Rally’s planning more San Diego burger joints

Rally’s says it’s preparing to bring back more of its drive-through burger joints to San Diego County, but the national chain faces a crowded field of local fast-food outlets.

Where the Checkers & Rally’s Restaurants chain at one time had a much larger presence in the county, its burger-and-fries drive-through outlets dwindled over the years to just the five existing locations. That could change significantly if the company is able to follow through on its goal of adding 20 new restaurants over the next five years.

In the near term, the plan is to open as many as eight new locations over the next two years, including one that will open early next year on 30th Street in Logan Heights, said Robert Bhagwandat, director of franchise development for the Rally’s and Checkers stores.

He acknowledged that the other deals are in the works but have yet to be consummated. Because the Tampa-based chain has long priced its offerings to cater to customers with lower incomes, Bhagwandat believes there is room for growth in the San Diego market.

“Rally’s is a unique concept that caters to people without a lot of disposable income,” he said. “If you have $5 in your pocket, we like to say you can come to Rally’s and get a full meal. And we fit the bill of where people can afford to come to us more than just once a week or once a month.”

Among the San Diego County cities that Rally’s is targeting, with the help of new franchisees are San Diego, La Mesa, National City, Spring Valley and Lakeside.

Statewide, there are currently 33 Rally’s outlets, Bhagwandat said.

The challenge for Rally’s franchisees entering the market, though, is finding affordable real estate deals. Bhagwandat was leery about getting too specific about its scouting efforts, noting, “We don’t want Jack in the Box to look in the same market we’re looking.”

Rally’s stores, which are more commonly found in the Midwest and on the West Coast, are part of a chain that merged the Rally’s and Checkers brands in 1999. The latter are more typically found on the East Coast and in the Southeast. But they all share the same menu.

Known for its affordable burgers, fries, hot dogs and shakes, Rally’s regularly entices customers with its monthly, limited-time offers, Bhagwandat said. For instance, this month, the restaurants are offering a sandwich, fries, drink, and an apple pie for $3.

Still, the stores will face stiff competition from ubiquitous and popular brands, most notably McDonald’s, Jack in the Box and In and Out.

San Diego restaurant consultant John Gordon is skeptical that Rally’s necessarily has a strong future in the San Diego market, given the stiff competition from other quick-serve burger brands.

“There’s nothing really exciting coming into San Diego in the burger/quick-serve, drive-through space because In-N-Out and Jack in the Box and McDonalds are all in strong positions here,” Gordon said. “It’s so much more expensive to get sites now. Franchisees have all these notions of growth and sometimes it doesn’t pan out.

“But hope springs eternal.”

Local franchisee Bruce Ong, who is opening the Logan Heights Rally’s, says he thinks the timing is right for a Rally’s resurgence because he believes the brand has improved, even though it doesn’t have a high profile in San Diego.

The proven demographic for Rally’s stores are lower- to middle-income working class households, Ong said.

“We have this guest measure and we can see traffic counts, and we have always been on the incline since 2001 in traffic counts and sales,” said Ong, who owns three Rally’s locations and is investing roughly $1.5 million in the Logan Heights location where he owns the land.

The average yearly sales volume for a Rally’s drive-through is $1.2 million, said Ong, who was recognized as one of three franchisees nationwide with a location that reached $2 million or more in sales.

While bullish on his new location, Ong said he has no immediate plans for opening additional outlets.

“Real estate can be very hard in San Diego, finding the right locations and the right demographic. The numbers have to be right. When I bought the (Logan Heights) lot two years ago, it was with the intention to put in a Rally’s, but it took a year-and-a-half to get permits.”

lori.weisberg@sduniontribune.com (619) 293-2251 Twitter:@loriweisberg