Special Report | June 2013 | By Laurel Nakkas

Birth of a Brand

What it takes in this day and age to develop a new brand, from conception to launch.

New fast food brands like Live Basil first start as innovative business ideas.
Employees at the first Live Basil unit work the line shortly after the restaurant opened.
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It always starts with a simple idea.

For Brian Bailey at Ichor Restaurant Group, it began with the idea that Ohioans needed better barbecue. Six years after that idea initially took hold, Old Carolina Barbecue opened the doors to its first unit, in Canton, Ohio. The company later opened California-inspired Baja Pizzafish and will soon launch Smoke, a concept that draws inspiration from the smoked burgers served in Old Carolina and the sauces from Baja Pizzafish.

For Fazoli’s CEO Carl Howard, the idea was that the fast-casual Italian market was severely lacking. That gave him the inspiration to open a new (currently nameless) modern Italian concept, set to launch at the end of 2013.

And for Smashburger’s founder and chairman Rick Schaden, the idea was that it was time for his company to launch its own fast-casual pizza concept with an emphasis on fresh ingredients. That paved the way for Live Basil Pizza, which opened its doors in May.

Every successful quick serve has to start somewhere. Getting the brand from simple idea to doors open, though, takes time, money, and a heavy dose of strategic planning.

Two is better than one

Experts say no individual should develop a new brand alone, even if they have experience in the industry.

Ichor’s Bailey, who partnered with a high school friend to launch his company, says having a business partner is crucial to the success of a new brand, but only if that person is a good fit.

“He or she needs to be complementary to your expertise,” Bailey says. “My partner was very good operationally … and I am very good at the culinary and marketing aspects. If you are doing it on your own, you will get caught up in so many details, and you will find yourself complaining to your wife or husband. Your home life will suffer.”

When Nick Vojnovic bought Florida-based fast casual Little Greek in 2011 so he could develop it into a prominent chain, he kept founder Sigrid Bratic on as partner in the brand. She already had seven years of experience with Little Greek, and Vojnovic says having Bratic around helped keep him on track and ensured the “essence of the brand” stayed the same.

“When you open a brand, there has to be more than just food. In restaurants there is food, but a brand serves an experience.”

Those embarking on creating their second or third brand could follow in Schaden’s and Howard’s footsteps and use the help of their existing employees to develop the brand. The executives say the resources at their fingertips, from financing to marketing to design, significantly helped the brand-building process.

Create a brand, not a restaurant

Branding expert and QSR columnist Denise Lee Yohn says that once the initial idea for a new brand is hatched and the proper team is in place, aspiring operators should plan out their overall brand identity.

“What specific segments is the concept for? What is the concept in its essence? What are the defining attributes and personalities and values of the brand? How is it positioned competitively?” Yohn says. “All of that needs to be determined before you move into the expression of those things in a visual or verbal identity.”

Bailey adds that creating the brand identity is key to differentiating it from the many competitors in the marketplace.

“The key word is brand. When you open a brand, there has to be more than just food. In restaurants there is food, but a brand serves an experience,” he says. “Take the energy, the way the staff interacts, and how all of those things come together with the food. To me that is what is most important.”

Hiring a marketing professional is helpful when creating that brand identity, Yohn says, because they can help create a focal point for everyone else involved in the startup process.

Line up your financing

For most operators launching a brand for the first time, securing financing will be the trickiest part to the process.

Mike Rozman is the co-president and chief strategy officer at Boefly, an online marketplace that matches borrowers with compatible lenders, eliminating the need to travel from bank to bank. Boefly has provided services to quick-serve clients such as Arby’s, Jamba Juice, Del Taco, Dunkin’ Donuts, and Hardee’s. Rozman says it is critical that the borrower is prepared to seek a range of financing opportunities, adding that outside expertise is sometimes necessary to figure out what those might be.
“I know national lenders that have no interest in doing a startup or small business, but the average franchisee or independent owner doesn’t know that,” Rozman says. “So it’s going to be really critical for that business owner to get in front of a wider array of lenders.”

Howard says quick serves, on average, cost around $200 per square foot to build.
“You can do a down-and-dirty great concept with great food … and get that open for $100,000,” he says. “Or you can go all the way and do something extremely polished for $750,000. It depends on what you want to do.”

Schaden says poor financial planning will not only cause a new operator to worry about the business, but will also distract them from ensuring the product is as good as it should be.

To make sure the business’s ongoing financials are protected, operators should create a business plan that estimates how much of product the brand must sell each week and month to pay the staff, pay rent, and keep the doors open, Bailey says. “If you need help with that, get a partner who has that expertise,” he says. “Or there are executives, there are universities that have groups, and [there are] organizations that help small businesses. Also, the local chamber may have people who can get some of that business experience and can help you learn how [a profit and loss statement] is going to be important to your unit.”