Aloha Poké, Jellystone Park owners talk growth
Illustration by Jonathan Hankin
I’m talking by phone to Bojangles franchisee Baryalay Razi (he said just call him “Razi”) on March 24. A week earlier, officials in Maryland, where he operates five of the chicken-and-biscuit outlets, ordered all restaurants to stop serving customers inside their establishments to help control the spread of the novel coronavirus. As of now, they are only permitted to sell food through drive-thru windows.
The edict has caused sales at restaurants countrywide to drop precipitously. Same-store sales at quick-service chains like Razi’s had already tumbled 43 percent by March 19, according to research firm Hedgeye.
Razi, 54, hasn’t furloughed his workers. As a result, the veteran operator may qualify for a small business payroll loan from the state. “I’m talking to a lot franchisees and I’m aware of what’s going on at the federal level,” he explains. “I want to learn all small details of these programs.”
At the moment, neither he nor I (nor anyone, for that matter) knows when restaurants will re-open their dining rooms—nor whether customers will stream in if they do.
The coronavirus crisis, moreover, scrambled Razi’s plan to open three Aloha Poké units in Montgomery County, an affluent area north of Washington, D.C. He’d set sights on three towns: Rockville, Gaithersburg or Germantown. But negotiations with a landlord stalled with the stay-at-home order.
Once open, the poké stores will be run by his children. His oldest daughter, 26, now helps Razi operate Bojangles as the director of communications and marketing for MSR Restaurants LLC, his franchise group. “I want to make this a family-run business,” he adds.
Aloha Poké, an 18-unit chain headquartered in Chicago, appealed to Razi because of the ease of the operation: a small footprint without grills, fryers or ventilation. Plus, the customizable menu—vegetables, grains and raw fish—is perceived as fresh and healthful. That hits the mark with customers concerned about wellness and trendy diets.
Online ordering also made a difference in his decision to franchise with Aloha. “I like the idea of” placing “an order ahead of time,” says Razi, a former Whataburger executive who oversaw the chain’s restaurants in Houston and Dallas from 1995 to 2015. “They are upstairs in their office, they go online, and by the time they get here the meal is ready.”
No surprise that he is seeking sites in office buildings and near universities and hospitals. Says Razi: “It’s not like we have to be on a highway.”
According to Aloha’s FDD, it costs from $138,000 to $357,700 to open a single unit. The document’s Item 19 listing its financial performance representations reports median sales of $653,647, a figure based on seven company stores.
Razi intends to finance the outlets the way he did for his Bojangles, with an SBA loan. Asked about the immense amount of paperwork involved, he confesses he nearly gave up on the process the first time. “But it worked out, so I think I’ll do it again,” he says.
Northgate group grows with Jellystone
[This interview took place two weeks ahead of reports that the COVID-19 virus would crush the tourism business.]
Don’t bother stopping the presses. “The big news in this year’s North American Camping Report is that nearly every ‘trend’ identified in the report’s previous four yearly editions appear to be ongoing,” reads the 2019 survey, sponsored by Kampgrounds of America.
The most important on-going trend, of course, is the swelling number of U.S. households that camp. That number grew by 1.4 million, “reaching a new high of 78.8 million households,” the survey reports.
Which helps explain why Northgate Resorts is Yogi Bear’s Jellystone Park Camp-Resorts largest franchisee. The family-run business, headquartered in Grand Rapids, Michigan, operates 13 parks and has been aggressively acquiring and developing them since 2013, says CEO Zachary Bossenbroek, who oversees the business with his father and another partner. Northgate, incidentally, also owns two software companies, apartment complexes, a home construction company, and sand and gravel quarries.
The group acquired its first Jellystone Park from an existing franchisee ready to retire. Negotiations went well, Bossenbroek says, and soon other franchisees wanted Northgate to purchase their parks.
He didn’t like every location brought to him. “It often comes down to a number of factors,” he explains. “Sometimes there’s no expansion opportunity or the ability to grow revenue or the location is too far from population centers. There can be lots of reasons.”
Interestingly, the wrath of homeowners or town councils isn’t necessarily one of them. Northgate, for example, recently acquired two camps in New Hampshire. Acquisition of the camp in Glen, a popular tourist area, went smoothly, Bossenbroek recalls. But about 60 miles south, in Milton, his company ran into what he describes as NIMBY culture, or “not in my back yard.”
“We had some battles,” says Bossenbroek. Adding more campsites to the location in Milford, New Hampshire, is delayed, for example, he explains, in reference to a zoning issue that involved 150 campground acres. He says residents who live near the property charged that additional campsites—the increase was from 223 sites to 396—would pollute the air with smoke and turned the camp into a mobile home park.
“They put out a lot of misinformation with what we consider great use of the land,” he continues. Still, he is hopeful a Jellystone Park in Milford will be up and running by May 31.
“But for us to achieve the full business model—with water facility and cabins—we’re hopeful that by May 2021 we will be there,” he adds. That’s of course barring other events over which Bossenbroek has no control. “There is unpredictable winter weather in New Hampshire that can impede construction,” he says.
Since our conversation, Bossenbroek and his group, along with just about every other franchise segment, is also likely dealing with a number of other unpredictable circumstances.
David Farkas has covered the restaurant business for 25 years as a reporter and food writer, and writes about development deals in The Pipeline in each issue. Send your franchise’s development agreements to him at firstname.lastname@example.org.