Restaurant Franchises That Are Cookin' - Part 1
Restaurant and food franchises still garner the biggest slice of the franchise marketplace. Even so, not all restaurant franchises are created equal. What ingredients are necessary for success? This month we take a look at some of the hottest restaurant franchises to see why they are leaders in this sizzling sector.

Qdoba Mexican Grill

Fresh-Mex restaurant franchise cashes in on changing tastes
Forget what you think you know about fast Mexican food. Qdoba Mexican Grill is unlike any of the ubiquitous Mexican fast-food franchises that offer what some call "Mexican Mush." Instead, Qdoba has created its own satisfying niche, offering made-to-order nouveau Mexican meals for the adult market. "You won't mistake our food for anyone else's," declares Todd Owen, Vice President of Qdoba. "Our unique menu is based on fresh ingredients. It's still fast even though your food is freshly prepared to order right in front of you. From the first customer contact to paid is 30-45 seconds depending on the order."

Even though many American markets have yet to be introduced to this grilled, vegetable-laden style of Mexican food known as Fresh-Mex, they definitely seem to be ready for it. "There is a growing interest in the American population, especially among baby boomers, to eat better," says Owen. "Qdoba is taking advantage of this new demand for healthier food choices. Our customers are people who want an upgrade in quality, service, and overall dining experience that they don't get at a QSR fast-feeder. Brands like ours that sell the freshness are moving forward faster in market share," asserts Owen.

Qdoba's menu has something for everyone. The menu centers around "signature burritos" that include such gourmet options as poblano pesto, fajita ranchera, and chicken mole - plus a variety of salsas. Customers order at the counter and can customize their own meals with ingredients added according to their personal tastes and health needs. Avoiding carbs? "You can have the tortilla on the side and load up on meat and grilled veggies. You can also opt for 100% vegetarian. Vegetarians here aren't stuck with boring cheese enchiladas. Qdoba offers vegetables like diced eggplant, zucchini, peppers, and scallions," Owen says. Whatever your dietary preference is, you will find a nutritional breakdown for low carb, low fat, or low calorie on the company website. "No matter what you are counting," Owen states, "we can help."

A leader in the fast casual sector
The fastest growing restaurant category is "fast casual." Qdoba Mexican Grill is one of the leaders in this sector with an impressive 23 quarters of growth system wide. "The fast casual category has met with some competition out of QSR, the fast food franchises. It is pretty obvious that they have taken note of fast casual's success and have made sincere efforts to improve the quality of their menu offerings. For example, some have added fruit to kids' meals. And there isn't a fast feeder out there that doesn't have a signature salad these days. This has placed some pressure on the overall category's growth. Lots of players have jumped in, both into fast casual and fast casual Mexican. Now there is a shakeout of some of the stronger companies who are moving forward while some of the weaker may be struggling to find their identity," explains Owen.

Several factors have contributed to Qdoba's success. According to Owen, "We have strong franchisees, our $2.3 billion parent Jack in the Box, an incredibly strong management team, and our focus is squarely on our business. Within the fast casual sector, Qdoba is a unique concept with significant national growth and franchising potential. We are committed to operations, marketing our brand, and picking the right real estate - which is critical. We are growing to build our brand, not just building at all costs for the sake of unit numbers."

Aside from modifying their own menus, fast food franchisors have jumped on the fast casual bandwagon by buying up promising chains and franchises. Overall, results have been mixed, but so far franchising giant Jack in the Box seems to have made a wise choice. They bought Qdoba in early 2003, shortly after Nation's Restaurant News named the franchise "one of the top 50 regional 'Powerhouse Chains'." Owen says, "Our experience with Jack in the Box has been wonderful. They bought us for the strength of our management team and a brand that didn't need to be fixed. They've been supportive and lent us resources and purchasing power where needed, but we are a stand-alone entity. It's a perfect situation. We have their clout, but they let us run our own business. They will continue to invest in our company's inner growth while our franchisees build restaurants that make money."

Multiunit strategy for national expansion
Qdoba was founded in 1995 as a privately held company. It began franchising in 1997 and is now one of the fastest growing franchises in any category. There are currently 167 franchise units in operation plus another 48 company stores. "In terms of national brand expansion, we insist on multiunit development," says Owen. He continues, "We don't want to go to Des Moines or Portland with one Qdoba. We are still a relatively young but growing brand. Much of the country doesn't know the brand name and therefore penetration becomes critical. Multiunit development is necessary for good purchasing power and distribution, and it allows us to provide strong support for our franchisees."

