Drivethrus drive profits for WKS Restaurant Group

Drive-Thrus Boost Margins

Roland Spongberg, founder and CEO of WKS Restaurant Group, said working through the effects of the pandemic at his restaurant chains “was not easy.”

“The most difficult part is we had some people get sick, and two passed away,” he said.

The Cypress-based restaurant franchisee owns more than 300 franchised restaurants, including 127 units of Denny’s

Corp. (Nasdaq: DENN), where it’s the biggest franchisee owner.

“Denny’s was a challenge” because of its sit-down nature, he said.

“The drive-thrus performed really well. Our sales in the drive-thrus are at all-times highs.”

WKS is also the largest franchisee of The Wendy’s Company (Nasdaq: WEN) in the state with 55 locations. This year, it expanded by snapping up 31 Wendy’s locations in Indiana and Kentucky.

“We stayed very active,” he said.

It acquired two more restaurants of the Costa Mesa-based El Pollo Loco Holdings Inc. (Nasdaq: LOCO), to add to the 70 he already owns, making him the largest franchisee of the chain that has 470 restaurants.

“We continue to look for acquisitions if they meet our criteria,” he said. “There are a lot of overvalued stores, which we try to stay away from and not get ahead of our skis.”

An interesting investing point was that because restaurants only had drive-thrus, their profit margins expanded during this period.

“The margins will come back to normal—we’re seeing that,” he said.

“We’re hiring. We need people. People are a problem. They’re not working because of unemployment benefits,” he said.

“Things are going back to normal. California seemed liked it was the last one to open.”