King of the Wing?

Dauphin County-based sports bar chain Arooga's has goal of national franchising, taking company public

View original article - By Jason Scott - March 2, 2012 at 3:00 AM - Central Penn Business Journal
 
Be better than the other guy. And remember, failure is not an option.
 
For Gary Huether Jr., these age-old sayings are part of everyday life.
 
They are the reason for the daily stream of 20-somethings and business types at the bar, families in the booths, and mix of casual sports and chicken wing fans strewn about the laid-back neighborhood environment at Arooga's Grille House & Sports Bar.
 
Of course, the wall-to-wall high-definition flat-screen TVs carrying the day's top sporting events, personal booth units for those seeking other digital programming and a menu that defies the sports bar stereotype of frozen-to-the-fryer food also might be reasons for the packed house.
 
"We're not elaborate, but I think the stuff we do is unique," said Huether, the company's president and co-founder.
 
Five years ago, the idea for the Susquehanna Township-based sports bar chain emerged out of what was Kokomo's, a former chain known for its wings and sports-themed style.
 
Today, the 32-year-old Huether is focused on quality control and product partnerships on signature food and drink items and identifying new locations for restaurants and smaller shack-style stands within sports complexes. Launching a retail line and bolstering online ordering and catering options as well as cardless customer loyalty programs are other priorities.
 
The East Pennsboro Township resident also is looking for a larger corporate office and distribution space in the Harrisburg region, while preparing to launch an aggressive franchising program that could lead to Arooga's restaurants in 31 states, starting with the East Coast.
 
"I'm looking at not just being a restaurant company. I'm looking at (building) the brand," said Huether, who has long-term plans of being among the fastest-growing restaurant brands in the nation and taking his multimillion-dollar-a-year business public.
 
The ticker symbol ARGA is available, he said.
 
Last year's list of the top growing brands from market research firm Technomic Inc. included Minneapolis-based Buffalo Wild Wings, a chain with more than 800 company-owned and franchised locations in the U.S. and Canada.
 
The success of Buffalo Wild Wings, which trades its shares on the Nasdaq, is something Huether has paid close attention to as he and business partner Mike Murphy set out to conquer the restaurant world.
 
Murphy, owner of Paxtang-based Mike Murphy Rentals, focuses on real estate acquisitions and the site development side of the business.
 
A sixth standalone Arooga's opened in January off Interstate 83 in Springettsbury Township, York County. The chain plans to unveil its seventh location in downtown Harrisburg next week.

The idea

Seven restaurants is nowhere near the level of Buffalo Wild Wings, but Huether knows that to be king of the wing he has to constantly fine-tune his budding brand.
 
Huether was a minority partner of the Kokomo's restaurant on Allentown Boulevard in West Hanover Township before it closed and a 2007 transition to Arooga's began. Before that, he made his money as a Snap-on tools franchise owner in Maryland and across Central Pennsylvania.
 
The first Arooga's, a name that came out of a customer contest, opened at the Route 22 location in July 2008. The name doesn't mean anything, Huether said, which is what he likes about it.
 
During the development of the new restaurant, which was always intended to be a franchise, Huether said the focus was on taking bar food to the "next level."
 
The selection features 80 items selling for $8.99 or less, including homemade dough, salsa, macaroni and cheese and mozzarella sticks.
 
The style of the restaurant — from the number of televisions per square, including TVs in the bathroom, to the separate dining sections that feature booths and high-top tables and green certified designation — was just as important as the menu.
 
"I love what I do. It's pretty much my life," said Huether, who still fields the occasional late-night call despite a growing management team. "When I watch TV, it's restaurant shows. When I read, it's restaurant news."
 
He knows the restaurant industry is projected to see sales growth of 4.2 percent in 2012, up from 6.1 percent market growth in 2011, according to market research firm Packaged Facts.
 
He is also out on the town during business trips looking for area sports bars. He studies menus and customer email programs. He watches what other wing restaurants are doing and studies the failures of other chains, including Damon's Grill & Sports Bar.
 
The Arooga's in Hanover and the one on the Carlisle Pike in Hampden Township are former Damon's franchises.

Timeline

The owners of Arooga's don't have a set schedule for opening new company-owned locations at this point.
 
"The down economy, in a way, has kind of helped us," Huether said, adding there has been more inventory with fewer bidders.
 
Due to the downturn, there is more scrutiny on bank loans. Without a track record, it's harder to get financing, he said.
 
After the Route 22 location, Arooga's opened a second location on Route 15 in East Pennsboro Township in November 2008.
 
