BURNSVILLE Minn. Rodger Head, chief executive and president of bd’s Mongolian Grill, said the 36-unit create-your-own stir-fry concept has begun an aggressive growth push in the face of a still struggling economy.
The chain just opened a location in the Minneapolis suburb of Burnsville. Another location is expected to open this year in Hampton, Va., which will be followed by six more in 2010 and six to eight units in 2011, said Head, who has led bd’s since Kinderhook Industries acquired the brand from founder Billy Downs in May 2008.
The brand said late last month that Tom Ragan had joined the company as vice president of franchising. Ragan had been vice president of franchise development for Papa John’s International and The Krystal Co.
“Potential franchisees will discover that the startup costs and the return on investment are compelling reasons to purchase this business,” Ragan said.
Those were among the reasons the ownership team of Head, Clyde Culp and Kinderhook partnered to purchase the brand, Head said.
“The same pitch we make is what intrigued us about buying the brand last year,” he said. “It’s unique, and of course the economic model is very strong. When we started to look for a brand to buy, we didn’t want it to be something lost in a sea of sameness.”
While other stir-fry concepts compete with bd’s, Head said, the chain differentiates itself with a high-energy, “eatertainment” atmosphere it has dubbed “Mongo Magic.” The brand also pitches its lower average check, which is about $12.50, and full bar as major draws to consumers.
The newest bd’s location in Burnsville is a former unit of Romano’s Macaroni Grill, and the cost to build it out was an “unbelievable difference” compared with constructing a new freestanding restaurant, Head said. He added that many of the brand’s franchise inquiries come from operators of other casual-dining concepts looking to diversify their portfolios with a completely different concept.
Competing stir-fry chain FlatTop Grill, one of two brands owned by Chicago-based Flat Out Crazy LLC, just opened its 14th unit in Chicago’s Loop at the newly renovated Sullivan Center. Flat Out Crazy was formed in August when FlatTop’s parent company merged with Stir Crazy Restaurants, the parent to 14-unit Stir Crazy.
One of the most effective ways to convince potential franchisees of bd’s viability, Head said, is to show them how well the concept performs in the struggling market where it was founded: Detroit.
“Our strength has been if we can get [potential operators] to a unit in Detroit, they come away very interested,” he said. “There’s not a more difficult market than Detroit, for all the obvious reasons. While casual dining is trending down in the double digits, in the Detroit market year-to-date we’re still down in the low single digits. That’s a huge testament to our brand. We’ve got a couple locations directly affected by Chrysler and GM, blocks away from the factories, and they’re driving our sales down, but we’re holding our own there.”
Markets identified for expansion include Minneapolis, Ohio, Virginia and Maryland, Head added.
Going forward, bd’s will continue to leverage its Club Mongo loyalty club, which has about 600,000 members, to promote limited-time offers the company hopes will drive sales. The chain just wrapped up an Italian-theme promotion and next moves on to “Mongo Okto,” its annual Oktoberfest celebration. Head said bd’s hopes not only to drive guest counts with the promotion, but also to sell about 15,000 commemorative beer mugs.
bd’s Mongolian Grill has 13 corporate units and 23 franchised locations in eight states.