It’s taken 40 years, but John Banks thinks the country is ready for this Czech-Texan pastry known to locals and a growing contingent of Americans as kolache.

“Over the past few years, people are more willing to try a new product than they used to be,” said Banks, founder of Katy-based family chain Kolache Factory. “It’s just a matter of not having been exposed to it. Once people are exposed to it, they seem to be fine.

With the company operating or franchising 48 stores in Texas and 13 in eight other states, Kolache Factory, which celebrated its 40th anniversary in August, is looking to further grow the brand by finding franchise partners in the western and southeastern United States. United States.

Banks and her daughter, COO Dawn Nielsen, say the quality of the food, the kolache backstory and the concept of a tasty breakfast at a reasonable price is a relatively safe investment for those who are looking to enter or grow in the challenging food and beverage industry.

Figures from Kolache Factory seem to back up their claim. The private company said it had record annual sales last year and estimated that it sells more than 18 million kolaches a year, making it the biggest seller of kolaches in the world. And though the company declined to disclose its annual revenue, Chicago-based restaurant consultant Technomic estimated the chain’s 2021 revenue at $45.7 million, up 29% from the year. former.

“While kolaches may not be a very familiar menu item in many parts of the United States, it’s still surprising how quickly consumers can adapt,” said Kevin Schimpf, director of research and industry insights at Technomic, adding that of America’s 1,500 largest restaurant chains, Kolache Factory is the only one focused on selling kolaches. “How many American consumers knew about poke or bubble tea five years ago?”

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Meanwhile, consumers continue to be drawn to fast food concepts that are not necessarily associated with fast food staples such as burgers and fries. This was the case for Ted and Kathy Skaff, franchisees of two Kolache Factory stores in California. Houston native Kathy Skaff grew up eating Kolache Factory candy and turned Ted Skaff into a kolache fan. When they moved to Ted Skaff’s native California, they approached Banks and Nielsen about the franchise and opened California’s first Kolache plant in 2013 in Tustin, about 35 miles southeast of Los Angeles. Theirs is the most profitable store in Kolache Factory.

“There’s not much like it,” said Ted Skaff. “It’s a healthier choice than a 320 calorie fast food breakfast or a big 800 calorie breakfast burrito.”

Additionally, as many Americans continue to avoid full-service restaurants in favor of take-out and drive-thru to minimize the risk of COVID-19, U.S. quick-service restaurant sales have increased. from 16% over pandemic-ridden 2020 to $296.6 billion in 2021, a 42% increase over the previous decade, according to Statista.

Much of the interest in the franchise is coming from states such as California, Arizona, North Carolina and Florida, Nielsen says,

“There is a uniqueness to the product,” Nielsen said. “It’s fun, it’s not messy, and it’s not fried. All of these things are relevant.

“We are ready to take away by nature,” added Ted Skaff. “We are pandemic proof.”

The beginnings of Kolache and the company were somewhat more modest than Kolache Factory’s national expansion plans. Pronounced “koh-LA-chee”, kolache was introduced to the United States when Czech immigrants settled in Texas beginning in the mid-19th century. Traditionally made with a slightly sweet yeast dough with a sweet cheese or fruit filling, kolaches evolved into a breakfast food and daytime snack when kolache purveyors added savory items like sausage and eggs.

Yet Banks, a former executive at Mrs. Baird’s bakery, and his wife Jerilyn “Jerri” Banks, who died in 2008, knew little about the concept when they bought a struggling Westheimer Road business called Kolache Factory in 1982. Banks said they kept the name because the previous business owners had just spent $900 on a new sign and set out to perfect a dough recipe for their new business.

“We did a lot of experimentation. When we first thought it was all together after about two weeks, we invited our friends to test it out. They said, ‘Are you going to make a living selling this product?’ Banks said. “So we went back to the drawing board. It’s been the same since. »

After doubling its annual sales when Banks moved the original store across the street in 1985, the company opened a store in the downtown Houston tunnels in 1986 (it remains the oldest company store) and gradually expanded to Houston. In 2000, Kolache Factory started the franchise.

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The company started with about 15 different types of kolaches priced at less than 50 cents each, the company has expanded its menu to about 25 items ranging in price from about $1.10 for a traditional fruit-filled kolache to 4 $.25 for a glaze-stuffed kolache. smoked sausage. On average, customers pay about $2 for a kolache, according to Nielsen. Banks estimates that savory kolaches outsell more traditional sweet types by 10 to 1.

“Houston is just a melting pot of ethnicities, and the uniqueness of kolache batter lends itself to almost any cuisine,” Nielsen said. “Houston loves the idea of ​​great, community-connected cuisine.”

Traditional sausage kolaches are the most purchased in Texas, while outside the state, “Ranchero” kolaches, made with eggs, chopped ham, cheese, hot sauce and jalapenos, are the most popular. popular. The company also offers a “flavor of the month” kolache, while periodically holding its “Kolache Olympics” for customers to submit new flavor ideas.

Kolache Factory’s savory and sweet products make it a contender for everything from burgers and sandwiches to donuts and cookies, according to Technomic’s Schimpf. With that in mind, Banks and Nielsen acknowledge that the company has taken a relatively conservative approach to growth and estimate that the chain could grow by five units per year through company-owned franchises and additions.
“The slow and steady development of the Kolache Factory location may in fact be an encouraging sign for their long-term prospects as they follow a more deliberate growth plan with thorough vetting of their franchisees and operators,” said said Schimpf.
Meanwhile, Skaff, which opened a store in Huntington Beach, Calif., in November, said revenue from the new store was 25% higher than the Skaffs had forecast and was expected to double first-year revenue. from the Tustin store. He added that unlike most catering operations requiring night hours, Kolache Factory’s opening hours – they open at 6 a.m. and close at 2 p.m. – make the concept more suitable for operators with families.

“You never want to grow out of business, so you have to be careful,” Skaff said. “On the other hand, we are on to something, and if you have an opportunity, there is a risk of not taking it. So we would like to open more stores.


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