So, let us give you a little background.

“There is no real-life Beard Papa. He is a fictional character,” explains Minoru Inagaki, president of the U.S. division of Japanese conglomerate Muginoho which owns Beard Papa’s. “When our company’s founder, Mr. Yuji Hirota, created our logo, he wanted to choose something that would bring people the cheerful, energetic mood associated with the Christmas holidays. So he chose a Santa-like character, but then changed the color of his outfit from red to yellow to signify that you can be in a joyful holiday mood all year at Beard Papa’s.”

Just seven years after Hirota founded Muginoho and five years after Beard Papa was born, the quick-service chain now has 260 stores worldwide. In addition to its Japanese base of approximately 200 stores, Beard Papa’s also operates in China, Korea, Singapore, Hong Kong, and now the United States.

How Beard Papa’s came to the U.S. is a story in itself. For years, travelers to Japan had relished the sweet treat of a Beard Papa’s cream puff. They would buy boxes of them to consume on plane rides back to the States—though the preservative-free puffs didn’t last much past the plane rides, making it easier to rationalize devouring the whole box in flight.

One such traveler was Nobuko Ogihara, a Tokyo native living in New York City. On a trip to Tokyo in 2001, Ogihara saw a line of people waiting outside a Beard Papa’s shop and so she did what Japanese shoppers tend to do when they see a queue outside an unfamiliar food establishment: she joined the end of the queue to see what could be so good. Finding the cream puff treat worth the wait, Ogihara felt sure that Americans would appreciate the joys of Beard Papa’s just as much as the Japanese and started to wonder why Beard Papa’s hadn’t already expanded to the States.

In fact, Beard Papa’s management had thought of expanding to the U.S. market for some time, but lacking the language skills, local market knowledge, and bureaucratic expertise, they had decided to build their operations closer to home until a suitable opportunity arose. Ogihara presented just such an opportunity. She contacted Muginoho’s corporate offices in Japan and offered to help the brand set up operations in New York City. As a densely populated urban market with plenty of Japanese expatriates and lots of experience with Japanese cuisine, New York was attractive as a U.S. base of operations from several angles. (Management had also considered other major metro areas like Los Angeles and Chicago as potential U.S. launch sites.) Ogihara flew to Osaka, Japan and made a presentation to the Muginoho board of directors in which she outlined the potential of the U.S. market in general and the New York market in particular. Hirota and the Muginoho board approved of her plans and began working with her on transferring the Beard Papa’s brand halfway around the world.

It was not easy to get to this point, however. In the two years between the time Beard Papa’s decided to come to the States and the time it opened its first store, the company needed to overcome two major challenges—penetrate the tough New York urban real estate market and adjust operations for unfamiliar territory.

On the real estate end, Beard Papa’s encountered trouble due to the mismatch between its status and its goals. The company felt it needed a high-traffic location to generate enough revenue off a $1.25 pastry to meet high real estate costs. Because the company didn’t want to have to spend a lot right away on marketing costs, it also needed the location to be visible enough to serve as its own billboard. The problem was that even though the company was well known overseas, it had no name recognition yet in the U.S. markets. Accordingly, many New York real estate brokers were reluctant to take the company’s search seriously.

“No one knew about us,” says Inagaki. “In New York, a company doesn’t go out and ask for Main Street and Broadway unless it’s Starbucks. A lot of real estate agents did not take us seriously at first. They told us to pay a full year’s deposit for the space. We did not have a reputation yet. Of course, as soon as our first store was open and people saw the line out the door for creampuffs, everyone wanted to be our best friend.”

Needless to say, Beard Papa’s no longer has trouble being taken seriously and negotiating for prime real estate. Its first 800-square-foot location sits in a high traffic area, a main avenue (Broadway) between two subway stops on the residential Upper West Side of Manhattan. Its second 900-square-foot store will be situated in Astor Place, a downtown neighborhood with a strong Japanese expatriate and multicultural hipster presence.

In addition to the space issues, Beard Papa’s also faced operational hurdles. Perhaps more than in some other countries, business in Japan is tied into a social network. Companies place great emphasis on personal recommendations and connections in finding suppliers. While Beard Papa’s had a dependable network in its Asian hub, it took time to build those same connections here. As president of Muginoho USA, Inagaki was charged with finding construction firms to build the new stores, designers to furnish it, dairy companies and sugar companies to supply the raw ingredients.

