Heights beer garden has national plans
King’s BierHaus inks franchise deal to expand German restaurant brand
Hans and Philipp Sitter sat at a long table in the back corner of King’s BierHaus, poring over business plans as waitresses in dirndls and bartenders in lederhosen served schnitzel and beer to customers.
The father-son duo never intended to enter the restaurant business, much less start a national chain. Yet here they were, on the verge of what they hope will be a global expansion.
“There has never been a German-American restaurant franchise,” Philipp, 26, said. “We have the concept. We’re positioned for growth.”
The Sitters opened King’s BierHaus in the Heights last year as a modern twist on the family’s original King’s Biergarten & Restaurant, a Pearland institution that started as a carwash and grew to become a castle-themed beer garden thrice named the best German restaurant in America and a perennial winner of the Chronicle’s Top Workplaces award.
Now, they’re looking to expand the brand nationally through franchising. The Sitters earlier this year inked a deal with Fransmart, an Alexandria, Va.-based group behind the rise of Qdoba Mexican Grill, Five Guys Burger & Fries and Halal Guys.
The family is now working with a local partner and Fransmart to open three franchise locations in the Houston area. The first, at 828 W. FM 646 in League City, is slated to open this fall.
As many as 50 franchise locations around the nation are expected to follow within the next five years. Eventually, the Sitters say, there may be hundreds of King’s BierHaus restaurants around the world.
Restaurateurs with national and global ambitions have long embraced the franchise model as a way to lower development costs, mitigate business risk and rapidly increase their restaurant count. Major chains — including Subway, McDonald’s and 7-Eleven — have sought financial backing from franchisees to grow their business to tens of thousands of locations worldwide.
“Franchising is a good
business,” said Ed Wulfe, chairman and CEO of Houston-based retail brokerage Wulfe & Co. “It gives franchisors the ability to expand a concept very quickly and make money at it.”
Ye, franchising also poses pitfalls, Wulfe said. Quality control and consistency in the customer experience can suffer as a mom-and-pop operation cedes to corporate management of hundreds of franchise partners.
Some large restaurant chains have fallen out of favor with customers in recent years. Casual-dining chains such as Applebee’s, Chili’s and Ruby Tuesday are struggling with slumping sales and stocks as consumer preferences tilt toward fast-casual concepts such as Chipotle Mexican Grill and Panera Bread.
The Sitters, who have amassed a large and loyal following, say they are keenly aware of the growing pains that come with franchise expansions. They vowed to temper their growth and maintain their fun-loving company culture.
“It would be a dream to go to Scottsdale or Washington, D.C., and have a beer at a King’s BierHaus,” Philipp Sitter said. “But we don’t want to be on every corner. Once you get too big and lose the cool factor, it becomes a problem, and we’re not interested in that at all.”
Nearly a decade ago, the Sitters opened a car wash in Pearland, hoping to turn a Hurricane Ike-damaged property into a profitable family business. But the Austrian immigrants, who moved to the U.S. in 1996, underestimated how long it would take to handwash Texas-sized pickup trucks and SUVs.
Hans, nervous about the long lines, had an idea: Offer complimentary bratwurst and beers to keep waiting customers happy. He donned lederhosen and worked the grill while Philipp and a handful of employees washed cars. They did that for about a month before the city of Pearland shut down their food operations for lack of permits.
That entrepreneurial experiment, however, became the genesis of King’s Biergarten, which opened in 2011 inside a former computer shop behind the car wash. Hans and Philipp Sitter and five employees sweltered in the small restaurant and kitchen, cooled only by a small air-conditioner.
“Customers complained,” Hans, 65, recalled. “Our answer was you should drink more beer so you don’t feel the heat.”
What started as a small beer pub to draw traffic to the car wash ultimately became the the Sitters’ core business. For Hans, a butcher by trade, it was a return to his family’s legacy of running restaurants and vineyards for five generations back in Europe.
“I grew up in the restaurant,” Hans said. “Deep in my head, I missed it.”
Over the years, King’s Biergarten expanded 13 times, replacing the car wash with a castle-themed restaurant topped with signage of a large lederhosen-clad monarch doublefisting beer-steins.
