Runza Looks To Expand Into Northeast Kansas

By Michael Hooper

Nebraska restauranteur Runza is looking to expand outside of Nebraska.

Based in Lincoln, Neb., Runza is looking for franchisees in Iowa, Colorado and Kansas, including northeast Kansas towns of Sabetha, Seneca, Hiawatha and Belleville, Kan.

Runza currently has 84 locations, most of these are in Nebraska. Runza's locations outside Nebraska are Council Bluffs, Iowa, Clarinda, Iowa, Lawrence, Kansas, and Loveland, Colorado.

Runza is known for its German sandwich, with ground beef seasoned with a secret blend of spices and mixed with cabbage and onions. All wrapped up in fresh-baked bread. Runza also makes great hamburgers and onion rings.

It's interesting that Runza is marketing on its website for franchisees in the smaller towns like Sabetha. Many of their Nebraska locations are in small towns with less than 10,000 people. They believe there are enough economics in Northeast Kansas to make it work. There is a Runza in my hometown of Clarinda Iowa, a town of 5,385 people.

In Sabetha, there are just a handful of options: Sonic, Pizza Hut, Subway and Casey's and the El Canelo Mexican Restaurant.

The franchise fee for a Runza is $25,000 which is reasonable considering Sonic is $45,000.

Runza locates in 2500- to 3600-square-foot places, 

Runza requires a 5-percent monthly royalty fee paid to Runza National exclusive of sales tax. Runza also requires 1% of your gross sales to go to a long-term Improvement fund to update your restaurant. And 1% of gross sales will go to advertising production fun for the development and execution of advertising and public relations campaigns.

In addition, you must spend 4% of gross sales for marketing in your local market. so all of that is 11% of gross sales which is a lot. The margins in restaurants vary. It really depends on volume, if you get a lot of volume everyday you can make some good sales numbers and pay the bills and have a margin of 15% or even 20%.

I like the Sabetha market because there's a lot of activity going on around here, at the intersection of Highway 36 and Highway 75.

Sabetha employers include Wenger Manufacturing, Mac Equipment, ADM, Buchheit Logistics.

I believe a Runza would do very well in Sabetha for several reasons. It's close to Nebraska, people in those parts are familiar with Runza. A lot of commuters work in the local Industries. Unemployment is low. There are jobs and there is discretionary income for going out to eat at the local restaurants.

Terry Krepel and David Tangeman contributed information for this article.