Colton's Growing Despite Recession

by Robert Bell  on Monday, Mar. 1, 2010 12:00 am  

Tim Nail, who started as a busboy and dishwasher at a Bonanza restaurant, worked his way up to being owner of the Conway Colton's.

While the American appetite for sizzling slabs of beef hasn't changed much during the last couple of decades, the steakhouse itself has. Many of the buffet-style chains that operated thousands of locations - Sizzler, Bonanza, Western Sizzlin' - have either closed or been forced to adapt.

That scenario is what led Robert Fain and his associates, who owned several Bonanza restaurants in Arkansas, to create the concept for Colton's, the first of which opened in Conway in 1999.

"The bigger restaurants, the Ryan's and Golden Corrals, came along with 11,000- or 12,000-SF buildings, and it made it difficult for Bonanza, with its 4,000- or 5,000-SF buildings, to compete," said Fain, CEO of Colton's Restaurant Group in Little Rock, which is the franchising company for Colton's Steak House & Grill.

The most recent addition to the chain opened late last year in Farmington, Mo., bringing the total to 24 in five states.

If the enthusiasm of some of the Colton's franchisees is any indication, the restaurant has been a smashing success.

"I've made the comparison before that these Colton's are like 7,000-SF cash registers," said Ed Featherston, who owns two of the restaurants in northern Missouri. "The revenue is always good."

Revenue for 2009 at the Hot Springs Colton's was up slightly from the year before, at a little more than $2.1 million, putting it at No. 10 on the list of highest-grossing restaurants in the Spa City (see Page 18).

The Conway location's $2.37 million in 2009 revenue was down 1.2 percent from the year before. But its profit was up compared with the year before, said owner Tim Nail. The increased profit was the result of controlling labor and food costs. Nail attributed the revenue decline to a number of factors, including the recession and new competition for the consumers' dollars, including the state scholarship lottery.

It's hardly a secret that the recession has been tough on casual restaurants. But Colton's seems to be weathering the economic environment well, and a franchisee group will likely open a new store later this year in northern Missouri, Fain said.

Colton's was down about 1.6 percent in overall comparable store sales for 2009, he said. "All things considered, it still was a good year for us. We got three new stores open," Fain said, referring to stores in Washington, Mo., and Campbellsville, Ky., as well as Featherston's store in Farmington.

Beef prices have been very stable over the last year, Fain said.

"The saving grace in this business for the last 12 months has been commodity prices. Most restaurant concepts have dealt with a decline in comp store sales, but commodity prices, beef prices, everything has been down. So we've been able to pretty well protect our margins by lower operating costs, even if sales were soft."



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