Today, King’s Biergarten is a 340-seat restaurant serving German, Austrian and American cuisine as well as a mix of European draft and local craft beers. The menu features bratwursts and schnitzels, burgers and chicken wings, as well as German beers Weltenburger Doppelbock and Andechs Weissbier Dunkel not sold anywhere else in Texas.
The restaurant serves more than a dozen kinds of sausages, including antelope, venison, boar and rattlesnake.
Philipp, a business major who dropped out of the University of Houston to help the family restaurant, pushed his father to create a King’s Biergarten concept that could be franchised nationally. The young entrepreneur said he saw an opportunity for a beer garden franchise amid the rise of craft breweries.
Enter King’s BierHaus, a 400-seat dining hall and beer garden with long tables and booths, family areas with hammocks, a fountain and pond and a live-music stage. Patrons can order food and beers at the front and have them served at their table. The so-called hybrid-casual model — a mix of quickservice and full-service options — is more efficient for both customers and servers, Philipp said.
The restaurant also allows customers to dine at their own pace. Patrons can grab a quick bite during their lunch break or sit in the beer garden for three to five hours at a time, ordering several rounds of drinks and appetizers. Diners can easily spend $40 to $50 per person, double that of typical restaurants.
With such a high check average driven by alcohol sales, King’s BierHaus reported a monthly gross sales average of $507,102 from when it opened in May 2017 until the end of that year. Sales per square foot are double that of an Applebee’s or Outback Steakhouse, said Dan Rowe, CEO of Fransmart, who took Five Guys from one store to 400 franchise locations and partnered with Halal Guys when they were selling gyros out of carts in New York City.
“His numbers are ridiculous,” Rowe said. “I just think it’s a big hit.”
Rowe, whose company has sold more than 5,000 franchises since it was founded in 2000, said he believes King’s BierHaus will be the next hit concept to sweep the nation. But he, too, said King’s BierHaus will be a niche concept with hundreds, not thousands, of locations.
“We’re not going to be everywhere, because we don’t want to lose the uniqueness of the concept,” Rowe said. “In every market we go into, we’ll do one, two, fewer than one too many. We want to be good stewards of this concept.”
Fransmart is looking for potential franchise partners for King’s BierHaus. So far, the group has seen interest from prospective partners in Arizona, California and Washington.
King’s BierHaus is targeting former Applebee’s, Chili’s and Outback locations for conversions, which is cheaper than constructing new restaurants. The market is ripe for picking, Rowe said. In May, Applebee’s secondlargest franchise filed for bankruptcy after the chain closed more than 80 stores last year.
Philipp said he is interested in expanding King’s BierHaus into the South American and Asian markets. But for now, the Sitters are focused on entering the top 40 media markets in the U.S.
“We never want to be considered a big brand,” Philipp said. “We want to be considered a local beer house.”
The Sitters say they will be selective in choosing franchise partners and will have extensive training to ensure the King’s BierHaus brand succeeds in other markets. Prospective partners must be willing to close their restaurants two to three days a year for employee appreciation and on some holidays such as the Super Bowl. The restaurants shouldn’t be just places to eat and drink, but community destinations.
During Hurricane Harvey, King’s BierHaus gave away its food to staff and after the storm held a hurricane party, passing out free beer to stir-crazy patrons in the Heights. Hans Sitter is still working to get back into his Friendswood home, which was flooded.
“The expectation is when you franchise, you buy into the entire concept, not just the economics,” Philipp said. “If we feel our brand is not being represented well, we’re going to take a step back. We can pump the brakes at any time.”
Rising next door to King’s BierHaus is the Sitters’ next venture: EggHaus Gourmet, a brunch concept serving high-end kolaches and egg sandwiches. Like its sister restaurants, EggHaus will use natural ingredients, such as cage-free eggs, never-frozen meats and housemade jams.
The family has high hopes for the new concept, which sold more than 2,000 kolaches during a test run at King’s BierHaus recently.
EggHaus, which opens this summer, may be franchised in the future, Philipp said.