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With People Worldwide Concerned About
Obesity And Their General Health, The Time Is Right For The UFood Restaurant
Group, “Better-For-You” Quick Serve Concept
Services
Restaurants
(UFFC-OTC: BB)
UFood Restaurant Group, Inc.
255 Washington Street, Suite 100
Newton, MA 02458
Phone: 617-787-6000
George Naddaff
Chairman and co-CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published - February 22, 2008
BIO:
George Naddaff, considered by many to be the Guru of Franchising in America,
specializes in the development and marketing of franchise concepts. As a man
frequently featured in leading business publications like Forbes,
Inc., Business Week, Entrepreneur,
Money and The Wall Street Journal, and in numerous
trade publications, he is a recognized visionary.
George began his career in food service when he co-founded International
Foods, which operated 19 Kentucky Fried Chicken Franchises in the Greater
Boston area and was sold in 1970.
In
1988, George founded, and until 1993 served as chairman and CEO of New
Boston Chicken, Inc. (“Boston Chicken”), a company that operated and
franchised limited service restaurants specializing in rotisserie-roasted
chicken. In addition to formulating the overall strategic direction, he was
in charge of Boston Chicken’s franchise expansion program and was primarily
responsible for site selection for both franchised and company-owned
locations. In 1992, he sold the company to a group of Blockbuster Video
executives, and shared in its record setting IPO (143% first-day increase)
in 1993. The company, now known as Boston Market, is a 700-unit subsidiary
of McDonald’s.
In
addition to Boston Chicken, George has been significantly involved with
several other successful concepts including the founding of Mulberry Child
Care Centers, which had over 90 company-owned childcare centers when it was
sold to Kindercare, America’s largest chain. In 1996, George invested in
Ranch*1, a New York-based chain of grilled chicken sandwich restaurants that
today operates 60 units in nine states and is franchising worldwide. George
also founded Living and Learning Schools, which operated more than 50
upscale child-care facilities and was sold to Kindercare in 1980. In
addition, George founded VR Business Brokers, the nation’s largest business
brokerage franchise with over 350 offices, which was acquired in 1986 by
Christies, LLP, London. In 1984, as a director and investor in Sylvan
Learning Centers, George helped launch their franchising effort which today
has over 800 units.
In
1993, George founded Business Expansion Capital Corporation, which was his
own venture capital firm where he invested in young start-up concepts that
had franchise potential.
Today, George is chairman and CEO
of UFood Restaurant Group, which is a start-up company planning a national
franchise roll-out of their new 2-in-1 concept. Presently, there are 9
operating units in the Boston area. There are also 5 units under
construction, with an additional 64 units under contract. His plan is to
open 800 units in 5 years.
Company Profile:
Headquartered in Boston, MA, UFood Restaurant Group, Inc. is a
franchisor and operator of fast-casual food service restaurants with an
integrated retail store that sells nutritional products for a dual revenue
stream business. UFood Grill offers a healthy lifestyle alternative to
consumers in the fast-casual restaurant space and is positioned to become a
leading player in the “better-for-you” quick serve restaurant category. The
Company is led by franchise innovator George Naddaff, who founded Boston
Market and led the franchising of several companies including Sylvan
Learning Center and Ranch*1. Mr. Naddaff has a veteran management team with
a record of success in the franchise market. UFood is currently launching a
growth plan to franchise nationwide.
CEOCFO: Mr. Naddaff, what is your vision
for UFood?
Mr. Naddaff: “My vision for UFood starts
with the fact that I think America is quite ready for our “better-for-you”
quick serve restaurant concept. Many have tried over the years. I am
reminded of a company a good twenty years ago called, Delight’s, which had a
great concept and tried to roll out the healthy version. There was another
company in Chicago called, Calorie, but America was not ready for it.
Everything is a question of timing. Is it too early or is it too late? You
can be too early, and if you are too early, you better have a lot of money
to sustain yourself until whatever you think is going to happen happens. Or
you can be too late and be amongst the ‘also-rans’. The fact that 375,000
thousand deaths each year occur because of obesity shows us that we are
ready for the UFood concept. There are 11,000 Curves that were not even
around eight or nine years, let alone Jenny Craigs, and Weight Watchers.
There are also people running up and down the streets of America; why are
they not all joining these things? I think people want to be healthier and
live longer. Who wouldn’t give their last dollar for another breath of life?
Therefore, the time has come, and it is always easier by the way to swim
with the tide as opposed to against.
