Mr. Gatti’s is set to open 20 restaurants this year, with plans to open the same number in 2023. The expansion is targeted at markets where the chain is best known, namely the Sunbelt and the South East. In fact, earlier in May, Mr. Gatti sold two franchises in Kentucky, where he already has 14 stores, and another in North Carolina.
The chain offers three prototypes to franchisees. The main one is the standard family entertainment center, which is about 12,500 square feet with an adjoining arcade or game room. The model is best for small and medium markets, including commercial areas with 60,000 to 250,000 residents and average household incomes of $55,000 to $80,000. Additionally, there is a smaller 5,000 square foot family entertainment center format that includes a limited game room and an offsite-only model that fits into 900 to 1,500 square feet.
Drop-off and drop-off locations have seen double-digit sales growth during COVID, leading Phillips and his team to believe these stores will sell at a higher rate coming out of the pandemic. This was not the case, however. Approximately 80% of new franchises are family entertainment centers, which is the current footprint of the system.
Large-format family entertainment centers are seeing a 97.71% sales increase in 2021 compared to the pandemic-hit 2020.
“I really believe the heavyweight for family entertainment centers is a consequence of us having smart franchisees who have the financial capability and operating experience to recognize how attractive our economy is to operate a center. family entertainment,” Phillips said. “They had the flexibility to do whatever they wanted and, predictably, they chose to invest in the most profitable alternative, which was that [family entertainment center].”
“Of course, this represents a greater investment than a [delivery and carryout] and a more complicated operating model because you have both the gaming and restaurant components, but damn it, you definitely get the rewards of that when you operate your store,” he adds.
Although Mr. Gatti offers recommended sizes, the company leaves room for franchisees to use their imaginations when it comes to interior design. For example, franchisees in Brenham, Texas decided to install a Bellagio-style water fountain and a 23-drink craft beer wall.
Phillips admits he was hesitant about the idea at first. He had never heard of a restaurant offering such an elaborate water feature. The chain allows franchisees to sell beer and wine on a case-by-case basis, but it had never explored the craft brewery scene or offered a featured beer segment.
Mr Gatti let operators go ahead on a trial basis, and the business was rewarded with several sales records when it opened in January. Phillips says more than 100 customers lined up outside the door at times.
“We love it,” Phillips says. “They are delighted and happy, of course, with their investment. We think it’s fun to help franchises spread their wings and realize their ambitions and creative ideas. It’s very good for our brand to make itself known and to have such a successful store.
In May, the brand opened a similarly sized store in Weslaco, Texas, which is also seeing explosive sales, but without all the bells and whistles of the Brenham unit.
For Phillips, this proves that success is more about the franchisee’s commitment and dedication, which is why Mr. Gatti’s isn’t going to start promoting water features and craft beer walls to the rest of his footprint. and potential operators.
However, it will continue to encourage creativity and support ideation. With this playbook, Mr. Gatti plans to reach or exceed 20 restaurants per year for at least the next five years. In addition to this organic growth, Phillips says mergers and acquisitions could also be an opportunity.
“We think the future looks very bright, and we think we will be several multiples of our current size by the end of this decade,” says the CEO.