In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Gyu-Kaku Japanese BBQ franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Gyu-Kaku Japanese BBQ franchise, based on Item 7 of the company’s 2019 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Gyu-Kaku Japanese BBQ franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Gyu-Kaku Japanese BBQ outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Gyu-Kaku Japanese BBQ’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 actual and average gross revenues for the 19 Gyu-Kaku Japanese BBQ franchised restaurants in the United States that have been open and operating for at least 12 months
Section I – Background Information
18 Things You Need to Know About the Gyu-Kaku Japanese BBQ Franchise
Names Matthews Real Estate Investment Services as Exclusive Tenant Rep
1. In late April 2019, Matthews Real Estate Investment Services, the nation’s fastest-growing commercial real estate company, was hired as the exclusive national broker for REINS International (USA) dba Gyu-Kaku, and secured three new locations nationally for Gyu-Kaku, consisting of over 16,255 square feet of commercial space. Spearheading the location strategy are Michael Pakravan, SVP and national director of retail leasing for Matthews, and Nick Day, a tenant rep associate for Matthews.
2. Aki Yamaguchi, chief operations officer of REINS International, said, “We are excited to announce this collaborative effort with Matthews as we continue the national expansion of the Gyu-Kaku brand. We are confident with Matthews’ knowledge, expertise and strategic focus, Gyu-Kaku is in the right hands to help achieve our growth objectives.”
3. At the time of the announcement, there were 53 Gyu-Kaku restaurants in the U.S. and Matthews secured the following Gyu-Kaku locations:
- Santa Monica, California – 231 Arizona Ave. will be the company’s new west coast flagship location. The property is situated at the North West corner of 3rd St. and Arizona Ave., the 50-yard line of 3rd St. Promenade, and features over 45 feet of frontage along the Promenade. This location will also feature a wrap-around patio along 3rd St. and Arizona.
- Charlotte, North Carolina – This new location at 650 Stonewall St. is housed in a mixed-use project built by Proffitt Dixon Partners. Located along the active Stonewall corridor in Charlotte, NC, this six-story community features 302 units with premium amenities and 11,400 square feet of ground-floor retail.
- San Francisco, California – 855 Howard Street is a three-story commercial building, with Gyu-Kaku occupying the ground floor and basement, and the top floor featuring office space. Situated in the heart of the vibrant SoMa district near Union Square, the site is located adjacent to Moscone West Convention Center and just a short walk to destinations like the Yerba Buena Gardens, the San Francisco Museum of Modern Art, San Fran’s nine story Westfield mall, and Union Square shops and restaurants.
4. As an industry expert, Michael Pakravan has previously advised multiple brands with their retail expansion efforts. “Gyu-Kaku is revitalizing their brand to fit a world where the culinary experience is heavily celebrated through platforms like social media and providing its customers with a tableside culinary journey,” said Pakravan. “As a tenant, Gyu-Kaku encompasses everything a landlord desires including a tremendous track record, modern buildout, and a unique dining experience.”
5. Scheduled to open in 2019, these new locations in California and North Carolina mark a substantial push in Gyu-Kaku’s national business growth in the United States and will feature Gyu-Kaku’s new prototype store design, which was recently revealed at their new Lakeview Chicago location.
6. Nick Day added, “We’re fortunate to work with a brand with a perfect track record in the U.S., and an even bigger international presence. Gyu-Kaku has done an excellent job in creating experiential dining that appeals to all demographics and leveraging landlord motivation. This is a well-oiled machine that is effective, efficient, and like no other.”
7. In the same press release, Gyu-Kaku said that it was seeking more locations around the U.S. in Orlando, Atlanta, Denver, Seattle, Waikiki, Austin, San Diego, Minneapolis, Scottsdale, Raleigh, Washington DC, Boston, Houston, Mountain View, Palo Alto, Long Beach, San Jose, Berkeley, and San Francisco.
8. Gyu-Kaku continues to grow in the United States and two of its newest restaurants are set to open in Austin, Texas and Cincinnati, Ohio in 2020.
