Claim to Fame
Deborah Silver, Editor
Under new ownership, Claim Jumper — the small casual-dining chain with the big burgers and steaks — is poised for national expansion.
Known for its extra-large burgers and thick slabs of aged steaks, Claim Jumper, the Irvine, Calif.-based casual-dining chain, has built a reputation for plus-sized fare sold at reasonable prices. It just may be the best-kept secret west of the Mississippi River.
Not for long. The 38-unit chain, with restaurants in its home state, as well as Arizona, Colorado, Nevada and Washington, was recently purchased for an estimated $220 million to $240 million by Los Angeles-based private-equity owner Leonard Green, who plans to turn the 28-year-old operation into a national player. Five new units are scheduled for this year — three in the Chicago suburbs and two in Oregon.
“The big challenge is to move from a small, closely held, private company to a large national brand,” says chief financial officer Bill Hustedt, who will continue to run day-to-day operations, along with Claim Jumper founder and CEO Craig Nickoloff and president and chief operations officer Robert Ott. Both Hustedt and Ott have worked for the company for almost 20 years.
Claim Jumper seems well-positioned to take on that challenge, given its ability to move large quantities of food quickly and smoothly. Indeed, volume is Claim Jumper’s hallmark.
Some five years ago, the company began operating its own meat-cutting plant near its headquarters. That facility employs 13 full-time workers and handles some four million pounds of meat annually — all of the chain’s meat products — which are purchased from Greater Omaha Packing Co. “That plant is currently our single point of distribution,” says David Wicker, Claim Jumper vice president of purchasing. However, starting in November, the company will begin contracting with a Midwest supplier to cut and distribute meat products for its restaurants east of the Mississippi River. The company opened its first Midwest unit this year in Lombard, Ill., a western suburb of Chicago.
“Having our own plant gives us two advantages,” says Wicker. “There’s the food cost savings of 2 percent to 3 percent. Then, there’s the control. We control our aging process and our contracts, and we have a consistent crew that’s been with us for years. They know exactly what needs to be done and how to do it.”
Claim Jumper obviously is doing a lot that is right. Although the privately held company does not disclose financials, it claims that the last 10 restaurants to come online are each ringing up more than $8 million a year, and overall unit average is $7.1 million. That puts Claim Jumper’s restaurants in the same rarified company as the highly successful Maggiano’s Little Italy, which boasts an average unit volume of $9.2 million.
Claim Jumper expects systemwide sales to grow to $290 million this year from $250 million in 2005. Starting in 2007, the chain will open smaller restaurants — 10,000 to 11,000 square feet instead of the usual 13,000 square feet — in St. Louis, Indianapolis, and Columbus, Ohio. Then it plans to head to the Carolinas and Florida. All units will feature an open-cooking area, a feature which the chain began installing in 2003. “We didn’t put them in before because we do so much volume,” said Ott, citing the pressure of serving so many dishes. “But now they’re part of our standard design because we take pride in what we do.” NP
Claim Jumper At a Glance
Company: Claim Jumper Restaurants
Headquarters: Irvine, Calif.
2005 revenues: $250 million
2006 revenues (company estimate): $290 million
Average unit volume: $7.1 million
Average check: $17
Expansion plans: 5 in 2006; 5 or 6 in 2007