Business Spotlight: Mo’ Jerky

The Beef Jerky Outlet’s first franchise store opened on the Branson strip in May 2012 by Bob and Debra Hathaway. One year later, the couple added another, in Springfield on South Campbell Avenue across from Bass Pro Shops.

There are now 95 independently owned stores across the United States.

“We were a little bit of a guinea pig,” says Bob Hathaway, who was a 25-year corporate lawyer for General Motors Co. before jumping into the jerky business.

After retiring from GM in 2008, he read some books on franchise ownership and attended a convention in Atlanta, where he first became acquainted with Beef Jerky Outlet.

“Since I didn’t have any experience in retail at all,” Hathaway says, “if I was going to try to do something like that, it needed to be a pretty straightforward, pretty simple business model.”

The dried-meat chain was founded in 2006 by Scott Parker and Paul Lyons, who started with five stores in Tennessee and Michigan before beginning to sell franchises in 2010.

Hathaway says his snack shops, each of which ran with only two full-time employees and one shared manager, went through a few hurdles – like changing point-of-sale systems and credit card merchants multiple times.

Last year, when Hathaway decided to retire for good, he partnered with Mick Riddiough, of the Riddiough Group, to broker a sale. Riddiough was previously a consultant with Beef Jerky Outlet on franchise deals.

“It made my life easy,” Hathaway says, “because he was intimately familiar with the franchise (and) a lot of franchisee candidates that were already vetted.”

The two stores were sold Feb. 15, 2017, to Arkansas residents Jonathan and Kaylie Fry, the owners of a Rogers, Arkansas, location via NWA Jerky LLC. The Springfield-Branson store combo was the first franchise transfer for Beef Jerky Outlet.

The Frys also own and operate the 165-employee Home Instead Senior Care franchise in Fort Smith, Arkansas.

Jonathan Fry says he attended a workshop, as well as factory and store tours, before investing an undisclosed amount in Beef Jerky Outlet.

According to company materials, initial franchise fees are $44,900, and the cost of establishing a new jerky store ranges from $215,750 to $394,900. Franchises pay a 5.5 percent monthly royalty and a 2 percent marketing fee.

“We don’t use the scrap meat trimmings to make our jerky,” Fry says of the premium-priced jerky, which retails for about $2.50 per 1-ounce bag and $10 a quarter pound. “It’s made from eye-of-the-round cuts of beef.”

All of the dehydrated beef is made exclusively by Smoky Mountain Beef Jerky in Knoxville, Tennessee.

“It’s cut to the same 3.5-millimeter thick – every slice. So when you get a bag of jerky you’re not going to have big, huge chucks and real skinny chunks,” Fry adds. “When you have that, it affects the flavor profile.”

Up North Specialty Meats in northern Michigan produces the smoked jerky products, including beef, alligator, elk, venison, pheasant, duck, ostrich and kangaroo.

“You have fans of both. Some of the traditionals like the dehydrated jerky because it’s tougher – you’ve got to rip into it and tear. Now the smoked jerky is a lot more tender – higher moisture content and easier to chew,” Fry says.

The stores also sell accessories, like Slap Ya Mama Cajun seasoning, “PETA” shirts that stand for “People Eating Tasty Animals” and jerky treats for pets. The spicier beef jerkies are the top sellers, Fry says, and honey barbecue and cherry maple are popular in the smoked varieties.

Nearly all of the 37 beef flavors are available as free samples. This food-handling feature requires the store to have city and state health licenses, as well as sanitation equipment.

According to the U.S. Department of Agriculture Economic Research Service, beef production is projected to grow 2.3 percent to 26.9 billion pounds in 2018, which would result in decreased prices for meat manufacturers.

Fry says the growth in the number of franchisees is proof of the booming popularity of the high-protein snack. The franchise store count has tripled in two years.

“When my wife and I bought two years ago, there were only about 30 stores open,” he says.

Rob Lemons – who works as a regional field consultant for Beef Jerky Outlet and owns the Arlington, Texas, store – says 12-15 locations are expected to open this year, with a total of 90 in the works. The company vets potential franchisees through its discovery outings, Lemons says, and also spends a lot of time analyzing real estate options.

“Picking the right place – that has the right traffic, that has street visibility – that’s where it becomes the toughest,” he says.

The Springfield store grossed $450,000 last year, Fry says, and the Rogers shop did about the same. Sales in Branson were better, with $550,000, even with the cyclical tourist seasons.

“The factory I went to in Knoxville, they have the capability to run 24 hours a day,” Fry says. “And whenever I was there a year and a half ago, they were running one eight-hour shift per day. So they are definitely able to scale and move up production as the demand steadily increases.”