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HuHot learning from its first express branch

Chain considers combining quick-service and full-service elements

It took 11 years for the table-service HuHot Mongolian Grill chain to spawn a quick-service concept — the weeks-old HuHot Express in Fort Collins, Colo.

But representatives of the parent company say a third variation melding aspects of the full- and self-service models may arrive much sooner.

Officials of HuHot Mongolian Grills LLC of Missoula, Mont., said the new counter-service Express concept opened Sept. 20 in Fort Collins is operated by franchisee Hot Grills Inc., which already had a full-service HuHot restaurant in Fort Collins, as well as conventional units in Billings, Mont., and Spokane, Wash.

The quick-service concept is designed to be a lower investment risk vehicle for bringing the HuHot brand to small markets, in-filling middle-sized markets and rapid development in major metropolitan areas, the franchisor said.

In addition to expansion possibilities, management of the 34-unit chain also believes there is inherent consumer appeal in the Express concept, where guests are spending about $9 at lunch and $11 at dinner, compared with the $10 lunch and $15 dinner average tickets at full-service locations.

“In this economy, we think the Express will offer our customers another dining option,” said Andrew Vap, HuHot Mongolian Grills LLC's co-founder and chief executive. “Whether people have been to the original HuHot or not, if you like Asian flavors and need a meal that fits your fast-paced lifestyle, then the Express is worth a try.”

HuHot Express requires about 2,500 square feet versus the full-service prototype’s 5,500-square-foot requirement, and costs about $400,000 to develop, or about half as much as a conventional location, said Stephanie Krause, director of marketing.

There are 80 seats in the express unit versus an average of 180 in the casual-dining locations, she said, adding that the business plan for the counter-service concept projects annual sales of about $1 million, down from the larger table-service stores’ average annual take of $1.9 million.

In conventional HuHot restaurants, guests compose their entrée by personally collecting ingredients and sauces from open food lines, which they then turn over to restaurant employees to cook on round, 6-foot diameter gas-fired grills. Full-service restaurant guests may make as many trips through the food lines as they wish.

At HuHot Express, guests may only make one trip through the production area and ingredients are gathered at their direction by employees behind the counter, similar to how Chipotle Mexican Grill staffers assemble burritos, tacos and bowls.

In addition to the chain’s signature build-your-own meal option, HuHot Express also offers six set-recipe Khan’s Creations specialty meals to shorten service times and facilitate phone and counter orders for take-out. A “Family To-Go Pack,” for $29.95, with four meals and four egg rolls, also is offered.

Krause said the most interesting revelation so far about the quick-service concept relates to its reception by customers of the nearby full-service HuHot branch. Those guests are “passionate” in their desire to control their own ingredient selection and have made it known when visiting the new quick-service branch, she noted.

“So we are considering adding a third [concept] model: one that opens up food-line access, with limited offerings, to customers,” Krause said. “That model will be used as a market filler where a HuHot already exists so franchisees can add a HuHot Express across town and fill the customer need.”

In a three-model scenario, the marketing director said, “The current Express model will then target non-HuHot markets that are too small for a full-size HuHot or larger metros where we want to open multiple locations quickly.”

She added that four franchisees are seeking locations for both the smaller-scale guest self-service and quick-service models.

While HuHot believes its Express option marks the first Mongolian Grill concept to offer a quick-service model with a Chipotle-style “made-for-you” format, there is a least one other Mongolian Grill chain that features guest self-service delivered from a relatively small square-footage production area. The Los Angeles-area based Great Khan’s Mongolian Festival shows 34 locations at its website, with most in malls with shared seating for foodservice concepts.

Great Khan representatives did not return e-mails seeking comment about that operation.

Krause said HuHot Mongolian Grills LLC is not ready to share sales results from the first HuHot Express. She said it would disclose that the quick-service concept was designed to generate earnings before interest, taxes, depreciation and amortization at the same percentage of sales as the chain’s larger, higher cost full-service restaurants.

“We’ve already achieved that with little marketing to date,” Krause said.

Of that achievement, she added: “Splitting the risk in half isn’t as easy as opening in half the square footage for half the cost. You also need to develop operations that are also half the cost at half the volume.”

Contact Alan J. Liddle at [email protected].

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