I launched a company back in 1951 when women were going back to work and
they needed to have daycare facilities; I was one of the first to do that
east of the Mississippi with a company called Living and Learning School. It
was a company that owned and operated educational childcare facilities and
my partner at the time was F. Lee Bailey’s mother who had run a school for
40 years. She and I launched this company and we kept on saying as soon as
we get the 57% enrollment we could break even. Well in those early years
women were just beginning to get into the workforce. There were not enough
women at the time to fill these schools in the first year or two or three.
But, as I saw each year, we got closer to that 57%, so it took us a good
four years before we were able to break even. If we didn’t have enough funds
in the kitty to sustain ourselves we would have run out of steam. That would
have been a perfect instance of perhaps getting in that industry too soon.
Today you cannot find a daycare slot, all of them are mostly enrolled if
they are good schools. They are not $28 dollars like they were back in 1971;
they are $200.00 and $300.00 a week.
For everything there is a season. We know, for instance, in the business of
‘home-meal-replacement’, Boston Market became one of the highest IPOs in the
history of Wall Street. What made that concept succeed? The fact was that
America needed to have home-meal-replacement. The fact that women who were
working needed to have a decent meal to bring home to the children but they
wanted it all in one package, and they wanted it hot and ready to go.
Believe me when I tell you Boston chicken was like putting a match to
lighter fluid. That is how fast it grew, because America was ready not for
fried food any more but for a rotisserie chicken with thirteen steamed
vegetables. You know that we got more credit for the steamed vegetables than
we actually got from the rotisserie chicken. I used to get letters from
people who said “this is the healthiest meal that I can put in front of my
kids.”
CEOCFO: Healthy food doesn’t always translate to tasty food; what
will UFood do to change that?
Mr. Naddaff: “Generally the words
‘healthy food’, meant that it was going to taste like cardboard. Ever since
you were a kid, healthy food meant tofu, which does not resonate well in
your mouth. When we first found this concept in the original store in
Watertown, Massachusetts it was run by three body builders, one of which was
a chef at Harvard business school. They had managed to create a menu that in
a sense was “better-for-you-food”. Everything on the menu were things that
people normally ate everyday, for instance if you wanted to have a burger
you could have a lean burger or a bison burger with lean cheese, turkey
bacon on a whole wheat bun. Have your burger. What’s that you want? Fries
with your burger? Everybody wants fries with their burger. Well we don’t
have a fryer in the store. We have something called the UnFries. Baked, not
fried. We can put that fry against any fried fry in America. We brought in a
chef from the Ritz Carlton full-time who works on every menu item to get it
to taste better than what would normally be the healthy version. Why our
foods are better for you is our campaign slogan. We whisper health and shout
taste. If you can have products that taste great and are good for you people
will come back to see you over and over again because that is what they have
been looking for. It is not Tofu and salad seven days a week. Our
restaurants have a wide variety of food, for example our turkey and steak
platter that has broccoli and sweet potato. We have a chicken chipotle
sandwich, a tomato fresca sandwich and a chicken parm wrap. We have
something on the menu for everybody but the first and foremost is the fact
that every item we have tastes great.”
CEOCFO: Where are your stores now and how will you be handling
the roll-out?
Mr. Naddaff: “We had to establish a
base, which we have done in the Boston area, and those stores were initially
called KnowFat Lifestyle Grilles. We thought that was great idea for a name
because the word ‘know’ meant know your food, in the know, need to know,
what to know. However, we got resistance to it; some people said how do you
have something called Know-Fat with no fat in the meal? How is it going to
taste great? We learned that some people didn’t even come into the store
because of the name. We hired a company called Pompeii AD, which is a design
firm that did Anthropologic and Urban Outfitters, and they did a search for
us throughout the country and came back and said that the name “KnowFat” did
not resonate with our clients. They came back and gave us two names that we
fell in love with and one of them was UFood Grill, ‘feel great.eat smart’.
The reason they came up with that name was because our customer base is
between 18 and 45. While we do have people that are over 55 and 65 eating in
our restaurant, 80% of them fall into the category of 18-45. What resonates
with them today is IPOD, MYSPACE, YOUTUBE, so we corrected the name, and
they created a logo that is the cutest thing you ever saw, and it is hip.
Our logo is a circle like a smiley face, and the rim of the circle is green,
which goes with the environmental request of the American today. Instead of
two eyes that are large, it is one eye that is a wink; we call him Mr. Wink.
He knows something. The mouth is in a shape of a U, so what we have is a
cute and hip logo, and underneath the logo we have the words ‘Feel Great,
Eat Smart’. That sends a message that we are a grill serving better for you
food.”
CEOCFO: How do you get people in to
taste the food?
