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Sizzling Steakhouse Success

[ 0 ] Aug. 4, 2014 | SBO Editor

sizzling-success-lgSteakhouse earns $35 million fortune.

By Stan Roberts

Chau Nguyen owns 11 Japanese Steakhouses in Central Florida yet he doesn’t call himself a restaurateur. “I’m a businessman running a restaurant,” he said.

Nguyen opened his first Kobe Japanese Steakhouse in 1984 in Altamonte Springs, applying business techniques that he admired in national chains like Red Lobster and Olive Garden. “I saw how they did things and realized if they could do it, I could do it, too,” he explained.

Like the chains, for example, he selected restaurant sites on thoroughfares near malls and shopping centers, and in tourist areas near Disney World and Universal Studios. He also operates three locations in Tampa, all near malls. Last year his restaurants posted sales of $35 million, and employ more than 600.

Kobe restaurants specialize in Teppanyaki or Hibachi cooking; chefs prepare steaks, chicken, seafood and Asian cuisine at patrons’ tables, with show-biz fanfare, displaying flashing knives.

RESTAURANT HOW TO

• Be mindful of eating. Know where food comes from; visit sources regularly.
• Hire pros: lawyers, architects, experienced head chef, bartender.
• Own your real estate.
• Be consistent in quality, service.
• Join trade associations; keep up with industry trends.


For info: 468 W. Hwy. 436, Altamonte Springs, FL 32714, Tel: 407-862-6099.

www.kobejapanesesteakhouse.com

Although Nguyen studied business and accounting, he gained practical experience working weekends at a Japanese steakhouse his parents opened in 1980 in Montreal, Canada. “It was a small place, and I did everything,” he said.

Nguyen, vacationing in Florida, was impressed with growth around Orlando and thought a Japanese steakhouse would attract tourists and residents. Here is how he built his chain of restaurants.

He had long admired how chains like Orlando-based Darden ran their restaurants. He analyzed how he picked locations, prepared food, trained staffs and so on. “I used them like a textbook,” he said. He joined trade associations and made contacts with restaurant pros. “I picked a lot of brains,” he said.

Like the chains, Nguyen purchased an acre-and-a-half lot near Altamonte Mall. An attorney handled the transaction and also helped Nguyen obtain the various local, state and federal licenses and permits required to open a restaurant: Occupational, liquor licenses, county Health Department; U.S. Department of Agriculture; and permits to handle food and collect sales tax.

Nguyen knew exactly how he wanted his restaurant to look, and he wanted authentic Japanese atmosphere and décor, incorporating stone, wood and bamboo. He hired an architect to design it to his specifications. He found an experienced general contractor, but this became a problem: The structure was three-fourths built when the contractor, in financial trouble, left the job. “I had to step in and finish,” said Nguyen.

To get his kitchen and bar/lounge opened, Nguyen needed pros —and he knew who could get the chef and bartender at his father’s restaurant in Montreal. Nguyen convinced them to move to Orlando to open his restaurant. They also agreed to set up training programs for the cooks and bar staff.

Another issue that concerned Nguyen was securing rights to the Kobe name. “I registered the name with the state of Florida,” he said. “No one else can use the name in Florida.”

Nguyen was concerned about finding suppliers for quality steaks and seafood, the staples of his menu. “U.S. consumers are mindful of what they eat,” he said. “They want to know where the food they eat comes from.” Nguyen scoured the country, finally finding three ranches that supply Sirloin Angus beef, New York strip Ultimate Wagyu and filet mignon. He found suppliers for Maine lobster, shrimp, scallops and salmon in Nova Scotia. He visits these suppliers several times a year.

For other food products, Nguyen got names of local vendors from other restaurant operators. “Once vendors find out about you they come after you quickly.”

When Nguyen was set to open his restaurant, he followed another practice of the chains—a soft opening. “You open quietly, without advertising, and this gives you time to work out kinks and get things moving smoothly before you open officeially,” he explained.

But Nguyen’s opening was anything but soft. “We were swamped the day we opened,” he said. “We served 200 people! We did $4,000 in sales! I knew we had picked a good location.”

Sales reached $1.3 million in a year. Nguyen was thinking about expanding, and got an unexpected nudge: The owner of a 45,000-square-foot shopping center under construction next to a Hyatt Hotel near Disney World approached Nguyen. Would he like to be the anchor tenant? Nguyen jumped at the opportunity. “We liked the location, and the owner was generous with tenant improvements,” said Nguyen. Within a year, sales at that location hit $1.6 million. This venture was so successful that Nguyen bought the shopping center and paid $10.7 million.

Buying the real estate where his restaurants are located is another of Nguyen’s business strategies. “That’s how we survived the recession,” he said. “We didn’t have to sacrifice quality or service.”

 

Chef Chau Nguyen learned everything he could about the restaurant business gaining practical experience while working at an eatery his parents owned. He also studied the big chains to understand how they developed their systems for success.

Stan Roberts is a Contributing Editor.

 

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Category: Magazine, Small Business Opportunities, Small Business Opportunities Nov 2014