The National Restaurant Association’s annual trade show has come and gone to much fanfare. From what I saw and read, the participation was phenomenal. We were able to bring our full consulting team from all of our offices and even made time to break some bread together. This year, I also participated in a panel discussion that explored unit economics and was moderated by Steve Romaniello, managing director of Roark Capital.Read more...
Restaurant sales showed solid growth in May. New study shows all consumer income groups devote about the same percentage of their day-to-day spending at restaurants. Prices consumers pay for food away from home continues to rise faster than food at home prices. Johnny Rocket’s opened their first drive thru location. The Ricker’s C-store chain has expanded their foodservice menu extensively. These stories and a whole lot more This Week in Foodservice.Read more...
After a team of restaurant industry veterans invested the time to refine the Garbanzo prototype, this budding fast-casual concept is poised to blossom.
Mor moved to the Denver area from Israel in 2001 and spent his first several years in the United States learning the fast-casual ropes at Panera Bread, where he held a variety of management positions. It was then that he met Panera cofounder Ken Rosenthal, who had sold that company in 1993 and later became one of its largest franchisees, operating multiple stores in the Denver market. Mor shared his vision for a new fast-casual concept with Rosenthal, and the two teamed up to get Garbanzo off the ground, tapping other Panera veterans for management expertise. From day one, the plan was to create a concept that would take fresh, healthy, flavorful Mediterranean food into the fast-casual mainstream.
“I looked at Chipotle, Pei Wei Asian Diner, Qdoba and others and thought that if they succeeded with ethnic cuisine, there’s no reason Mediterranean wouldn’t work,” Mor says. “At the same time, it seems you now see three or four new hummus and pita bread products on the shelf every time you go grocery shopping. Dr. Oz is on television touting the health benefits of the Mediterranean diet. Those were among the biggest forces behind the creation of Garbanzo: the combination of the growth of fast casual and it being the right time to introduce Mediterranean cuisine in that format. You get a gut feel on things. I knew that this would work, but I wanted to do it the right way.”
That meant not only bringing in a management team with deep experience in chain operations and expansion, but getting systems, processes, menu, and prototype look and feel in place right out of the gate. “People came into our first store and asked me where we were franchised out of. We already had the look, feel and sophistication of a 100-unit chain. I always wanted to be able to build it quick, so we put strong focus on building the systems that would enable fast growth,” Mor says.
Fresh, Healthy, From Scratch
The garbanzo bean, a familiar ingredient in Mediterranean cooking, provides a catchy name for the concept and comes to life in the chain’s animated Mr. Bean mascot. He’s featured in online videos introducing people to what may be less-familiar Mediterranean foods and their health benefits. But the little, round, protein-packed bean also stars on the menu, shining in signature dishes including hummus (a spread made with ground garbanzos, tahini and spices), falafel (crispy fried balls of ground garbanzos blended with herbs and spices) and fresh vegetable salads.
True to its inspiration, Garbanzo’s service format resembles that of Chipotle’s, with customers building their meals from components displayed on the serving line before paying at the end of the line. “Their first big decision is how they want their food ‘packaged’ — in a pita, a laffa (wrap), as salad or simply plated,” Bafundo says. “Then they customize it however they want.”
Key menu components include freshly grilled marinated steak or chicken (shwarma), grilled portabella mushrooms and falafel. Guests can then add their choice of toppings, including seasoned rice, hummus, tabuleh, babaganoush, pickled eggplant, lettuce, vegetable salad, red onions, red cabbage and pickles. Sauces come next, including cilantro, tahini, Mediterranean garlic, amba (tangy pickled mango) and red chili. For salads, dressing choices are creamy Mediterranean garlic, Greek vinaigrette and zesty lemon vinaigrette. Extras such as feta cheese, grilled eggplant, house-made potato chips and hard-boiled eggs are offered, along with four soups.