Besides finding suppliers, Beard Papa’s also needed to fine-tune its operations for its new market. Even the electrical voltage differs between the U.S. and Japan, so the company’s baking equipment and prep times needed to be altered to conform to the realities of the U.S. infrastructure.

Beard Papa’s hit on an innovative way to ease into its U.S. operations and gain valuable experience while minimizing risk and keeping a low profile. The company made a deal with a single unit Midtown Manhattan café called Zaiya that caters to a Japanese clientele. Zaiya agreed that Beard Papa’s could carve out a section of its store and set up a mini store-within-a-store operation. It was a win-win arrangement for both parties: Beard Papa’s could hit the ground running by training employees, adjusting operations, and building a brand presence before even opening its first real store. Zaiya could generate additional foot traffic for its other products from customers who felt nostalgia for their home country’s brand. Though Beard Papa’s plans to open only stand-alone stores from now on, the Zaiya kiosk remains open as a acknowledgement, say Beard Papa executives, of the role Zaiya played in helping Beard Papa become established stateside.

Inagaki also had the responsibility of staffing U.S. operations in a way that would meet Beard Papa’s high standards of service. In Japan, customers expect quick-service workers to provide a level of courtesy, professionalism, and deference that far surpasses what is asked of U.S workers. “We try to do everything for the customer,” says Inagaki. “We don’t see ourselves really here to sell cream puffs—we are here to sell a service. When the customer walks into the store, we engage his five senses. You can smell the cream puffs baking all day long. You feel the fresh shell of the cream puffs, and you taste them when you bite in. You can see and hear the servers talking to you and to each other so it’s important that they are very upbeat and enthusiastic. We tell our staff that when they are behind the counter, they are not there to sell cream puffs—they are actually performers on stage who are being watched making cream puffs. When the customer is done seeing the performance, he gets to go home and take the cream puff that he watched being made. The cream puff is just something to take home. It’s an extra treat.”

Going forward, staffing will continue to be a challenge for Beard Papa. So far, many of the company’s U.S. employees are Japanese or Japanese-American, simply because the company has largely advertised for employees in Japanese-language outlets. Still, as the company grows, Beard Papa’s will obviously need to diversify to meet U.S. employment laws. Franchisees will be encouraged to hire a diverse group of employees to both represent and attract a diverse customer base.

Still, the company says it is confident that its training program for both staff and managers will allow it to maintain the same high levels of friendly service and quality production. “We are very demanding from our staff, but then again, we also make Beard Papa’s a very fun place to work,” says Inagaki. “It’s going to be very rewarding, because we are at a point where we are growing and franchising very aggressively. So it will be easy for employees to move up to managerial and even owner levels. If you work hard, you will be recruited to a new store.”

Here in the U.S., Beard Papa’s has decided to use its first corporate-run Beard Papa’s store as an outlet to test items that Muginoho sells through three distinct brands back in Japan—items like mango sorbet and cheesecake sticks. In Japan, Muginoho sells the shaved ice mango products through a brand called Oriental Beauty and the cheesecake sticks through its Tio Gluton (Fat Uncle) brand. In fact, Muginoho runs a number of specialized quick-service operations in Japan—savory crepe stores, yakitori (BBQ chicken on skewers) outlets, noodle shops—as well as various upscale restaurants and a Cuban salsa club.  However, here in the States, the plan is to focus on the Beard Papa’s brand for now and, more specifically, on the cream puff. Outside of the testing and training store, Beard Papa’s will carry only cream puffs and related cream-filled items such as cannolis.

Beard Papa’s focus on making the world’s best cream puff goes back to its founder, Mr. Hirota. Before Hirota founded Muginoho, he worked in the bakery business and ran a small chain of high-end bakeries that produced a range of various breads. He grew frustrated with the forced losses his business incurred; whatever was not sold at the end of the day had to be thrown out. Such losses cut into his marginal profits.

So, Hirota decided to create one exceptional product. Inspired by his own childhood love of cream puffs, he began to focus on producing and selling the world’s best cream puffs. His devotion to this singular goal produced the Beard Papa’s phenomenon—fresh, delicious, all natural, and extremely popular cream puffs.

To produce a premium quality product while keeping costs under control, Hirota and his team developed a series of mechanized factories that cut labor costs and produced prepackaged boxes of the cream puff’s constituent parts. The puff’s shell comes from frozen dough balls that are made in the factory. The creamy filling is made in the stores using Madagascar vanilla beans. “A lot of companies cut costs by using vanilla essence or extract,” says Inagaki. “We take the vanilla bean, slice it in the middle, and scrape out the seeds. That’s why you can see black bits in the custard itself.” Beard Papa’s maintains that using these premium ingredients create a taste premium that sets the product above its Japanese competitors.