Mr. Naddaff: “It is amazing, we don’t do
it; it is the consumers that bring their friends. The guys that attend the
gyms bring their girl friends, the girls bring their friends, the
girlfriends bring their parents, the parents bring their kids, the workers
call their coworkers. If we open a store it is like a chain reaction. We do
not do a heck of a lot of advertising, which we will now because as a public
company you have to do it. As an expression, there is nothing as powerful as
an idea whose time has come. I believe just like daycare in early 1971, just
like home meal requests in 1988, I believe that healthy food and concepts,
has got it nailed and we are way ahead of everybody right now and we intend
to keep that lead.”
CEOCFO: Are you going to be doing this with a franchise model?
Mr. Naddaff: “I always believe that if
you want to capture the marketplace, nobody has all the money in the world
so what we are doing is going after area developers who are in the food
business already. In fact, I would say all of the major cities in the US
have them, and we are going to bring our concept to the attention of these
companies. The reason why I do that is they know what a restaurant is all
about, they know what opening and closing a store is. They also know about
hiring people who can’t speak English, they know the cash, they know how to
control food and labor costs, construction, finance, and human resources.
Why should I go and put somebody who doesn’t know how to fry an egg in the
business, when I can get somebody who owns a territory for a food chain
anywhere in the US? I know that when I give them our recipes, our method of
doing business, and present them with our drawings and plans that they can
open up a store within three months and be in business.”
CEOCFO: You do as much due diligence on your franchisees as
hopefully they do with you!
Mr. Naddaff: “We do not sell a
franchise; we award a franchise. The lucky person gets chosen.”
CEOCFO: You recently have an agreement with George Foreman; would
you tell us about that relationship?
Mr. Naddaff: “George Foreman is
represented by a gentleman whose name is Seymour Holtzman who is the
chairman of Casual Male. George hired him to run George Foreman Enterprises.
I have known Seymour for 25 years, and one time he was in our downtown
restaurant, ate our food, and could not get over the taste or the crowds
that were there. He called me up and told me that George Foreman had been
looking for a healthy concept to attach his name to because he had sold over
80 million fat-free grills and he is known as the grill man. We brought
George in to meet me and taste the food. George came up with two of his
sons, who were incidentally both named George. He ate our food, and even
went into a few restaurants. Everywhere he went immediately there were
hundreds of people who wanted his autograph, his picture. He was a charmer
and loved the food. He said “I want to be part of this.” For the first time
in his history, George Foreman took stock instead of cash upfront. We loved
that feeling that he had that much faith in what we were developing. He is
now our spokesperson and for the first two years, he will be promoting the
sale of the franchise. Because we don’t have hundreds of units where you can
go on TV and say go to your nearest UFood Grill, it is up to him and me to
promote this concept to potential franchisees, to get them to come in and
taste the food, see the crowds, and then decide to get into this game with
us. George will be our spokesman and he will be involved in the next month
or two rolling out all of the Know Fats into the new UFood Grills. The
grills are presently in Naples, Florida and Roseville, CA, which is outside
of Sacramento. We just recently opened up at Logan Airport, terminal
B-American Airlines and there we really rocked because people finally have a
choice. They were tired of all that food they have seen for years, they now
have a choice to eat something healthful before they get on a plane. Boy is
that resonating with the crowds at terminal B.”
CEOCFO: In closing, why should potential investors be looking at
UFood now?
Mr. Naddaff: “Everything in life is a
risk, I will never say it is 100% guaranteed. This is a start-up and we have
a way to go. What I am seeing and hearing from the consumers, from people
who are gym operators, college students, from people in general, they are
saying finally somebody has gotten it right. People who invest in the stock
market are hoping that they can hit a homerun. I just got in a company
called Boston Chicken, which later became Boston Market. In the days of our
early growth a lot of people said, “you are never going to make it”. I said
“why?” They said because once Kentucky Fried Chicken sees you succeeding
they are going to swat you like a fly on a horses back. I said I don’t think
so because I was Kentucky Fried Chicken franchisee and I knew the kind of
ethic that it takes to take a good rotisserie chicken and it took two hours
and fifteen minutes to cook. It only takes ten to twelve minutes to cook
fried chicken. It was a different mind-set, it is thirteen steamed
vegetables as opposed to the coleslaw and mashed potatoes. Everybody was
saying, ‘well I don’t know’, but those that did invest took that risk and
walked away with the highest IPO in the history of Wall Street. I think I
know the game, I am 77 years old; I have been in the game of start-ups and
know what it takes. I know the effort that it takes. We have just brought
back on board the former president and chief operating officer of the Boston
Chicken days. He is on board full time. We have an excellent site selector
that was with us early on, he is now back with us. We have people that have
been with us in the food business totaling 127 years. People know that we
are on the right track. For those that want to take a look at this
investment, I do not think they will be disappointed.”
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