Strictly franchising

Spanish catering group Restalia has quadrupled its business during the crisis

Restalia now has branches in Italy and Portugal.
Restalia now has branches in Italy and Portugal.

After José María Fernández Capitán opened his first 100 Montaditos sandwich bar in a shopping mall in Huelva in the southwest of Spain in 2001 he came round to the idea that it wasn't so much the hostelry trade in itself that interested him but the idea of building up a franchise business. A few years later he sold off his own restaurants and created Restalia in 2004, one of the few franchises specializing in the hostelry trade in Spain. By 2007, the company had a network of 112 outlets in Spain and by the end of last year the empire had expanded to 400, with 25 outlets outside of Spain.

Restalia now operates under three brands: 100 Montaditos; La Sureña, an Andalusian-style eatery; and TGB (The Good Burger), with the main focus of the company being the creation and launching of brands rather than hostelry management in itself. "As pure franchisers, our mission is to provide services to franchise holders, enhance the value of the brand, secure favorable prices and design attractive products," explains Restalia's general manager Cristina Donado.

Restalia makes its money by charging a franchise fee of 30,000 euros and a 7-percent share of outlets' sales. Revenues have grown from 45 million euros in 2008 to 175 million last year, without incurring any debt and with a direct workforce of 160.

100 Montaditos, the largest of Restalia's franchises with 296 outlets, took off rapidly. "The concept was a revolution," Donado says. "Being able to eat a small rather than a big sandwich, drink out of a glass and at competitive prices won people over." La Sureña was launched in 2010 and now has 76 franchised outlets

But the company also felt the impact of the crisis that began to hit Spain hard in 2008. "We noticed a drop in sales and in the number of customers from the middle of 2008 and we reacted very quickly," Donado says. "We reinvented the business on the hoof." 100 Montaditos began to charge customers just one euro for every item on offer on Wednesdays. "When we saw the situation was getting worse, we extended this to Sundays," Donado says.

In doing so, 100 Montaditos won a name for itself that allowed it to extend the brand to less busy and cheaper outlets, including outside city centers, which allowed for rapid expansion. At the same time, the crisis wiped out a number of rival brands. "In the end, we remained as one of the few profitable and consolidated alternatives in the hostelry business," Donado explains.

US expansion plans

On the back of this success, Restalia has embarked on further expansion, with the recently started TGB brand to be followed by a fourth at the end of this year.

The company ventured overseas with 100 Montaditos in 2010. "We started with an outlet in Miami and we have several now in Florida," Donado says. Restalia has opened an office in the United States where it plans further expansion. The company is also present in Mexico and Colombia and next year plans to move into Guatemala and Chile. In Europe, apart from Spain and Portugal, Restalia also has its eyes on Britain and Denmark.

But Restalia's big project currently is The Good Burger, which was launched last November in the La Vaguada shopping mall in Madrid. "We knew it was difficult to invent something in this segment of the market, so we looked for a niche that didn't exist in Spain, which was a premium quality hamburger at prices similar to those for normal hamburgers," Donado says.

The brand revolves around using higher quality meat and a special bread, developed and patented by Restalia, in New York and English pub-style surroundings designed to appeal to young people. The idea is to have 10 to 15 TGB outlets by March and no less than a 100 by the end of the year.

Donado believes the market is open to new ideas. "People are tired of the same ideas as always," she says. Ideas for the fourth brand are still maturing, but in the meantime Restalia plans to open another 250 outlets for the existing brands this year.

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