Slow start, then upstart: The Halal Guys take their street eats mainstream
When The Halal Guys street cart shows up, lines tend to form.
For its first 16 years of operation, the street food cart that birthed the concept now taking its chicken, gyros and falafel nationwide—and making its Top 200+ debut—didn’t have a formal name.
“The combo platter cart” is what most people called it, recalls Ahmed Abouelenein. “It wasn’t until 2006 that it officially became The Halal Guys,” he says. “It was suggested by a customer and it stuck.”
Abouelenein was also without an official title until a few years ago, when the cart concept co-founded by his father, Mohammed Abouelenein, and fellow Egyptian immigrants Abdelbaset Elsayed and Ahmed Elsaka became a brick-and-mortar restaurant and burst onto the franchise scene.
Now CEO of The Halal Guys, Abouelenein runs a franchise that from 2016 to 2017 saw 106.9 percent systemwide sales growth as it rocketed from $34.3 million to $71.1 million, putting it at No. 348 in its first year on The Top 200+. The brand’s unit count made an equally impressive jump, from 27 locations at the end of 2016 to 81 to close out 2017, a 200 percent jump.
While The Halal Guys is new to this ranking, the concept’s origins stretch back to 1990, after the aforementioned three founders settled in New York City. First working in kitchens and as cab drivers, the trio then opened a hot dog cart on 53rd Street and Sixth Avenue in the city’s Midtown West neighborhood.
They soon recognized that while there was a glut of hot dog stands, the demand for halal food, which is food free from any preparation method or ingredient forbidden by Islamic law, from the city’s many Muslim cab drivers was unmet. Thanks to the popularity of their chicken and rice platters with a slathering of white sauce, lines stretched down the block and three more carts opened as business boomed and the owners began thinking about what could come next.
Inventing a new category
“We were approached many times over the years but always hesitant because we were worried the food quality would be compromised,” says Abouelenein of the expansion inquiries—many of them franchise-related—fielded as others wanted to get in on The Halal Guys’ success.
Then came Dan Rowe. The CEO of franchise development company Fransmart would grab lunch at one of The Halal Guys street carts whenever he was in New York City, often thinking how such a concept, with its loyal customers and high volumes, would make for an ideal franchise. Later on the hunt for an authentic Middle Eastern brand to bring into the Fransmart fold, Rowe says he didn’t find a single concept that measured up to The Halal Guys. It took a year’s worth of negotiations—time Rowe says is indicative of the care the Guys give every aspect of their business—before The Halal Guys signed with Fransmart in 2014.
“They didn’t take it lightly, they wanted to make sure if they did this, to do it right,” says Rowe. “They’re so focused on the product, on the plate of food. I hadn’t see that level of attention since Five Guys,” the burger brand Rowe helped grow from 10 to 1,000 units (today Five Guys has more than 1,500 stores).
Rowe was also drawn to what he calls the “authentic DNA” of the brand, in reference to the founders’ entrepreneurial success story as Egyptian immigrants. “I don’t want copycat brands, when somebody is just getting into it because it’s a hot segment,” he continues. When evaluating a brand, Rowe has the end in mind as he considers what it could become over time, not just over the next year. In The Halal Guys, “I saw a 500- or 700-unit chain across North America,” he says. “We’ve truly invented a new category.”
Within the first two years of working with Fransmart, The Halal Guys sold development rights for about 350 locations in the U.S., plus a few dozen in Asia. Franchisees agree to develop a minimum of five units, which carries on the high side a total estimated investment of $926,500. “Franchisees have to want to build and run a multi-unit business,” says Rowe. “We’re looking for people who want to grow.”
Rowe and Fransmart assisted with the creation of operations and training systems and with the opening of the first two corporate brick-and-mortar restaurants, on 14th Street and on Amsterdam Avenue in New York City. That second corporate storefront became the prototype for The Halal Guys expansion and together with the first helped Abouelenein refine the concept as he prepared to scale across the country.
From left, founders Mohamed Abouelenein, Ahmed Elsaka and Abdelbaset Elsayed.
“We learned we needed to put in place better training,” Abouelenein explains. “Now we have a very strict and strong training manual. Franchisees have to come to New York City for hands-on training and learn food preparation, that’s a minimum of four weeks.”
The Halal Guys’ famed white sauce is now made in a commercial kitchen to ensure consistency, and other national distribution and vendor partnerships were established to maintain the food quality.
Locations began opening in Chicago and Southern California, with lines out the door and around the block as upwards of 1,500 people turned out to get the first combo platters outside of New York. By 2016 The Halal Guys had 37 franchisees signed, and as excited as he was about the swift development pace, Abouelenein’s mind also kept returning to his core focus on putting out that perfect plate of food.
“In 2017 we only signed one franchisee,” says Abouelenein, chuckling that perhaps while Fransmart wasn’t particularly happy about that, “we’ve got to protect the brand.”
The focus turned to existing franchisees, as many of them were accelerating their development schedules and accounted for the 54 new locations last year.
“We wanted to make sure the quality is there, the operations are there and the customer experience is what we want,” continues Abouelenein.
Rowe agrees that was the right move and one that’s helped the system’s franchisees become more profitable. “In this business, you only get rich if you help others get rich,” says Rowe. “It’s gotta matter that you help franchisees be successful.”
Paul Tran is one such franchisee, signing an agreement in late 2014 to develop 50 locations in Southern California with his three business partners. He was the senior director of development at Fransmart and, like Rowe, would eat at The Halal Guys carts whenever he’d travel to New York, “but I never thought it would become a national brick-and-mortar store,” says Tran. “It’s come full circle.”
Tran is now COO of franchisee group Halal or Nothing, which has nine locations open. He likes the brand for its simple menu and ability to attract a wide customer base.
While he acknowledges there have been some growing pains as his franchisor learns and adjusts, there are also advantages to being among the first to join the system.
“We get to add value and effect change,” he says, particularly on the marketing side as one of his partners, Thomas Pham, also runs creative agency Slique Media and helped create the bulk of the brand’s collateral. They also spearheaded the brand’s broader social media presence to increase engagement.
Operationally, Abouelenein made the switch from having a chief operations officer to installing several directors of operations, each focused on supporting a few markets.
Franchisees are encouraged to hire general managers with experience running high- volume restaurants and training employees to focus on the entirety of the guest experience, which in the case of The Halal Guys includes engaging with customers throughout the ordering process.
“We try to teach all our employees how to translate that street experience, to bring that inside those four walls,” says Abouelenein. Employees are also trained in the art of upselling, something that’s become easier as sides such as hummus, fries and baba ganoush were added to the menu.
The Halal Guys’ highest-performing stores see between 10,000 and 15,000 customers each week, Abouelenein says, with weekly sales of more than $100,000 and check averages hovering around $12-$15.
“They do more volume than a Five Guys in half the square feet,” points out Rowe of the average 1,400-square-foot restaurant.
To further fine-tune operations and help franchisees achieve better unit economics The Halal Guys uses the Aloha restaurant management tool from POS provider NCR, which tracks sales, check average, inventory and labor, among other features. “It helps operators identify small issues that impact their sales tremendously,” says Abouelenein.
Even with all the tools and improvements made since the franchise launch, for Abouelenein, continued success for The Halal Guys comes back to one thing: the food. “It’s all about the food, it’s all about the plate. Then the sales come by themselves.”