They met in middle school in Georgia. They’re now both billionaires from Zaxby’s, the fried chicken chain they started together in 1990.
Zach McLeroy and Tony Townley became best friends in the seventh grade while growing up around Athens, Georgia. Then in their late 20s, they decided to go into business together.
The friends each put up $8,000 to open a chicken finger restaurant near the campus of Georgia Southern University, where Townley had gone to college. They officially opened the first Zaxby’s – or “Zax,” as it was called then, a play on McLeroy’s name – in 1990.
More than three decades later, that $16,000 has yielded an unbelievable return. Townley and McLeroy, both now 62, are worth $1.2 billion and $1 billion, respectively, thanks to the success of Zaxby’s. They’re both newcomers on this year’s World Billionaires list, published on Tuesday. The pair join other food entrepreneurs like Chipotle founder Steve Ells, Jersey Mike’s founder Peter Cancro and Cava chairman Ron Shaich, who are also first-timers on the list.
Headquartered in Athens, Zaxby’s is beloved for its wide-ranging menu of chicken “fingerz,” wings and signature sauces. The chain recorded some $2.5 billion in systemwide sales in 2023, the latest year data is available, according to restaurant analytics tracker Technomic. Zaxby’s is smaller than competitors such as Atlanta-based Chick-fil-A ($21.6 billion in 2023 sales) and Louisiana’s Raising Cane’s ($3.7 billion). It’s also more regional: Its 960 stores are spread across just 18 states, mainly in the U.S. Southeast.
Townley sold his half of the business to Goldman Sachs for nearly $1 billion in 2020. As part of the deal, he also received more than 140 Zaxby’s franchise locations, making him one of the chain’s largest franchisees. McLeroy sold 20% of his stake to Goldman at the same time but held onto 30%. He stayed on as CEO until 2022, when he stepped aside for the company’s first outside CEO, Bernard Acoca, the former head of El Pollo Loco. McLeroy remains chairman of Zaxby’s board. Townley, meanwhile, no longer has any leadership position at the company.
“We’re really emotionally attached to the business,” McLeroy told Forbes of the founders’ decision to sell a majority to Goldman, but added: “We both wanted to go in a different direction.”
The exterior of a Zaxby’s restaurant in North Carolina in 2014.
Jeffrey Greenberg/Universal Images Group via Getty Images
The decision was so emotional because of the hard work that went into growing Zaxby’s from the ground-up. McLeroy, who dreamed of becoming a professional drummer, sold his drum set and borrowed off credit cards to get the money for his half of the capital needed to open the first store. After opening the restaurant, which had a $400 a month lease, he moved into a condemned building across the street to tend to their store. “I was the sole resident in [the] eight-unit building,” McLeroy recalls. Townley, meanwhile, kept his day job running a mortgaging and loan business he founded in Athens. He would finish work and then drive over to the store to mix sauces with McLeroy – sometimes until 5 a.m.
The pair expanded Zaxby’s in the beginning by targeting college campuses like Valdosta State and the University of Alabama, where they opened some of their first locations. In 1994, they started franchising and changed the restaurant chain’s name from “Zax” to “Zaxby’s.” A decade later they had 100 locations, according to The Atlanta Journal Constitution. They hit $1 billion in revenue in 2013 – and surpassed 650 locations the next year. They continued to add around 40 new stores a year up until the sale to Goldman in 2020, data from Technomic shows.
Zaxby’s was founded six years before Todd Graves started Raising Cane’s in Baton Rouge, Louisiana, and boasts more stores than Raising Cane’s’ more than 800 locations. However, Raising Cane’s has emerged as the stronger chain in recent years. It’s growing at a much faster rate – Raising Cane’s opened 118 new locations last year – and has better store-level economics. The average Zaxby’s brings in about $2.7 million in revenue per year, compared to $6 million for Raising Cane’s. (They’re both outpaced by Chick-fil-A, which was founded in 1946, and records an average of over $9 million at its more than 3,000 locations.)
The reason is that “although Zaxby’s may have similar items on the menu [to Chick-fil-A and Raising Cane’s],” Zaxby’s gets lower ratings from consumers on the taste and flavor of its food, the quality, order accuracy and customer service, according to Robert Bryne, an analyst at Technomic who studies consumer brands’ perceptions.
While sales have increased from $2 billion in 2020 to $2.5 billion in 2023, Zaxby’s has significantly reduced its store growth since Goldman Sachs took over. It was “slow for a period,” says McLeroy. But “over the last 18 months we’ve made a turn for the better.” “We’re opening new stores, bringing new franchisees into the brand. And we should probably open up 70 stores this year.” He said the brand’s focus now is on “trying to go back and fill in” the blanks in states where they’re already present. The states with the most Zaxby’s franchises include Georgia, with 199, Florida (106), North Carolina (99) and Alabama (89), according to the company’s latest Franchise Disclosure Document.
Townley and McLeroy may have cashed out at the right time. The partners also took advantage of a period where franchises were getting big offers from private equity firms and banks. Blackstone bought Jersey Mike’s in an $8 billion deal and Tropical Smoothie Cafe for an undisclosed price last year, while Bain Capital spent $1.1 billion (including debt) to acquire the Brazilian steakhouse Fogo de Chao in 2023.
Since the sale, McLeroy has focused his energies outside of Zaxby’s on real estate, cofounding The Leaven Group, an Athens-based residential and commercial real estate developer. Their projects include a senior living facility in Oconee County, multi-family developments around the state and an apartment complex in Orange Beach, Alabama.
As for Townley, he remains busy as a board member of the Athens-based biotechnology firm Aruna Bio, which aims to help with the treatment of neurodegenerative disorders. He and his wife Elizabeth are also some of Georgia’s biggest landowners, with more than 35,000 acres of farmland and timberland across the state. In January, the Townleys won a multi-million dollar tax refund from the U.S. government on a series of conservation easements they’d donated, promising not to develop the land in the future.
Though the assessed value of the properties was less than $2 million, the Townleys claimed the parcels were worth a combined $166 million based on their “highest and best use,” meaning the use of the land that would bring the owner the most value. In the Townleys’ case, they argued their land could be worth that much based on the cash flow it would generate if it were used for gravel mining instead of remaining undeveloped. Courts have been “very negative” about cases like this, which they’ve argued can abuse the tax incentive structure based on unrealistic hypotheticals, explains Nancy McLaughlin, a professor of law at the University of Utah. Yet, the Townleys won a favorable judgement from a jury of their peers. They’d asked for a refund of $43 million and received at least $2 million – the total amount has not been disclosed.
According to their lawsuit, Townley and his wife actively tend to their land themselves – hauling hay, feeding cattle and pulling up fence posts. Townley is no longer as involved as he used to be in running the day-to-day of Zaxby’s but keeps a foot in the business as a major franchisee. He and McLeroy are still good friends, according to McLeroy. Townley did not respond to a request for comment for this article but he acknowledged in his lawsuit – one of his rare public statements about the business – the good fortune of his and McLeroy’s Zaxby’s triumph. “The hard work in growing Zaxby’s turned into success beyond Tony and his friend’s wildest dreams.”