To entice customers to try various menu items, the restaurant staff encourages sampling. “Everyone who walks in the door gets a free sample of a falafel, and we encourage people to ask for samples of anything else on the line,” Bafundo says. “We want guests to feel comfortable trying new foods and experimenting with new flavors. That, and the fact that they can completely customize their meals, is key. We’re introducing new flavor profiles to many of our guests, and they can build their meals according to the sophistication of their palates. If tabuleh is too intimidating, they might just go with rice. We have first-time customers every day who just get a white pita, fill it with rice and chicken and maybe add a little sauce at the end and say they ate Mediterranean food. That’s okay. It’s one of the benefits of the system. At its core, our menu is grilled chicken, steak, fresh bread and salad. They can experiment with the variety of other authentic items if they want, but they don’t have to. It’s a formula that works.”
The typical Garbanzo serving line includes two six-foot refrigerated make tables that display food for guests and hold salads, sauces and other components. The balance consists of a warming well for soups and another, in the center of the line, for protein items. Just before guests reach the cashier, they pass a refrigerated display case holding Garbanzo’s signature mint lemonade, pomegranate lemonade, iced tea, and other beverages, dessert items, and hummus and fresh pita bread packaged in bulk for grab-and-go sales.
Behind the serving line and in view of guests, staffers cook chicken, steak, mushrooms and eggplant on a three-foot char grill. Side-by-side fryers produce the falafel and house-made potato chips. And a customized oven turns out the concept’s fresh-baked white and wheat pitas.
Perfecting the Pita
Bafundo says Garbanzo’s pita bread is its strongest calling card. Baked in view of customers throughout the day, it’s served stuffed or as a side item, and is also sold in bulk.
“Our pita ovens are the only pieces of customized equipment in our stores,” he says. “Everything else is standard, and that’s by design. It allows us to keep our costs down. Also, we operate in small spaces, so we keep it simple in terms of the products we bring in and our equipment package. It’s more efficient and also makes us easy for manufacturers and dealers to work with.”
When Mor launched the concept, however, he imported specialized pita ovens from the Mediterranean region. “The goal was to get as authentic an end product as possible,” Bafundo says. “But as we expanded, importing the ovens was no longer practical or cost-effective in terms of lead times, repair and maintenance. Ultimately, we partnered with a manufacturer here to re-engineer and modify an existing oven to meet our needs. We now source all of our ovens from them, and it’s been a very cost-effective change for us.”
The ovens have the same size and appearance as impingement pizza ovens, with finished product emerging on a conveyor belt, but the technology is different, Bafundo says. Raw dough rounds are placed into the oven, and in 60 to 90 seconds they emerge as perfectly baked pitas. At peak service periods, customers are getting pita bread that may be less than five minutes out of the oven.
As with all menu items, staff prepare the pita dough fresh on site. The back of the house, which comprises roughly 950 square feet, or 40 percent of total store space, includes a bake station. Employees start with 50-pound bags of flour to mix the dough, and then portion it using a divider/rounder for consistency. “We lay them out on sheets, and they’re stored up near the front line so they’re accessible to be baked as needed,” Bafundo says.
In addition to the bake station, Garbanzo’s kitchens include a prep station, walk-in cooler, dry storage area and dish-washing station. “Again, we keep it simple,” he adds. “Depending on local health codes, that will be either a three- or four-compartment sink.”
Right-Sizing the Restaurant
Part of the prefranchising fine-tuning process at Garbanzo has involved determining ideal prototype size and layout. The chain’s original location measured just 1,500 square feet, but the sweet spot now is 2,300 square feet. “We’ve had some evolution in the layout,” Bafundo says. “The first restaurant is in a converted pizza restaurant. It’s 21 feet wide, kind of like a bowling lane. We had no option but to put the service line along one side wall and there is very little queuing space. As we’ve evolved, we’re going after wider spaces — typically 35 to 40 feet — and we’ve moved the kitchen to the back wall of the restaurant. That allows us to get customers inside the building and queue along the wall, going back toward the kitchen, with plenty of menu visibility along the way.”
