This story was originally published on Restaurant Dive. To receive daily news and insights, subscribe to our free daily Restaurant Dive newsletter. When George McAllan joined Sonny’s BBQ as chief growth officer a year ago, the full-service chain hadn’t added a new franchisee in about eight years. But that is about to change. Over the past year, the company developed processes for franchisees and added mapping software and other technology to make sure its IT platforms are up to speed. The chain has been ...

Core Insights - 7 Brew has reached a significant milestone by opening its 500th store and is poised for further growth due to its modular construction design, which reduces both construction costs and time to open new locations [3] - The company has a robust development pipeline and is attracting interest from major franchisees, exemplified by Flynn Group's recent commitment to open 160 units [3] - 7 Brew is diversifying its growth strategies by opening non-traditional locations, including its first "walk-thru" in Walmart and another at The Ohio State University [5] Leadership Changes - Matthew Dunnigan has been appointed as the new Chief Financial Officer of 7 Brew, bringing extensive experience from his previous role at Restaurant Brands International [7] - Dunnigan's background includes significant contributions to strategic growth and capital allocation during his tenure at RBI, particularly during the merger of Tim Hortons and Burger King [4] - He expressed enthusiasm for joining 7 Brew, citing the company's compelling growth potential and franchise returns as key factors in his decision [7]

Financial Data and Key Metrics Changes - System-wide sales for Q1 2025 increased approximately 4.8% year over year to $140.7 million, with total revenue rising approximately 2.3% year over year to $113.7 million [21] - First quarter adjusted EBITDA was $5.5 million, representing 4.9% of total revenue, a 2.8% decrease year over year due to a prior year settlement payment benefit [21][26] - Company-operated shop revenue increased approximately 1.3% year over year to $109 million, while franchise revenue surged approximately 30.8% year over year to $4.7 million [22] Business Line Data and Key Metrics Changes - Same store sales growth was 0.9% for the full quarter, driven by a 1.1% increase in average check, partially offset by a 0.2% decrease in transactions [22] - Franchise units increased by 26%, contributing to the significant rise in franchise revenue [22] Market Data and Key Metrics Changes - Digital sales represented over 42% of total shop sales during the first quarter, an increase of approximately 200 basis points compared to the previous year [14] - The company expects to open at least six new shops in Q2 2025, with a total of at least 38 new shops anticipated for the year [17][28] Company Strategy and Development Direction - The company is focused on driving same store sales growth through menu innovation, digital investments, and prudent cost controls [10][20] - Plans include modernizing the shop footprint and accelerating unit openings through franchising efforts, aiming for a total of 2,000 units in the U.S. [19][30] - The company is also investing in digital assets and data analytics to enhance customer engagement and operational efficiency [14][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth plan despite potential pressures from tariffs and a challenging consumer environment [27] - The company anticipates same store sales growth of 1.5% to 2.5% for the full year 2025, with adjusted EBITDA projected at approximately $33 million to $34 million [28] Other Important Information - The company reported a slight net loss of $62,000 for the quarter, an improvement of $2.7 million over the prior year [26] - The company purchased approximately 117,000 shares of common stock for about $1.1 million during the first quarter [26] Q&A Session Summary Question: What is driving the outsized performance in same store sales? - Management attributed the performance to menu innovation, digital marketing efforts, and improved value offerings [34][35] Question: Can you provide insights on franchising initiatives and unit level economics? - Management noted strong interest from franchisees due to positive trends in unit level economics and the brand's appeal [41][42] Question: What are the trends in digital ordering and loyalty penetration? - Digital sales increased significantly, and the company is investing in enhancing its digital platforms and loyalty programs [51][52] Question: What are the expectations for inflation and pricing for the rest of the year? - The company anticipates a full-year gross price increase of just over 3%, aligning with inflation expectations [66] Question: What is the status of the PDK rollout and its impact on labor costs? - The company is on track to retrofit half of its company shops with the new system, which is expected to yield labor savings [70][71]