9. In Cincinnati, Gyu-Kaku will be opening at The Kenwood Collection, enhancing the development’s growing reputation as the premier shopping and entertainment destination in the area. Gyu-Kaku will be the fourth restaurant tenant to join the Collection after Pies & Pints, Matt the Miller’s Tavern, and Olio Italian. Currently, the closest Gyu-Kaku to Cincinnati is the restaurant located in Chicago, Illinois.
10. Dr. Jun-Ming Zhang, co-owner of the Kenwood location, said, “The dining experience at Gyu-Kaku is unlike anything you have seen before. While you can traditionally order a meal that is prepared for you, you also have the option of grilling your own meats and vegetables – right at your table.”
11. Gyu-Kaku Austin will make its debut during the summer next year. The global restaurant chain based in Tokyo, which already has multiple locations in Dallas and Houston, leased nearly 4,000 square feet in an endcap space at Saltillo in Central East Austin.
12. Nick Day of Matthews Real Estate Investment Services – who, along with Michael Pakravan, handles leasing for Gyu-Kaku – said, “Austin is a market we envision doing three or four stores. With everything happening in the city, in terms of growth and the larger corporations going in, it was time to add a location in Austin.”
13. DXU Architects in Chicago is designing the Austin space. The restaurant will join retail tenants such as Whole Foods, Target, Hopdoddy, Chuy’s, Club Pilates, and Orangetheory Fitness, among others. When completed, the project from Endeavor Real Estate Group will extend six blocks along East Fifth Street from I-35 to Saltillo Rail Station. Google leased 150,000 square feet — all of the office space. About 800 multi-family units are proposed.
14. Gyu-Kaku’s Texas locations are corporately-owned, Day said. About half of Gyu-Kaku’s 55 restaurants in the U.S. are franchises and half are corporately-owned. In terms of sales, the average unit volume for a franchise store is $2.4 million, he said. The average revenue for a corporately-owned store is $900 per square foot. Day said The Domain is being considered for a second Austin location of Gyu-Kaku.
15. Gyu-Kaku was first opened in 1996 by the Reins Group, one of the largest restaurant operators in Japan. The Reins Group developed the Gyu-Kaku system of restaurant operating techniques and initially expanded throughout Japan. Gyu-Kaku is a yakiniku (grilled meats) restaurant and the name of the brand means “Horn of the Bull” in Japanese.
16. A year after opening the first Gyu-Kaku, the Reins Group began franchising the brand. After growing in Japan for a few years, Gyu-Kaku opened its first international restaurant in 2001 in the United States. Since then, Gyu-Kaku has spread around Japan, the U.S. (in New York City, California, Pittsburgh, Chicago, Houston, Hawaii, Philadelphia, Miami, and Atlanta), Canada, Hong Kong, Taiwan, Cambodia, Thailand, Indonesia, Malaysia, Singapore, Vietnam, the Philippines, and South Korea.
17. In addition to its franchising operations, Gyu-Kaku also produces and purveys its own brand of kimchi in Japanese supermarkets, and a line of dipping sauces and marinades.
Entrepreneur’s Franchise 500
18. Gyu-Kaku ranked No. 196 on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Gyu-Kaku Japanese BBQ franchise costs, based on Item 7 of the company’s 2019 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Gyu-Kaku Japanese BBQ’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 13
- Outlets at the End of the Year: 16
- Net Change: +3
- Outlets at the Start of the Year: 16
- Outlets at the End of the Year: 18
- Net Change: +2
- Outlets at the Start of the Year: 18
- Outlets at the End of the Year: 23
- Net Change: +5
- Outlets at the Start of the Year: 19
- Outlets at the End of the Year: 19
- Net Change: 0
- Outlets at the Start of the Year: 19
- Outlets at the End of the Year: 20
- Net Change: +1
- Outlets at the Start of the Year: 20
- Outlets at the End of the Year: 25
- Net Change: +5
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- The following chart contains historic financial performance representations for the period from January 1, 2018 through December 31, 2018, including actual revenues of the 19 Gyu-Kaku franchised restaurants in the United States that have been open and operating for at least 12