As Inagaki noted, there is also an element of theater to a Beard Papa’s operation. Unlike a typical bakery where a product is simply plucked off the shelf when a customer places an order, Beard Papa’s prepares each puff individually for each customer. It is only when the customer purchases the cream puff that the cream is injected into the pastry shell. There is a practical reason for this as well—a last minute cream injection keeps the pastry shell crisp, the cream fresh, and the whole puff from getting soggy.

Beard Papa’s also takes action to ensure product standardization across locations. One out of every five cream puffs is weighed to ensure that the proper amount of cream has been added to the shell. “If a cream puff is off the standard weight by more than 5 grams, we either throw that pastry away or keep it for the staff. Part of what makes a franchise a franchise is the maintenance of the same product and quality in all stores. We make sure that the cream puff tastes the same even if we have to use sugar or flour from different suppliers. To obtain this consistency required more than 3,000 trial-and-error tests,” says Inagaki.

Market research leads executives to believe that Beard Papa’s cream puffs will find an enthusiastic consumer base in many countries—particularly the U.S. and Europe.

As evidence, Takuma Ogihara (no relation to Nobuko Ogihara), part of Beard Papa’s franchising and expansion team, tells the story of one lactose-intolerant New Yorker. According to Ogihara, the customer regularly brings Beard Papa’s puffs to parties, saves one or two to eat right at the end of the party before heading home to endure his subsequent distress in private. The same guy is so impressed with the popularity of the puffs, says Ogihara, that he’s even thinking of opening his own store.

 Though Beard Papa’s now receives requests from would-be franchisees across the country, the company is taking its expansion slowly. “You can’t have a store opening on every corner in an environment where people are not yet used to eating cream puffs,” explains Inagaki. Indeed, while cream puffs are popular, even ubiquitous, treats in Japan, Beard Papa’s will have to create a market in the States. Still, Beard Papa’s is looking at opening five or six stores in Manhattan and expanding to other major cities like Los Angeles, Chicago, D.C., Boston, and Dallas.

Company executives say  a lack of shareholder pressures is a major asset in allowing Beard Papa’s to expand at its own pace. “A public company like Krispy Kreme has a lot of pressure from its shareholders to boost sales every quarter no matter what. This leads the company to start selling its products in gas stations, supermarkets, and delis. While this is great in a way, you also lose control over the product. You don’t know how long it is sitting on the shelf,” says Takuma Ogihara. Beard Papa’s has no plans to go public at this point and thus can keep greater control over the presentation, sales, and freshness of its products—and thus over its brand and reputation, explains Ogihara.

Still, the company is not trying to stifle creativity once it does begin franchising. Though every franchisee will be expected to maintain quality and service standards, individual operators will have choices. Some Beard Papa’s stores might sell cheesecake-on-a-stick once domestic manufacturing facilities for the product is set up. And, franchisees will be encouraged to try different cream flavors—after gaining approval from corporate headquarters. “We recommend for franchisees to try our flavor varieties— like vanilla, dark chocolate, and coffee. But if they can explain why eggplant-flavored cream puffs might work in North Dakota, and the flavor gains approval, then that’s okay,” says Ogihara.

Choux Factory’s Executive Director Yoko Kato says her cream puff shop will develop its own following in the cream puff business based on the strength of a thick, handmade egg custard filling (purposefully free of vanilla beans) and a baked shell topped with caramelized cinnamon and sugar. To complement the puffs, Choux Factory has developed a specialty-grade Hawaiian Kona coffee blend, the highest grade of coffee on the market.

Kato believes there’s plenty of room in New York for two cream puff chains. Choux Factory plans to open a second store by the end of the year and then expand from there on a corporate-ownership model.

The thought of such competition doesn’t seem to worry Beard Papa’s, which has carved out a reputation as a purveyor of premium puffs in its own crowded Japanese market. Indeed, Beard Papa’s team says it welcomes other puff sellers. Anything to increase familiarity.

“In America, many people don’t even know what a cream puff is,” says Inagaki. “Unlike deep-fried doughnuts, cream puffs are baked pastries, so they are much healthier. Everything is made fresh and is all-natural with no additives and no food coloring.

“We want people to wake up in the morning and replace their soggy, greasy, unhealthy donuts with fresh cream puffs and coffee. Sooner or later, we want companies to replace their coffee rooms with cream puff rooms.”