Garbanzo’s ideal prototype today is a strip-center end cap with patio/sidewalk seating space available. Most new units seat 75 to 80 inside and another 20 to 24 outside. “In Colorado, we can use that outdoor space for nine months out of the year. In some of our newer stores, we’ve actually extended a hard roof on an end cap with a heater and some drop-down curtains to maximize our use of that space,” Bafundo says.
The company’s top-performing units reside in trade areas with a balance of daytime population and strong residential back-up for nights and weekends. “While we prefer end caps, we will do in-line locations if we think a trade area and shopping center are A-level quality,” Bafundo adds.
The majority of Garbanzo’s customers dine in, with takeout comprising one-third of sales on average. In addition to individual takeout meals, the restaurant’s menu promotes the availability of bulk to-go items, including hummus, pita bread, shwarma, seasoned rice, salads and sauces. Pitas are packed five to a bag, while the other items come in 8-ounce, 16-ounce and 32-ounce packages.
Catering, too, is seen as a strong opportunity both to grow revenues and to introduce more people to the concept and its cuisine. “We’ve gotten serious about catering in the past 12 to 18 months,” Bafundo says. “We’re now at the point where each restaurant has a catering coordinator on staff who is responsible for working the community and generating catering business. They’re also active in delivery and set-up at events and are paid a base hourly rate plus commission on sales they generate. It’s working very well for us, and we see catering becoming a bigger portion of our business going forward.
The most popular catering menu option? A build-your-own pita buffet. It’s set up to mimic the serving line in the restaurants, but guests serve themselves and customize their own pitas with fillings and sauces.
Franchising Drive Underway
Mor’s cautious, “right way” approach to building the Garbanzo concept and prototype prior to growing it through franchising is one he’s applying to selecting franchisee partners, as well. In this regard, the right way is also the cautious, disciplined way, driven by quality of prospects over quantity of units. “We’re not putting out a forecast for number of units we’ll hit by a certain point in time,” Mor says. “With that said, 2012 will be a good year for us. We’re stepping out of Colorado for the first time in company stores, and we’ll start our franchise effort in a big way.”
That effort centers on lining up well-financed, multiunit area developers. “We’re seeking people that not only have restaurant experience but are in the business and have had successful experiences. Most importantly, they understand what it’s like to operate multiple units; they’ve got experience building a team and have a support structure in place for other brands,” Bafundo says. “Maybe they’re toward the end of their development agreements with their existing franchise; maybe they’re running out of room and still need to grow; maybe they’re looking for another concept. Those are our ideal candidates. We’ll also look hard at their operating partners, the people who will actually be running the units,” he adds. We want people who live in the market where they do business and know it well. Some of our early franchisees have developed other brands in these markets, so they know the real estate, costs, labor market, etc.”
From a financial standpoint, franchisee candidates must come to the table with a minimum $3 million net worth and $1 million in liquid assets. To date, the company is shunning advertising for candidates in favor of identifying contenders through personal networking.
While the company is not publicly forecasting specific unit numbers, it is sharing a vision for growth that includes introducing Garbanzo Mediterranean Grill to wide swaths of the country. “Our strategy for franchise development would be to grow in contiguous markets, but Denver’s a bit of an island,” Bafundo says. “Beyond that, we have strong interest in the I-70 corridor of the Midwest — Kansas City, Omaha, St. Louis, for example. We’ll see a lot of activity there. Also, if you look at our demographics in existing stores and apply those to the rest of the country, we think there will be real strength for the brand in the Northeast, from Baltimore-Washington to Boston. We also think we’ll do well in the Pacific Northwest, as well as in the Sun Belt when that region starts to rebound from the recession.”
For now, recession or not, Mor and company are happy with how far they’ve come and with Garbanzo’s position in the marketplace. “We’re exactly where Chipotle was in terms of store counts when McDonald’s got them,” Mor says. “It’s easier for us because people are now used to the fast-casual model. My parents and grandparents would never have stood in line like that, but people stepped down from full service during the recession and discovered you can still have a great meal in a nice place, you can get it for under $10, and you don’t even have to tip. That’s a really big deal.”
Facts of Note