Article
How 3 former Zoes execs teamed up to fuel growth of Bellagreen, Original ChopShop
Hargett Hunter Capital Partners CEO Jason Morgan tapped two of his former colleagues at Zoes Kitchen to help him develop and expand two emerging fast casual concepts.
December 13, 2018 by Cherryh Cansler — Editor, FastCasual.com
After spending seven years as the No. 2 man at Zoes Kitchen and helping it to expand from 20 to 150 units, Jason Morgan left in 2015, with hopes of helping another small brand make big growth strides.
He ended up doubling that wish.
The former Zoes CFO now oversees Original ChopShop — a 10-unit brand based in Phoenix — and Houston-based Bellagreen as CEO of their parent company, Hargett Hunter Capital Partners.
"When we were lean at Zoe's (pre-IPO), I led most of the functional departments," he said in an interview with FastCasual. "I really enjoyed the early days of Zoe's where we were very hands on. I was confident that I could take the Zoe's growth playbook, which I helped author, and replicate it with another fast-casual brand."
So far, his prediction is on target. Each concept produces AUVs over $2 million, has cash-on-cash returns north of 40 percent and is expanding their footprints. Original ChopShop, for example, has grown from three units to 10 since Hargett Hunter purchased it in 2016. By the end of 2019, it will have five more, one of which will be a licensed store in the Phoenix Sky Harbor airport.
"We also plan to test our first drive-thru location in the Dallas market. All of our growth in 2019, will be in Dallas or Phoenix," Morgan said. "Beginning in 2020, the brand will enter a third market, and we have been looking for opportunities in Atlanta, Charlotte, Austin and Houston."
Bellagreen, which had five locations in Houston when Morgan's team acquired it nearly three years ago, has since added two locations — one in Houston and its first in Dallas.
Building a solid leadership team is the first step to building a thriving brand
Although Original ChopShop and Bellagreen first caught Morgan's attention by possessing — what he described as the "it factor"— they were small, emerging concepts that required a lot of direction.
"We bought these brands so early in their life-cycles that a lot of brand building still needed to occur," he said. "It's been a lot of hard work and also very rewarding to see these brands grow and come to life. We were also very fortunate that others from the Zoe's team, including our COO, Kyle Frederick, and CFO, Will Evans, were also willing to take a leap of faith and join the team."
Taking that leap, however, made perfect sense to Frederick and Evans.
"It gave me a lot of comfort to have someone seek out my level of support and appreciate the qualities I brought to the table, while also being upfront in the things I would have to learn," Frederick said in an interview with FastCasual. "There was no sugarcoating that I might not be 'ready' for what we were about to do. That energized me. "
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| Avocado Toast at Original ChopShop |
Evans agreed, saying that he learned a lot from everyone at Zoe's — especially Morgan — in which he applies daily in his role as the Original ChopShop and Bellagreen CFO.
"These two new amazing teams and brands were the perfect opportunity to leverage that knowledge and those experiences into an exciting new growth adventure, both personally and professionally," he said during an interview with FastCasual. "Then, the unique potential of the concepts and the confidence and trust I have in Jason and Kyle pulled me over the edge."
Morgan's time at Zoes taught him that he could only be as good as the team that surroundsed him, which is why he recruited Frederick and Evans.
"We've been very protective of our brands in terms of who we've hired," Morgan said. "Culture is hard to manufacture and shouldn't feel contrived. We've been able to attract and retain people with a similar belief system and passion for our brands. We are starting to see a very organic culture developing at each brand."
Another major lesson Morgan took from Zoes was the importance of building a foundation.
"If you don't have it, growth can be crippling," he said. "Everything from systems, processes, training, real estate site analytics, branding, etc. It's a lot of work that often is done much later in a brand's development, but by getting this in place early, we were able to hit the accelerator on unit growth."
FastCasual recently chatted with Morgan about a variety of issues, including his plans for Bellagreen and Original ChopShop, why he launched catering and how he'll measure success.
See the Q and A below.
Q: As emerging brands, what makes ChopShop andBellagreenunique?
A: When people ask "What other brands are they like?" I don't have a good answer, and I really love that I don't have a good answer. There are a lot of similar brands and concepts out there competing for the same customers. We have two brands that are completely unique and differentiated.
