Bar-b-cutie Close To Franchise Deal In China

(Wednesday, June 28, 2006) - Bar-B-Cutie Franchise Systems is in advanced talks to take its Southern fare to the Middle Kingdom.

Greg George, the Brentwood company's director of franchise development, says he expects to sign a franchise deal in the next month. He expects the agreement to call for between 50 and 100 Chinese stores over the next 10 years.

"They love American food and products," says George of the Chinese, whose booming economy is spurring the rapid growth of a middle class craving Western goods of all kinds.

That has made China an attractive market for American restaurant companies. Last September, Louisville-based pizza chain Papa John's International Inc. opened its 15th location in China and plans to open another 250 in the next five years.

Several years ago, Popeyes Chicken & Biscuits, which is owned by Atlanta-based AFC Enterprises Inc. (NASDAQ: AFCEE) signed a deal to open 54 restaurants in China and opened the first of those locations in 2003.

Restaurant franchise heavyweight Yum! Brands (NYSE: YUM), which operates KFC, Pizza Hut and Taco Bell, operates a China division with more than 2,300 restaurants that churn out annual operating profits of more than $200 million. The company has identified China as its chief market for new restaurant development worldwide.

Ronnie and Brett McFarland, who began franchising Bar-B-Cutie a few years ago, also sees plenty of potential elsewhere internationally and closer to home. The China talks are progressing as George is putting the finishing touches on a 20-store master franchise deal covering all of Spain. And he last month sold a 53-county master franchise in the Wilmington, N.C., area.

Bar-B-Cutie, which specializes in barbecue and traditional Southern selections, in May also sold franchises for two units in Nashville and single units in Hays, Kan., and Dallas. A store also is opening in Memphis, and one opened in Georgia in March.

There are six Bar-B-Cutie stores operating in the Nashville area, and the company is looking at opening a store in Chattanooga.

The Wilmington master franchise will likely add 40 to 50 stores to the Bar-B-Cutie system. Terry Quinn, whose company Wilmington Food Systems LLC bought the master franchise, says eastern North Carolina will be a terrific market for Bar-B-Cutie.

"They have staying power and very capable leadership," says Quinn.

Founded in 1950, Bar-B-Cutie opened its franchise division in 2003. According to a Price Waterhouse Coopers study, there are more than 183,000 U.S. franchised food operations generating 3.6 million jobs, about $40 billion in payroll and a total economic output of $144 billion.

George says Bar-B-Cutie's logo needed updating and the company didn't have branding and marketing materials. His marketing tool of "Get Your Bootie to Bar-B-Cutie" is garnering the attention he was seeking. The slogan appears on T-shirts and posters and complements the point-of-purchase "Food That's Never Been So Good Lookin' " displays in Bar-B-Cutie stores.

George says Bar-B-Cutie's goal this year is to sell 25 franchises. Within the next 12 months, the goal is to reach 100 stores and then grow that number to 500 in the next five years. To help guide that growth, George has hired Kelly Pope as director of franchise relations as well as a director of franchise operations.

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