A second Harrisburg area location followed in June 2009 on Route 39, followed by the Carlisle Pike restaurant in October 2010. In the same month, Arooga's struck a deal with the Giant Center in Derry Township to carry its wings, fries and branded light beer at an arena stand.
 
The fifth standalone restaurant was in Hanover last March. Each location is identified by its route number or location.
 
Hoping to build on the company's growing success, the owners opened an Arooga's Wing Shack at Metro Bank Park on City Island in Harrisburg in April 2011.
 
An Arooga's Wing Shack opened in the Giant Center this season.

Partnerships

Not only has Arooga's grown its regional footprint, but it also has fostered partnerships across the state and nationally to strengthen its brand and create more product awareness.
 
Consistency with the menu offerings is more and more important as the chain takes on new locations and rolls out franchising — something Huether said he plans to do later this year.
 
For example, the wing sauces used to be made in-house. Today, a company out of Chicago produces the sauces based on specifications.
 
For about a year, Arooga's contracted with Harrisburg-based Appalachian Brewing Co. to brew its Arooga Light beer.
 
"It was a good relationship," said Artie Tafoya, ABC's director of operations.
 
ABC has about five outside contracts to brew beer for existing brewers and marketing companies that want products, Tafoya said.
 
The Arooga Light production has since shifted to the Lion Brewery out of Wilkes-Barre for larger volume, Huether said. The Boston Beer Co., which makes Samuel Adams products, brews an amber ale product that is branded for Arooga's.
 
A branded vodka called Sagoora — Arooga's spelled backward — is made by Philadelphia Distilling.
 
For the company's fresh-cut fries, it partners with Schuylkill County-based Sterman Masser Potato Farms. In all, more than 80 percent of the produce Arooga's buys is from Pennsylvania farms, Huether said.
 
To further enhance the Arooga's brand, a new line of retail products is being launched this month, Huether said. The company that makes the sauces will send them to a co-packer.
 
The retail initiative includes a Tabasco-style hot sauce that also will be on tables in the restaurants, as well as varying degrees of hot wing and barbecue sauces and the company's brand of bleu cheese and ranch dressing.
 
Huether said the goal is to sell the products online, in the restaurants and then in grocery outlets.
 
"Getting into grocery stores will be the next side of the business that we want to get into," he said, seeing some potential cross-marketing opportunities with the restaurants.
 
Identifying additional distribution outlets for the product will be an ongoing goal, he said.

Other initiatives

Pushing franchises has not happened sooner for Arooga's because of a desire to grow the company-owned locations first, Huether said.
 
His concept already has earned national recognition. In 2009, Arooga's earned assistance setting up franchise licenses after winning a national franchise contest co-sponsored by Sysco Foods and The Franchise Edge.
 
"We're ready for it, but I want full devotion and focus to the first (restaurants)," he said. "We want to grow fast but under control."
 
Arooga's was looking at the Lancaster market and into Maryland for its next restaurant after opening the latest York location, he said.
 
But the opportunity to revamp the former Spice restaurant on Second Street in Harrisburg into a draft house-style Arooga's came along.
 
The city model will be a smaller restaurant that is heavier on craft beers. The restaurant will cater more to busy downtown workers with a lunchtime buffet. It also should meet demand for a fast-casual dining establishment that serves alcohol, Huether said.
 
In opening the downtown Harrisburg location, Arooga's expects to begin pairing beers with wing sauces, he said, including an exclusive sauce made with nugget hops.
 
Huether said he still has an eye on Baltimore, Lancaster and Philadelphia for new locations. College towns and resort areas also are on his wish list.
 
"I hear from so many people out of town that say there is nothing like it," he said. "Franchising allows us to grow quicker. We still want to grow our corporate stores. I always want to have skin in the game. That will keep us more focused on managing the business more than just focusing on royalties and market investment."
 
Continuing to reinvest in the business, whether it's revamping the menu or technology upgrades, always will be a big part of the company's growth strategy, he added.
 
Upon opening the York restaurant, Arooga's unveiled a cardless loyalty program that rewards customers with special offers. It creates the ability to send out general company emails and then target each store's demographics, Huether said.
 
In addition, the new company website is now customizable to features of each store, including different pricing, menu items or area specials.
 
Television commercials are in the works, he added.
 
Winning the contest sped up the reality of the franchise dream, but it's something that would have happened anyway, Huether said.
 
"It gave us a good confidence boost," he said. "There is a no-fail option on this. We're going to push this and push this."
 
He said he believes Arooga's will be right up there with Buffalo Wild Wings and other dominant restaurant brands.
 
"I love what I'm doing. It's a lot of fun creating the brand," he said.
 
Release Date: 
Monday, March 12, 2012