Moving away from Checkers Fast-food franchisee La-Van Hawkins plans a new venture

January 26, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Checkers Drive-In Restaurants Inc. said La-Van Hawkins has quit the board of the Florida fast-food chain and may sell his interest in 43 Checkers' stores.

Mr. Hawkins, the owner of the chain's Baltimore outlets, is negotiating to form a new company.

Mr. Hawkins, 36, said he is not prepared yet to announce details of the new venture, other than to say he will have major corporate partners, that the venture will be in the fast-food business, and that it could have sales of $1 billion and employ 15,000 to 20,000 African-Americans by the time it reaches its peak.

"I'm leaving Checkers because I have a philosophy: you always leave the party while you're having a good time," he said.

Checkers has been struggling with growing losses in the past 18 months, as price wars between bigger fast-food competitors have taken a toll on its market share. On Jan. 12, Checkers disclosed that it had retained an investment banker to seek new investors or a merger partner to shore up its finances.

But Mr. Hawkins' company, La-Van Hawkins Inner City Foods Inc., has been one of the company's more successful franchisees. While it is privately held, Mr. Hawkins said it had 1995 sales of $63.3 million and net income of $11.8 million.

He said sales per unit worked out to about $1.75 million per year, after prorating sales at stores that opened during the year.

Legg Mason Inc. analyst David Gardner said earlier this month that an average Checkers store has about $700,000 in annual sales, down 30 percent over the last three years, as stores in Florida have been especially hard hit.

Mr. Hawkins' firm has invested heavily in poor, mostly black neighborhoods of Baltimore, where the five city Checkers stores have gained a following because of a combination of low prices, fresh-tasting fare and black ownership.

The chain also became a favorite of city officials after Mr. Hawkins said he would move his company's headquarters to Baltimore from Atlanta, a move set for next month. He said a

staff of 22 initially will set up shop at 201 N. Charles St.

Checkers said Mr. Hawkins is exploring the possibility of selling all of his interests in Checkers' stores and becoming a franchisee of another fast food chain. Checkers general counsel James T. Holder said he could not elaborate on the company's terse press release.

But Mr. Hawkins said the decision to sell his Checkers stores isfirm, and the parties have agreed on the basic terms. He said most of his stores will be sold back to the company, but that he is recruiting a black investor to take over the Baltimore shops.

An aide to Mr. Hawkins said earlier this month that he had already sold some of his stores back to the company, reducing his stake to 23 stores. Yesterday, Mr. Hawkins said that sale had not been completed yet.

Checkers' other local franchisee said the company appears to have its financial problems under control. Ron Wyland, a partner in Marchek Inc. of Glen Burnie, which owns outlets in Linthicum Heights, Glen Burnie and Randallstown, said Checkers has told franchisees it has three proposals on the table from potential investors.

"I feel it's going to continue to be Checkers," he said.

Mr. Wyland said his company has 312 employees, mostly part-time, and that a well-performing Checkers restaurant brings as much as $1.5 million in annual revenue. Privately held Marchek does not disclose its profits or losses, but Mr. Wyland said the local suburban stores have remained profitable.

"We've had a trend in our business that has not been as good as the second year, but it's not down that much," Mr. Wyland said. Marchek became a Checkers' franchisee four years ago, he said.

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