Zaxby’s is a privately held chain of chicken-focused quick service restaurants offering a broad menu of chicken wings, chicken fingers, sandwiches, salads, and appetizers. The first Zaxby’s was established in 1990 in Statesboro, Georgia, near the Georgia Southern University campus, by childhood friends Zach McLeroy and Tony Townley. It was modeled after a small chicken finger chain in Athens, Georgia that Zach McLeroy frequented while attending the University of Georgia. The company operates primarily in the Southeastern United States, but has made plans to move into the Midwest and Mid-Atlantic soon, and grow to more than 800 locations. Zaxby’s popularity has exploded in the last 10 years, adding nearly 350 stores and reaching a total of 725 locations by 2015. Zaxby’s primarily operates a franchise model with 123 corporate-operated locations.
Zaxby’s was recently ranked 25th on QSR magazine’s annual list of the top 50 chains in the quick-service and fast-casual industries; a strong accomplishment given that it maintains a presence in only 16 states. It ranks fourth in the QSR chicken
category behind the much larger names of Chick-fil-A, KFC, and Popeye’s. Average annual store sales are strong at close to $2.2 million and in 2013 it became a billion dollar chain. To continue its growth objectives, Zaxby’s is reportedly working on an initial public offering (IPO) of around $200 million that could come as early as the fourth quarter of 2016. Though the IPO market has been slow in recent months, the past two years have seen a spate of “fast-casual” restaurant IPOs, including chicken and biscuit chain Bojangles Inc., pizza chain Papa Murphy’s Holdings Inc, and wings restaurant Wingstop Inc.
Zaxby’s locations are in freestanding buildings with drive-thru windows. The average restaurant is 3,300 to 3,800 square feet on approximately one acre. Preferred sites can be suburban or rural but need strong residential and daytime populations driven by office, retail, and university environments. The typical Zaxby’s lease is absolute triple net for a 20-year primary term with either annual or periodic rent increases.
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