Zyng Asian Grill

International franchise puts the Zyng in Pan Asian cuisine
Zyng Asian Grill is a full service Pan Asian grill that serves up fresh, light, and healthy meals in a lively atmosphere reminiscent of a funky Asian marketplace. The concept was established in 1997 and the company started franchising two years later under the management of Fransmart, a franchise development company. "Our menu is Pan Asian, not just Thai or Korean or Chinese or Japanese," says Dan Rowe. "It's a mixture of the most popular of each of those cuisines."

Dining at Zyng's is a carefully choreographed experience. A typical Zyng Asian Grill is a 2000-3000 square foot neighborhood restaurant with a striking exterior located on a well-traveled street. Inside, the award-winning décor blends with music, an exhibition kitchen, and an Asian market to produce a unique atmosphere.

At center stage is the open kitchen where patrons can watch as dishes from China, Japan, Thailand, Vietnam, Singapore and Korea are cooked on a flat steel teppanyaki grill. Teppanyaki is the Japanese art of tabletop cooking that combines good preparation with flair and showmanship. Here it's not done at the table - but it is still clearly visible. The teppanyaki method was not just chosen for its entertainment value. It's also good for the bottom line. "We achieve operating efficiencies, labor cost savings, and lower energy costs by using the teppanyaki grill. One Zyng-trained cook can prepare up to six complete meals at a time on a six-foot surface," says Rowe.

Customers can order a variety of specialty meals including the "world's best" Pad Thai, the one and only Zyngaproe Noodles, Zyng Peanut Toss and other favorites. Diners can also create their own dishes by picking and choosing their protein (fish, steak, chicken, or tofu), veggies, noodles, and sauces. Unlike many Asian restaurants, there are also some delectable desserts like the Shock o'Chocolate Cake topped with chocolate noodles, Mango Cheesecake, and Lucky Lime Sublime. This is a full service restaurant that also serves ten different teas, beers and wines, Sake, and Zangria. The retail market area is an additional profit center for the restaurant. Strategically located near the checkout, after dining customers can buy hard-to-find Asian noodles, sauces and condiments, kitchen accoutrements, teas, giftware, and impulse-purchase items.

Zyng Asian Grill straddles the fast casual and casual restaurant sectors. "There is table service, but it is modified. The dining room is small and compact, seating 100-120, and there is no traditional waiting area. Typically, the host is also your server, runner, and bus. It's about half of a notch below your traditional full service, but customers still receive proper attention and it is much more efficient for the operator," declares Rowe.

Zyng patrons are primarily young couples, young families, and young singles. "We conceived this concept to be healthier and fresher, which seems to attract a lot more women. In fact, about 50%-60% of our customers are women" reports Rowe. "In general, our customers are looking for something a little healthier to eat. We designed our menu to appeal to a wide range of dieting interests and health needs by allowing customers to customize their dishes. If somebody decides they want no carbs or more veggies, they can do that. We also have a lot of vegetarian options," explains Rowe.

Until early 2004, Zyng was known as Zyng Noodlery. As the name implied, the menu was based primarily on noodles. "There are a lot of noodle concepts starting to open up and most of them are perceived as fast food. We didn't want to get lumped into that because this is a full service restaurant. It's just a different experience, a higher quality experience. We decided to transition to a grill, which allowed us to broaden our menu. It meant that we can do more of each of these Asian cuisines without being limited. We still have tons of noodle based dishes but we also have center-of-the-plate entrees now, so it has really broadened the appeal. As a result, we have watched our dinner sales grow considerably," reports Rowe.

"Noodles is going to become more of a fast food lunch concept," predicts Rowe. "People typically spend less at lunch than at dinner. We still have a fair amount of noodles - over half of our menu items are noodle-based dishes and that's great because they're high profit margin. It's basically flour and water so it's a very profitable item for us. But we're trying to spin it around more entrées to grab more of the dinner sales. The transition has been fantastic. For example, in one of our airport units, when our new menu was implemented we had a 40% increase in top line sales. We sold just as many noodles, but we sold a lot more other things in addition," says Rowe.

The new grill concept is paying off in terms of franchising, too. While most noodle franchises have fewer than 10 operating units, Zyng has over 200 restaurants in development - ambitious expansion for a 6-year old franchise.

According to Rowe, Zyng's future is bright because "Asian is just hot. The restaurant business is growing and people are always trying to get in the next hot thing. There aren't that many options to get a franchise with what we call 'Asia appeal'. Zyng Asian Grill is a fusion of East Asian style, Western ideas, and solid business practices. This presents a good opportunity for experienced full service restaurant owners who want to build a restaurant company," says Rowe.