Originally published on Restaurant Dive on May 26, 2023.
The company, which hasn’t aggressively franchised in the past, signed the largest development deal in its history as it works to open 60 units in six years.
After Jim Dinkins joined The Honey Baked Ham Company in 2021 as CEO, he developed a plan to double the company’s revenue by 2029. That means opening new units, optimizing individual unit sales, enhancing the customer experience and forming new partnerships that open up new markets, said Scott Temme, Honey Baked’s franchise sales development manager. According to its 2022 FDD, the company’s revenue was $17.7 million during the fiscal year ending Sept. 26, 2021.
As the brand opens new stores and enters new markets, it continues to build upon its founder’s early success. Honey Baked Ham was founded by Harry Hoenselaar in 1957 in Detroit, Michigan, after he created a unique flavor profile with a sweet crunchy glaze. The ham and his patented spiral slicing machine caught on quickly, and there were long lines and waits for some of its products in its early days, Temme said.
The company, which is now synonymous with holiday meals for many families, opened its first franchised unit in 1998 when it acquired the Hickory Ham Company. In 2002, it acquired the Heavenly Ham Co. and added 190 stores across 39 states. These acquisitions grew the brand’s franchised unit count to about 200 by 2002. Twenty years later, the company has about 440 units total, of which 207 are franchised.
“If you think about the last several years, we have really been a little sleepy on franchise development,” Temme said. “We like to think of ourselves as a reemerging brand.”
Of Honey Baked’s franchisees, 62% are multi-unit owners, and many of them are ready for expansion. At the end of 2022, the company signed its largest franchise agreement in its history. Existing franchisee The Davis Restaurant Group agreed to develop seven stores in four states North Carolina, Maryland, West Virginia and Minnesota through 2025.
Honey Baked offers four revenue streams in addition to its holiday hams. It serves lunch throughout the year and offers catering with a lunch box program, which Temme said has been “very successful.” Gifting has also proven popular, not just around the holidays, but also throughout the year, he said. The company also launched a loyalty program last November that provides HoneyBaked Cash for customers to use when purchasing products in stores or online.
To get new franchises onboard, Honey Baked offers a three-part training program, Temme said. The first part consists of 32 hours of food safety and ServeSafe training, onboarding and meeting the operator’s franchise business leader. The second part is three weeks of hands-on, in-store training at one of the company’s certified training units. During that training, operators learn the nuts and bolts of running a Honey Baked Ham store, from glazing ham to working the register and providing a high-level of customer service, he said. Training culminates with at least seven days of opening training.
Corporate also provides operators with different analytical tools to evaluate who its existing customer base is and where customers might come from in the future, Temme said. Franchisees work with one of Honey Baked’s national broker programs, and corporate representatives travel to target markets to observe and approve individual sites. From there, the company helps franchisees with architectural partnerships and construction. Honey Baked also conducts franchise business reviews throughout the year, asking operators how corporate can better support them, he said.
Additionally, Honey Baked secured two lending partnerships this year to help franchisees gain capital for expansion, Temme said. In April, the company began partnering with ApplePie Capital to allow franchisees who have paid off their debt to leverage the equity of their stores with zero out of pocket expenses and no liens to help fuel the development of new stores. The company also has a secondary relationship with BoeFly that started in January.
Development plans: Honey Baked is planning to develop 60 stores over the next six years, which includes the eight expected to open this year, Temme said. The company plans to open 10 to 12 units annually in the subsequent years. Honey Baked is targeting states like Texas, California, Florida and Georgia, as well as the Southeast region. These areas have had the most leads, and management feels there is room for growth in these regions.
The company typically looks for 2,000- to 2,200-square-foot inline locations. End cap units are relatively new to Honey Baked, and it’s looking into drive-thrus as it pursues growth. The company also has a few freestanding locations, but that is not typical to the brand, Temme said.
Ideal franchisees: Honey Baked looks for both experienced multi-unit operators and first-time franchisees that have a passion for the brand, Temme said. Ideally, franchisees have some experience either in restaurants or retail, or hire an experienced operator to fulfill that requirement.
