The founders’ passion for everything from food to customer service was yet another selling point for Rowe—and something franchisees appreciate as well. “You could sit down and talk to them for hours, and the conversation keeps coming back to the plate of food—how do you make the chicken perfect, how do you make the meat perfect, how do you build this perfect plate of food?” he says. “The last time I had that conversation with a brand was with Five Guys.”
This passion even translates into the hours the company operates, with some stores staying open more than 20 hours a day in the busiest markets. What’s more, when Hurricane Sandy hit New York in 2012—causing more than $68 billion in damage along the East Coast—The Halal Guys continued to serve chicken and rice platters to hungry New Yorkers despite the howling winds and driving rain. “The joke we heard was there were three departments: the police department, the fire department, and The Halal Guys department,” Speck says. “As the founders would say, ‘We’re different by being there when nobody else is.’”
It’s the brand’s streamlined menu that makes operating these long hours under any and all circumstances a whole lot easier. Serving authentic halal food—food that’s free from any preparation method or ingredient forbidden by Islamic law, such as alcohol and pork products—the brand’s lineup consists solely of sandwiches, meat and rice platters, hummus, baba ganouj, falafel, and baklava, available in generous portions at a good value. Platters typically ring in at $8.99 for a regular ($7.99 for a small) and sandwiches at $6.49, with an average in-restaurant check of $15.10 and an average online check of $28.50.
And with no major competition from another national Middle Eastern brand, there’s a gaping hole in the market for The Halal Guys to fill. “The only chain I can think of that’s offering gyros right now is Arby’s, and I don’t know if you want to call them competitors or not,” says Dennis Lombardi, president of foodservice consulting firm Insight Dynamics. “I think it’s nice that they have some competitive white space around them, but that alone is not going to make them successful.”
Authenticity, a strong customer base, a limited menu, and little competition were all factors that led Logan Trotter and Masroor Fatany to become two of the system’s first franchisees. Trotter operates five units in Louisiana, with three in development in the Miami area, while Fatany is the owner of three stores in Houston.
“It’s still in such a young phase, but it’s one of the most popular brands in America, if not the world,” Trotter says. “We’re worldwide now, and people are just absolutely loving it.”
Case in point: Fatany’s first Houston location opened in January 2016 with a four-hour wait, requiring a police presence to control the high traffic. (Trotter’s first downtown New Orleans store, meanwhile, had a three-hour line.) And this kind of fanfare isn’t unusual when a new location opens, Speck says. The Halal Guys marketing team creates grand-opening event pages on Facebook for each new unit, with 7,000–8,000 fans typically confirming they’ll attend. “What we’ve found through the years now is most of those people actually attend,” Speck says. “We see a lot of people on those event pages who will tag friends and say, ‘Hey, this is the cart we waited at in New York.’”
Franchisees like Trotter and Fatany can not only expect a built-in audience for their open and future units, but also an estimated startup cost of $300,000–$500,000, with a 6 percent royalty fee and 2 percent marketing fee. Each franchisee is required to sign at least five development agreements at $40,000 each, for a total minimum agreement cost of $200,000.
Although sales information for the privately held brand could not be disclosed, the company claims that based on average sales per unit per year, The Halal Guys is the second-highest grossing ethnic restaurant chain behind only Chipotle. But this sales success isn’t the only thing Fatany and Trotter appreciate about the business and the corporate team leading it.
“They’ve got a strong hold on supply chain, they’ve got a strong hold on operations. And as a franchisee, those are two important things we lean on the franchisor for, along with lowering our costs and finding new ways to improve,” Fatany says, adding that the brand’s mystery shops and food-safety checks allow him to hold his team accountable and ensure the same standard of excellence as the original carts. “They’re investing that time in making sure the brand is consistent throughout the country.”
As the company continues to grow, Speck and the team are looking for new operators to join their family of franchisees. Most appealing to them are local owner/operators who “live, sleep, eat, and breathe in the market they want to develop,” Speck says, along with a proven history of multiunit operations. “They’ve had boots on the ground, and they’ve experienced what it means to grow a brand in their market. But I also just love the idea of, ‘My kids go to school down the street,’ or, ‘I grew up over there, and now I’m developing a business here.’”
Though strong sales are a major selling point with prospective owners, Rowe says potential franchisees who are only in it for the money won’t be in it with The Halal Guys at all. “And if we get franchisees who talk about cutting corners—whether it’s with hiring the people or, instead of taking good real estate, they take cheap real estate—those franchisees get washed out,” he says. “Over the long haul, they’re just not going to operate the right way.”
With expansion on the brain, The Halal Guys has more than 400 units in development both in the U.S. and Asia, and recently opened up the U.K. to franchising. “There’s a billion and a half people in Asia, and we’ve only sold two or three deals,” Rowe says. “We could easily sell 23 deals over there.”
Not only that, but Rowe says many franchisees are already ahead of their development schedules. “That only happens when they’re happy and they’re making money,” he says. “If they’re not happy and making money, they’re slow. But right now, The Halal Guys franchisees are tearing it up.”
The brand is already operating in most of the top 40 media markets across the country—everywhere from Boston and Philadelphia to Phoenix, and Long Beach, California—as well as in Canada, Indonesia, South Korea, and the Philippines. But as The Halal Guys expands its reach outside of major markets to enter smaller pockets of the country, it is facing a bit of a challenge with brand acceptance and familiarity.
“It’s been very hard educating our customers on who we are and what we do. They’re simply just not used to or exposed to Middle Eastern street food from the streets of New York City,” says Trotter, who also operates units in Baton Rouge and Shreveport, Louisiana. “To combat that, we’ve done a lot of community events, fundraisers, and benefits where we go out and donate food and get a real opportunity to interact with customers in a more casual setting.”
Maintaining its strong momentum is another challenge The Halal Guys must contend with after coming fast out of the franchising gates four years ago. Lombardi says that initial rapid growth like that seen by The Halal Guys is unusual but not unique, with the real test being whether they can sustain that growth over the long run. To do so, the brand will need consistent, highly successful unit economics moving forward, “which means your existing franchisees are raving fans about their decision to go into it, stay in it, and be in the mindset of wanting to build more and more,” he says.
But The Halal Guys’ continued success is nothing Fransmart’s Rowe is concerned about. “This is one of the easiest brands I’ve been involved with,” he says, “and it will be one of the biggest things I’ve ever worked on.”
