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Tokyo Joe’s rolling into New Year with first franchise deal

By Brenda Rick Smith

tokyo-joesWith Technomic predicting Asian concepts will dominate in 2015, it seems like Tokyo Joe’s has picked the perfect time to break out into franchising. The 30-unit fast casual concept inked its first franchise deal late last year. Its first franchised restaurant will open in Tuscon, Arizona, later this year, the first in a four-unit deal for the area. Tokyo Joe’s already has company-owned locations in nearby Phoenix.

“Tuscon is a good fit,” says Chad Corrigan, Tokyo Joe’s VP of Brand Development. “[Franchisee Dale See] will be able to feed off our momentum and our brand awareness in Phoenix, so I think it’s a great opportunity for both us and for him.”

It’s been a long-time coming for the Denver-based chain, which was founded by former professional skier Larry Leith 18 years ago. “After 18 years of operating and building the brand and building the concept, we have a lot of confidence in the business model and our goal now is to start expanding outside of Colorado,” says Corrigan.

Gridiron Capital LLC voiced its confidence in Tokyo Joe’s when it bought a majority stake in the company nearly two years ago with the goal of doubling its units by the end of 2016.

That expansion began with the opening of the two company-owned stores in Phoenix, and an additional two company stores planned for opening in the Dallas market in the first half of 2015.

Spoke-and-wheel strategy

Tokyo Joe’s is using a “spoke and wheel” strategy to grow, gaining a foothold in new markets with company-owned locations first, then working on franchising deals in neighboring markets.

“We feel like that gives us the best opportunity to support franchisees,” he says.

That will allow franchise stores to build on the momentum and brand awareness established by company stores, says Corrigan.

“It’s a different approach than a lot of brands take, but we’re willing to wait to follow that strategy,” says Corrigan. “We’re not rushing into franchising. We want to do it in a very strategic way, and be smart about it, and get the right people in our system. We feel like this is the approach that will make everyone successful.”

With the opening of Dallas company units just around the corner, Tokyo Joe’s is now working on closing deals in Austin, San Antonio and Kansas City.

Asia rising

As 2014 wound down, Technomic EVP Darren Tristano predicted that Asian limited-service concepts would increase unit counts by 8 percent in 2014 over the previous year. That momentum is likely to carry over into 2015.

So what’s driving the popularity of Asian concepts? Corrigan points to two ways Asian cuisine lends itself to top trends for customers: a desire for healthy options and customization.

Whatever the dietary needs or preferences of the customer – extra protein, gluten-free, etc. – there’s likely an easy way to accommodate it within an Asian-inspired menu, says Corrigan.

At Tokyo Joe’s, customers can choose noodles or rice, can add extra meat or no meat at all. “It seems like with Asian you have that flexibility,” he says.

Tokyo Joe’s Japanese-inspired cuisine lends itself to healthier preparation, since Japanese food is typically prepared grilled or steamed, as opposed to Chinese preparations which rely on frying. The health-focused Japanese preparation is a significant differentiator for Tokyo Joe’s. 

Tokyo Joe’s house-prepared sushi rolls – an item that can typically only be found in a casual- or full-service setting — also set it apart. “In terms of fast casual, it’s a component that’s missing in the marketplace,” says Corrigan.

What’s ahead

Corrigan sees competition heating up across the fast casual segment in 2014 as more brands and concepts jump into the market. Fast casuals are all competing for the same customer, says Corrigan — the consumer who is willing to pay a little more for higher-quality food and a good atmosphere. Competition for those customers won’t be limited to other Asian concepts, he says. The same customer might try a burrito one day, then crave pizza the next, and sushi the day after that.

“It will just keep getting more and more competitive, so we’ll just have to stay on top of our game with our segment and our concept,” says Corrigan.