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How Quickly the Franchise Segments Fill Up – ShopHouse, Pei Wei


Chipotle’s new fast mexican asian concept dubbed ShopHouse has only been open a few months in Washington DC. Their menu consists of Banh Mi sandwiches and rice or noodle bowls with meats. The reviews on Yelp vary, with an average of 3 out of 5 stars. On the negative side, comments seem to congregate on the odd combinations of tastes, blandness, and unlikable slaw on too many items. On the positive side, employee helpfulness and value seem to rank high.

Many restaurant groups are pursuing this market – Wagamama, Big Bowl, Stir Crazy, Panda Express (and all the indoor mall food court offerings), and Pick up Stix. Technomic claims that sales at limited-service Asian restaurants grew 5.9% in 2010, faster than any other menu category, and in 2011 sales at Asian dining spots are expected to rise 5% compared to 4% for all limited-service restaurants. If you’re a CEO of a restaurant group looking to ride the trends, this is your new market.

P.F. Chang’s, who also owns the popular casual restaurant Pei Wei, is creating a “more casual” concept called Pei Wei Asian Market, to compete in this fast service segment. It won’t be the notorious scoop style forged by Panda Express and Chipotle, but what they call a diner style with no table service. It sounds like the same style of Panera Bread but with a few more ready-to-eat packages at checkout.

The fast asian fusion segment seems to be one that will have staying power. I like the segment, and there is a place for the Panera of Asian food, a speedy and quality layer above Panda Express. Just like Chipotle forged Mexican cuisine into the weekly rotation of American lunches, the arguably healthy fast asian fusion will also continue to grow and improve.

— Franchising Options —

Most of the good concepts aren’t franchising at this time – Chipotle, ShopHouse, Pei Wei, Wagamama, Panda Express.

IF I wanted to pursue this segment going the franchise route, I’d probably look to Noodle & Company. The branding seems strong, the familiar chinese and thai menu works well for lunch and dinner crowds, and most importantly they seem to successfully attract lines throughout the week. A highly viewable location in a new, upper scale shopping plaza, in a dense residential community would be a strong location for this concept. A warning is there have been store closures in Portland and elsewhere, and at those locations people have complained about the quality of food. In contrast to busy open locations, people seem to praise the food dishes, so there seems to be variance in the quality of the food based on skilled preparation.

There are a good number of other franchises in this asian segment, but most are the “orange and bourbon chicken” joints that belong in an indoor mall. For example, Pick Up Stix in California is akin to Panda Express, but I wouldn’t be a buyer of the Pick Up Stix franchise.

About Ryan Knoll

Attorney and advisor with an interest in franchising. Feel free to email me comments and questions on the "Contact Us" page.
4 comments
Iqbal Ahmed
Iqbal Ahmed

Interested in franchising your brand

fuwafuwausagi
fuwafuwausagi

Chipotle has a very, very simple menu and process. Frankly I think it would be hard to deteriorate the quality given the few number of moving parts, ingredients etc. It really is the epitome of exploiting the availability of low skill labor. I would assume the profit model centers more around keeping the number of workers at an optimum level, as training should really not be an issue. To see the difference look at the amount of time it takes to train a cook at Denny's, or Friendly's. Then compare that to McDonalds then finally look at Chipolte. Chipolte is in the sweet spot clearly. As for Starbucks, an observation is, the remain a standout in terms of benefits to their employees and the unique fact that people actually often take pride in working for them becasue of their social responsibility. Meaning the employees are far more bonded to the company, what it stands for, and their commitment to social responsibility. I would think that reduces their turnover and that the employees attitude make s huge difference in performance.

FuwaFuwaUsagi
FuwaFuwaUsagi

One reason Noodle & Company may be having consistency issues is the are not a true "Owner*/Operator model in the classical sense. They use an area developer model and do not sell single franchise offerings. This is a notoriously poor model for quality replication unless the proper incentives are in place and those incentives do not appear to be dictated by the franchisor model , ergo a possible reason for the variance in quality. FuwaFuwaUsagi * I use the term owner/operator for convenience, but you should understand under most QSRs you do not own a darn thing other than a rapidly diminishing right to use a tradename and trademark and associated information and techniques.