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Colorado sit-down restaurants spin off fast-casual eateries

nuhuEd Sealover – Reporter- Denver Business Journal

Fast-casual is a very hot segment of the restaurant industry right now — so hot, in fact, that a number of Colorado sit-down restaurants are spinning off their concept into growing, faster-service chains.

HuHot Mongolian Grill on Feb. 12 opened its first NuHu Mongolian Express location in downtown Denver, hoping it will jump-start efforts to spread smaller, limited-menu versions of its already growing Asian-meal chain across the country.

And after a couple of years of fits and starts, Larkburger — a burger chain spawned from one of the most popular menu items at the upscale Larkspur restaurant in Vail — is expecting to open its first out-of-state locations in the next 12 months.

Transitioning a popular concept or popular menu item into a fast-casual restaurant comes with challenges. The food must be as good as that which appeals to diners at the slower-service setting, but it must come at a quick enough pace and low enough price to please urban lunch-goers who have given the sector its biggest boost.

NuHu, for example, replaces the two self-service buffet bars of ingredients at HuHot that customers load into a bowl that chefs will cook on a hot grill in front of them with one pick-your-ingredients line manned by restaurant employees.

The choices remain plentiful, from 18 types of fruits and vegetables that can be mixed into a rice or noodle bowl to nine different sauces, but HuHot/NuHu COO Jeff Martin had to pare down both main and side offerings in order to fit a 5,000-square-foot restaurant into a 2,000-square-foot space at 1147 N. Broadway.

Chain executives, most of whom are located in Denver, believe the fresh ingredients and ease of menu will appeal to a demographic searching out more than just sandwiches for a quick lunch.

They will monitor the success of the first location before opening others, but they also are laying out plans to grow in urban markets with both company-owned and franchised stores.

“There’s no question the fast-casual segment allows for more rapid growth,” said Martin, who operates 57 HuHot locations in multiple states. “By no means would we abandon our sit-down restaurants. … But NuHu can fit into a lot more real estate.”

Adam Baker, co-founder and CEO of Larkburger Inc., already operates 13 locations in Colorado. But chain leaders are examining a handful of markets in nearby states and expect to break into one by early 2016.

Going from an upscale eatery to a fast-casual concept saved some costs — there is no host stand, no full-service bar and no dishwashers needed to clean china, Baker noted. But the ingredients and preparation for the burgers have not changed, despite their lower prices.

Still, he sees major opportunities even in a crowded market.

“We’re pretty unique in that we cater to a subset of the better-burger segment … those who revel in food,” he said without using the more popular term of “foodies” to describe those customers. “We don’t view it as scaling down. It’s just a different service format.”