaylord, Mich. This new Rally's in-store restaurant, which still features the chain's traditional drive-thru and the full menu available at traditional freestanding Rally's locations, is one of around a dozen c-store locations that exist in the company's 28-state footprint.  

Customer traffic has been strong since the Nov. 19 opening — particularly walk-in foot traffic, which Joyce called "incredible" considering the chain is known for its drive-thru convenience. The amount of foot traffic has come as a pleasant surprise to both the owners and corporate officials. 

"It just blows us away," Joyce told CSNews Online. "[The community has] been very warm and welcoming to us as a new business."

In fact, she and her husband — who own a standalone Rally's in West Branch, Mich., and have owned and operated other franchises such as Big Boy and TGI Fridays since 1972 — have decided to open a second Rally's restaurant inside a convenience store due to the lower initial cost and quicker opening process. The couple is planning to have a second northern Michigan c-store location with a year.

While c-store Checkers/Rally's locations currently remain a minority, with the oldest one opening around a decade ago, the company has "definitely seen a surge in proposed sites and is aggressively going after that as a [growth] channel," Senior Vice President and Chief Development Officer Jennifer Durham told CSNews Online.

Rather than focus on building up its c-store presence in specific geographic regions of the country, the company is pursuing a fill-in strategy whereby it hopes to add more c-store franchises in areas where the brand is well known but the population density is unlikely to support a standalone restaurant.

"It starts and ends with return on investment," Durham said, explaining that potential franchisees are seeking a lower initial financial burden these days. What makes Checkers/Rally's such a suitable partner for the c-store industry, she added, is not only its lower initial upfront cost, but also its focus on speed and efficiency via the drive-thru and the requirement of just a small 750-square-foot kitchen. 

"Our brand is really about three things: flavor, value and convenience," Durham said. "It's a very natural fit."

The biggest challenge for the company's c-store growth is visibility. While a particular location may seem conceptually like a good location, Durham said a franchise may not get the necessary volume if it is hidden behind gas pumps. Additionally, a site needs to have easy access for the flow of traffic, as a drive-thru is both required and key to the concept (which does not require customers to walk inside).

Three more c-store restaurants were expected to be open by the end of 2015, and at least one is already on the drawing board to debut in 2016.

"Low investment drives the opportunity, but as a brand, we offer something pretty different and unique from a lot of the bigger brands that have made their ways into the space," Durham said. The company offers the scale and brand support of a corporate organization, but franchisees also personally know executive team members, who treat Checkers/Rally's more like a family business.

"Everyone's family," agreed Joyce Stuck. As an experienced franchisee, she said longevity comes from offering respect and getting it back. "That's the big attraction with Rally's corporate, too — it's nice to be part of it."

Rally’s Hamburgers Inc. first fired up the grill in 1985 in Louisville, Ky. Checkers Drive-In Restaurants Inc. burst onto the burger scene in 1986 in Mobile, Ala. The two companies merged in 1999. Today, Checkers & Rally's have more than 800 restaurants open in the United States.