Original ChopShop combines facets of Starbucks, Chipotle and Zoe's into a better-for-you brand that has all three day-parts, snacks and catering. This allows us to maximize the return on the box economics. We get frequency similar to Starbucks based on the juice/acai/protein shake offerings; we are highly customizable (without walking a line) with our protein bowls like Chipotle and our menu is fully prepared and prepped at each shop similar to Zoe's.
Similarly, Bellagreen, isn't like any other fast casual brand that I've ever seen. We've got a chef-driven fine dining menu in a fast casual format that includes appetizers, soups, salads, sandwiches, burgers, tacos, pizza, pasta and desserts. We're also one of the most eco-friendly restaurants in the state of Texas.
Bellagreen offers everything from a lunch meeting, a date night or take-home option for the family. Sales are 50/50 lunch/dinner and 50/50 weekend/weekday and has north of 5 percent beer and wine sales without a dedicated bar. Average check is over $17, and the menu is centered on offering diet-friendly options including more than 30 gluten-free items, vegan and vegetarian options.
Q: How will you measure success? Is there a sales goal, number of units, etc.?
A: Right now, our biggest measurement of success is going to be how well the brands transition to Dallas from their home markets. We have a lot of competition in Dallas. We have to be nimble, smart, and creative in how we attract customers. We must also remain focused in the home markets where the majority of the cash flow is derived.
We have a saying amongst our team that, 'The restaurant business is RTB (a really tough business).' There just isn't much room for error. Every meal has to be spot on, every real estate deal has to be the right site, every store employee has to represent the brand well, and you have to have enough financial backing to be able to withstand any blips along the way.
Fortunately, although it's early, Original ChopShop's first three Dallas locations are trending well in sales and are cash-flow positive at the store level after only a few months. For Bellagreen, we are only a few weeks into our first opening, but couldn't be happier with the early sales volumes.
Q: Will you keep the brands separate or eventually merge them into one concept?
A: Today, the brands share about 80 percent of the same investors, but operate as separate legal entities mainly due to rollover equity from the founders of each brand.
We have a lean home office team that is shared between the two brands, but also have operations personnel dedicated to each brand respectively. The shared home office structure has allowed us to add talented team members that we couldn't otherwise afford if we only had one concept.
We've been able to implement systems and processes that are identical in both brands from accounting to POS/back-office to HRIS systems. We have two emerging, on-trend, fast casual brands with AUVs north of $2 million. Splitting them would be relatively painless if there was ever the desire to split them.
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Bellagreen's Paleo Spaghetti Squash Bolognese |
Q: You oversaw Zoe's IPO; any future plans to go the IPO route?
A: The IPO route typically requires $15 million or more in EBIDTA. We've got a lot of growth in units and EBITDA before an IPO could even be considered. When and if the current set of investors decided to pursue a liquidating event, a more logical route would be to pursue a larger private equity firm.
However, at this time we aren't thinking about the exit, but instead continuing to build these two great brands. Our current investors are patient and supportive, which are two great traits when you are growing an emerging restaurant company.
Q: How do you market the healthy lifestyle and sustainability aspect of the brand?
A: We intentionally don't use the word "healthy" in any of our marketing materials for either brand. Healthy means something different to just about anyone you ask. Oddly enough, saying your brand is healthy can be a detractor to sales and produce a veto vote in dining decisions. Although we offer many health-conscious menu options, we also have some indulgent items like our desserts.
Instead, we use words like "healthful", "whole foods" and "wholesome." I know I'm playing with words a bit, but we believe that these are better descriptors of what we do. Where I think a lot of better-for-you restaurants make a misstep is in being "preachy" about their brands and telling consumers what they should eat. We want to be better-for-you but also approachable.
Q: Tell me about the catering program at Original ChopShop.
A: When we purchased the brand, we had no catering sales. We knew that this was a huge opportunity that ultimately could be north of 10 percent of sales. We've hired catering managers in Phoenix and Dallas that target local businesses and social caterings. So far, we've grown from zero to over 5 percent in the last two years. The diversity of the menu makes catering a win for us. Guests can order a cold sandwich, a hot protein bowl or a breakfast parfait. We also offer the ability to cater to different dietary needs.
What is your favorite thing on the menu?
A: Original ChopShop — Chicken Teriyaki Bowl and PB&J Parfait
Bellagreen — Angus Burger and fresh cut fries made with local TX 44-Farms beef and our homemade White Chocolate Bread Pudding
About Cherryh Cansler
