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 2020 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 2020 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 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of Gyu-Kaku Japanese BBQ’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 actual and average gross revenues for the 21 franchised Gyu-Kaku Japanese BBQ restaurants in the United States that were open and operating for at least 12 months

• 2019 actual and average gross revenues for the 23 company-owned Gyu-Kaku Japanese BBQ restaurants in the United States that were 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

Serves Japanese BBQ and Korean Dishes

1.  Although Gyu-Kaku is a chain, the brand strives to use only the highest quality meat and in the U.S., its supplier is West Coast Prime Meats, which was founded in 2001, the same year that Gyu-Kaku made its American debut. West Coast Prime Meats’ website features background information provided by Gyu-Kaku’s meat purchaser, Irene Lin.

2.  Lin, who has been with Gyu-Kaku since the first Hawaiian location opened in 2002, says founder Tomoyoshi Nishiyama “decided to open a family-friendly yakiniku. He didn’t want to be just rich. He wanted to make people happy.”

3.  To meet that goal, Nishiyama tapped Japanese expat and Honolulu entrepreneur Toshi Hayakawa to spur the company’s North American expansion. Under Hayakawa, the brand has upgraded and expanded its meat selections and developed a wide range of seasonings and condiments to appeal to a broader market, Lin notes. Today, the menu is closer to an izakaya, she believes, which is Japan’s version of a tapas bar.

4.  The pleasure of cooking one’s own choices of seasoned strips of meat over an open grill remains. To add to the enjoyment, Gyu-Kaku developed smokeless grills, so families could enjoy a barbecued meal without filling their lungs with smoke or smelling like they had been at a campfire.

5.  The item most often chosen to grill is a red miso-marinated skirt steak, followed by the short rib, or kalbi. “Miso is our most popular marinade. It’s similar to American barbecue. It’s tangy and sweet,” Lin said.

6.  Several years ago, when Korean fusion tacos gained popularity in Los Angeles and beyond, the Gyu-Kaku team started working on their own taco. “There is a big Mexican influence and culture in Los Angeles. All of our managers love Mexican food,” Lin stated, which led her to combine the top-selling meat with spicier seasonings.

7.  Besides meat dishes, Gyu-Kaku serves a wide array of noodle and rice dishes, including the Korean hotpot rice dish known as bibimbap. Vegetable lovers have nearly a dozen choices to cook to their liking. Cleaving to the origin of the yakiniku concept, Gyu-Kaku serves an extensive happy hour menu with reduced prices on many of customers’ favorite dishes.

8.  Gyu-Kaku’s culinary team continues to introduce new items and flavors to meet their president’s credo of kando sozo, Lin explains, which translates loosely as “to create experiences and exceed expectations.” Because of that philosophy, “we can focus on the atmosphere and the food quality in each restaurant,” she said.

New Locations

9.  Despite the slowdown happening in the restaurant industry due to the ongoing COVID-19 pandemic, Gyu-Kaku announced plans to open new locations this year, including one in the Denver area. According to a news report, Gyu-Kaku has leased space at the base of the Coda apartment building at 100 Steele St. in the Cherry Creek neighborhood of Denver.

10.  This is the second Gyu-Kaku location in the city; the first one opened in 2019. While Gyu-Kaku does have franchisees, the Denver locations are corporate-owned.

11.  Bret Larson, marketing manager for Gyu-Kaku, said the lease in Cherry Creek is for about 4,600 square feet. The restaurant is expected to open sometime in 2021, he said.

12.  In addition to the upcoming Denver location, Gyu-Kaku has signed a lease near Disney World for its second Central Florida restaurant. The chain already has a location in Orlando and a few more in Miami. The 3,900-square-foot restaurant will be part of a 6,300-square-foot building in Elevation Development’s Parkview retail project, said Elevation CEO Owais Khanani.

13.  The building was expected to break ground in March of this year and should be done in about five months. Khanani speculated that Gyu-Kaku would open its restaurant by the end of the year.

Company History

14.  Gyu-Kaku was first opened as Yakiniku Ichiba “Shichirin” in 1996 by Tomoyoshi Nishiyama in Japan. At the time, Nishiyama was running Kokudo Shinpan Co., Ltd., a real estate business that decided to venture into the restaurant business. The brand is a chain of yakiniku (Japanese BBQ similar to Korean BBQ, which is more widely available in the U.S.) restaurants, where customers cook their own beef, pork, poultry, seafood, and vegetables at their table.

15.  A year after opening the first Shichirin, Nishiyama started franchising the concept and changed its name to Gyu-Kaku. Additionally, Kokudo Shinpan Co. was renamed REINS International, Inc. and shifted its focus to owning and operating restaurants. REINS is now one of the largest restaurant operators in Japan.

16.  Over the next few years, Gyu-Kaku expanded around Japan and became one of the most popular yakiniku chains in the country. In 2001, Gyu-Kaku opened its first international location in the U.S. Since then, Gyu-Kaku has opened locations in Canada, Hong Kong, Taiwan, Cambodia, Thailand, Indonesia, Malaysia, Singapore, Vietnam, and the Philippines.

17.  In addition to restaurant operations, Gyu-Kaku produces and sells 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. 240 on Entrepreneur’s 2020 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 2020 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 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

• Outlets at the Start of the Year:  16
• Outlets at the End of the Year:  18
• Net Change:  +2

2018

• Outlets at the Start of the Year:  18
• Outlets at the End of the Year:  23
• Net Change:  +5

2019

• Outlets at the Start of the Year:  23
• Outlets at the End of the Year:  25
• Net Change:  +2

Company-Owned

2017

• Outlets at the Start of the Year:  19
• Outlets at the End of the Year:  20
• Net Change:  +1

2018

• Outlets at the Start of the Year:  20
• Outlets at the End of the Year:  25
• Net Change:  +5

2019

• Outlets at the Start of the Year:  25
• Outlets at the End of the Year:  27
• Net Change:  +2

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

Part 1 – Total Revenues for 2019 for Franchised Restaurants

• The following chart contains historic franchised restaurant financial performance representations for 2019, reflecting actual revenues of the 21 Gyu-Kaku franchised restaurants in the United States that were open and operating for at least 12 months.