Steady growth a formula that works for family-owned Spangles
04/14/2013 7:52 PM
04/14/2013 7:52 PM
Three warm pancakes smothered in cinnamon icing and syrup named “Ooey Gooey Cinnamon Pancakes” is classic Spangles: created by – and for – gut feeling.
The dish, due out chainwide in two weeks, was created by Spangles co-owner Dale Steven and tested on his brother Craig and sister Rene.
In an industry dominated by large chains driven by market research, Spangles is still a family business run by owners Craig and Dale Steven. Rene Steven Brand is director of operations.
The 35-year-old chain has grown steadily, but without the explosive growth of other Wichita successes such as Pizza Hut or Freddy’s Frozen Custard.
And the Stevens say they are OK with that. Every year or two they add a restaurant. Today they have 28 stores, half in Wichita and the rest spread between Hutchinson and Lawrence.
They still visit the stores every day, meet with their managers every week, invent new products without any fancy test marketing.
“It’s hands on, so we can keep control of everything,” Craig Steven said. “We are not in any big hurry to franchise. We keep the stores fairly close around Wichita, so we can keep good control of those stores.”
Hot dogs to hamburgers
The Steven children worked long hours for their dad, Joe, at Joe’s Seat Covers and Carwash. There were 11 sons and daughters in a family that remains tight and famously entrepreneurial.
By the time Craig turned 20, he was ready to be out from under his dad’s tough thumb.
His father had just returned from Tulsa and suggested to the older boys that one of them start a hot dog restaurant. Craig started the first Coney Island in 1969 at 21st and Amidon.
“It wasn’t that complex of an operation. Hot dogs, chips, chili and pop. That was it.”
But it did well enough that he opened a second and a third.
In 1978, Craig was approached by an acquaintance about taking over a stand-alone restaurant with a drive-through on South Seneca. He brought in his younger brother, Dale, as a partner to share the workload. That marked the formal beginning of the company that would become Spangles.
At customer request, they put hamburgers on the menu and were shocked to discover that they far outsold hot dogs. They eventually got rid of the other restaurants and concentrated on developing a chain of stand-alone restaurants.
In 1984, as they were about to open their sixth restaurant, at 850 N. Broadway, they held a contest for naming the company. The woman who suggested the name Spangles was given a week in Hawaii.
Today, only corn dogs remain on the menu.
A common theme for the Stevens is that they make the decisions themselves, where to put their stores, what kind of new food to sell, what kind of advertising to have.
Dale comes up with all of the new products based on things he sees here and around the country.
The company’s menu, like most fast-food chains, is based on a largely unchanging core with several limited-time offers such as the infamous “holy moly” guacamole cheeseburger.
Dale always confers with Craig and Rene.
Their test market is the office staff.
“We’ll do it and we might do it again six months later if it’s very successful,” Craig said. “They all do it. How many times has McDonald’s brought back the McRib sandwich? Every three months, I think.”
Some of their ideas work out great, such as the limited-time Asian chicken on pita, or the move to Black Angus beef, which has increased burger sales, but others not so well.
“I don’t know that any of them have really failed,” Dale said. “I just don’t know if they are as successful as you would want.”
“What about the grits?” Rene said. “I loved them, but they just didn’t take.”
“There are a whole bunch of things; it just goes on and on,” Dale said. “But you have to try them. It’s got to be different than your competitor. If it works, go with it. If it doesn’t, take it off.”
Randy Simon, who co-owns the other Wichita-based burger chain, Freddy’s Frozen Custard and Steakburgers, said he has long known and admired the Stevens. He and Craig Steven were classmates at Kapaun High School.
He said that Freddy’s may look like it is growing a lot faster than Spangles, but that’s misleading. The company is about 10 years old and has 10 company-owned restaurants, about the same rate as Spangles.
The difference, he said, is franchising. There are nearly 80 franchisee-owned Freddy’s.
Deciding whether to franchise or not is a matter of choice, he said. Franchising restaurants is an almost completely different business from operating restaurants and requires different skills and knowledge. In fact, his organization operates them as separate businesses.
He said that because the Stevens began so young, they had the opportunity to grow their business organically the way they wanted. Simon, who has had a long career as a restaurant owner and franchisee, started Freddy’s relatively late in life.
“I had to hurry,” Simon said.
The Stevens are still looking for expansion, but they want stores in places where people have already heard their name. Craig, who’s in charge of the real estate, said they’ve been scouring Manhattan for the last few years looking for a good location. They’re also looking in western Kansas, Dodge City, Great Bend and Liberal. They need a market of 15,000 to 25,000 people to build.
In smaller towns, it can be hard to find just the right piece of property, Craig said. And they’re not willing to overpay.
They’re not real interested in going into Kansas City or Oklahoma City in the near future because they rely on advertising to drive sales — they spend 4 percent of sales on advertising — and those markets are big and expensive. They would need to open six or seven stores at once to cover the cost, they said.
As far as retirement for the Stevens, it’s not imminent, they say. Craig is 64. Dale is 57. Craig’s son, Craig Steven Jr., a former Wichita State University basketball player, works six feet from his father.
So, they say, they’ll keep executing on their successful formula.
“We are not trying to be a McDonald’s or Subway,” Craig said. “We’re happy doing what we are doing. We make enough money.”
“We’ll grow beyond Kansas one day,” Dale said. “We really don’t have a desire to go now. We’re Kansas based and we’ll be Kansas based for a while.”
“It gets our properties paid off faster this way and it’s all just profit then,” Craig added. “I don’t need a jet plane or a yacht.”