BUILDING AN EMPIRE

Kara Gebhart

Concepts of Tomorrow
Growth Strategies For Emerging Full-Service Restaurants

Genghis Grill is conquering Texans’ tastes buds with
its bottomless "build your own" bowls of Asian cuisine.

BUILDING AN EMPIRE

For years suburbanites have extinguished their all-you-can-eat cravings at so-called "Mongolian barbecues," actively participating in the preparation of their meals by filling their bottomless bowls with choice ingredients to be stir-fried by grill attendants on the spot. The meats and veggies at these Americanized chains may be fresh, but the concept, which can be found in many cities, isn’t new. But Genghis Grill—The Mongolian Feast—is a relatively new player in this segment, and, with annual sales of about $1.5 million per unit, it’s creating quite a stir among Texans who are known more for their love of barbecued ribs, not "Asian barbecues."

The name, of course, is inspired by Genghis Khan, a Mongol hero known for his military genius. And while Jeffrey Sinelli, president and CEO of Dallas-based JPS Enterprises Inc. (the company that owns, operates and franchises Genghis Grill), isn’t out to conquer the world, he is out to conquer taste buds, systematically.

Sinelli, whose career has included operating several nightclubs, has built his Genghis Grill empire around, what he calls, "build your own" principles. "Employees build their own careers, customers build their own bowls, you can even build your own frozen drink," Sinelli says. "It’s a very interactive company and concept."

Sinelli built his own chain by first acquiring an old one. A Dallas restaurant called Genghis Khan Mongolian Feast, established in 1970, closed down in 1995. Sinelli, who had been interested in the Mongolian barbecue concept, took notice. Following the advice of his trademark attorney, Sinelli tracked down the owners of the defunct operation and, in 1998, purchased all of the restaurant’s good will.

With that purchase, Sinelli says that he instantly became the owner of the oldest Mongolian barbecue restaurant around. He revamped the concept and slightly changed the name to Genghis Grill—The Mongolian Feast.

Next, Sinelli contacted David Walker of David Walker Designs, a pro he had worked with on interiors before. Sinelli had several design criteria for Walker that broke away from traditional restaurant design concepts. Walker achieved those criteria, and, as a result, Genghis Grill has a small kitchen, more seats than most restaurants of comparable size, and smaller tables with square corners for increased flexibility.

Sinelli was able to specify the small kitchen because the majority of cooking is done in the dining room by "Grill Masters," in front of customers. Smaller tables are fine when bowls and glasses are the only dishes. And since customers prepare and transport their own meals, servers are better able to accommodate large groups. Tables with square corners can be pushed together to accommodate those big parties.

Pleased with the restaurant’s design, Sinelli next tackled the menu. He opted to simply update the original restaurant’s menu by growing each of its five categories. It is here that Sinelli’s "build your own" principles begin to come into play. Customers build their own bowls of food by traveling along a linear food bar, systematically completing five steps. First, the customer chooses a "main," which is a form of meat, poultry, fish or tofu. Then the customer begins to create his or her personal flavor profile by choosing a half-ladle of canola, sesame, olive or garlic oil. Next are the veggies, ranging from baby corn, broccoli and snow peas to green onions, mushrooms, leeks and celery. The sauce list also is long, ranging from soy, teriyaki, sweet & sour and plum to peanut, lime ginger and Asian chili. Lastly, the customer chooses a dash of dry spice, ranging from salt, nuts, pepper and dill to rosemary, carib jerk, paprika and cayenne pepper.

Sinelli says that each of Genghis Grill’s categories offers a larger selection than any competing Mongolian barbecue restaurant. And, he says, menu items in each category constantly are being updated and changed. As the concept grows outside Texas’ borders, Sinelli says that menu items will reflect the culture of each state. For example, a Louisiana-based Genghis Grill might offer crawfish while one in the Midwest might focus on beef.

OF COURSE, BOWLS AREN'T ALL GENGHIS GRILL OFFERS. There’s check-building depth to the menu in the form of a fully-stocked bar, from which drinks like a Mongolian Martini, a Mongorita or Asian beer flow. The restaurant also serves gourmet Asian ice cream, including green tea, plum wine and red bean flavors.

Checks average around $9 for lunch and $14 for dinner. Food costs are 28 percent. A clear bonus of the format is that food complaints are virtually elimi nated simply because customers control their own meals, and if a guest makes a "mistake," he or she is free to start over.

While the restaurant’s menu options may be many, so too, are the number of other Mongolian barbecue chains growing throughout the U.S. Differentiation, therefore, will become more important. Sinelli is confident that customers will see Genghis Grill’s lengthy array of ingredients, including unexpected offerings like sausage, red potatoes and white wine sauce, as the key point of differentiation between his and the other Mongolian barbecue restaurants chains. (Interestingly, Sinelli attended high school in Michigan with another build-your-own-stir-fry entrepreneur, Billy Downs, of BD’s Mongolian Barbecue.)

Sinelli adds that Genghis Grill also attempts to break away from the pack with an interactive web site (www.genghisgrill.com) that serves as more than a vehicle for brand awareness. It’s also a profit center, he says. Customers who visit the site can purchase merchandise such as T-shirts and hats, as well as gift certificates, which are hot sellers around the holidays. Customers also can sign up for give-aways, such as free meals, when they visit the site. "We give out a lot of dinners for two," Sinelli says, as a way of exposing more people to the concept.

The company also gives out a lot of "birthday bowls." With each check, customers are given a card to fill out. The information written on each card, including the customer’s birth date, is stored in a database. Genghis periodically sends out direct mail promotions, including coupons for a free bowl on, or within the month following, the guest’s birthday. "It’s very successful," Sinelli says. "The capture and redemption rates are very high."

SUCCESS, SAYS SINELLI, MEANS GROWTH. He projects that Genghis Grill will grow to between 200 and 300 units by 2007, thanks, in part, to the high number of franchisees already signed on to Genghis Grill agreements. Future units will consist of both company (10% of future units) and franchised stores, financed by cash flow and franchisees, respectively. Currently, there are six units open and 33 in development throughout several states. There are about 50 markets on Genghis Grill’s radar screen.

The transition from few to many should be smooth, if all goes as planned. Sinelli says he systematically built the first Genghis Grill knowing that he would need to be able to reproduce it repeatedly, with location being the only difference from store to store. Updates aren’t expected to be an issue, either. Sinelli says that he purposefully chose a traditional Mongolian look with design elements that consist of lots of tiled, hard surfaces so that changes in later years won’t be necessary.

Sinelli works with real estate professionals to choose future sites for restaurants, a process he says that is getting easier every day. Now, "people are calling us," he says, instead of the other way around. Sinelli says that he’s had a few conversations with possible strategic partners but for now, he plans to stick around. "As founder and CEO, I’d like to stay on and keep developing the chain," he says. "It energizes me. It’d be tough to leave." So for now, Sinelli’s focusing his energy on future franchise growth, moving at a pace of one new unit per month, a rate that will allow him to more quickly conquer.