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Saturday 20th August, 2022

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From food cart to franchising frontrunner

Insight

From food cart to franchising frontrunner

Ahmed Abouelenein, CEO of middle-eastern fast-casual franchise The Halal Guys, tracks the brand’s evolution since its 1990 New York City origin

Ahmed Abouelenein, CEO of middle-eastern fast-casual franchise The Halal Guys, tracks the brand’s evolution since its 1990 New York City origin.

Interview by Kieran McLoone, deputy editor for Global Franchise

If you’re looking for a U.S. brand that perfectly exemplifies the American Dream, then look no further than The Halal Guys. In 1990, three Egyptian immigrants started a hot dog stand in New York City, and were constantly asked by Muslim taxi drivers where they could find the best halal food that the city had to offer. Strategizing and researching led those three founders to a simple answer: “here”.

Now celebrating its 30th birthday, The Halal Guys has grown into a dynamic fast-casual brand with a diverse portfolio of restaurants. As well as its growing U.S. footprint, the brand has opened shop in Malaysia, the Philippines, Canada, and Indonesia; and has begun dipping its toes into the futuristic world of cloud kitchens, as a means of reaching entirely new customers and investors.

We sat down with Ahmed Abouelenein, CEO, to talk about the middle-eastern brand’s humble beginnings, and its exciting, tech-centric future.

What’s been the biggest evolution that the brand has undergone in its 30- year journey?

AA: One of the biggest evolutions in the brand’s history was transferring that core idea that we had back in 1990, to a brick-and-mortar location. Then, introducing a franchise system. Introducing the technology that allowed for that change was a big operation, and it takes a lot of work to introduce things like training systems and daily operating systems. As you say, we’ve been in operation for 30 years now, and it’s been a really interesting journey.

Back at the start of this year, you announced that The Halal Guys would be utilizing cloud kitchens. What’s the current state of that?

AA: We have two so far; one in California, and one in New York City, which is a corporate cloud kitchen. The reason we started using these was because of areas that are higher- end, and we wanted to get the word out and introduce our brand in locations where physical real estate is expensive and difficult to find.

We have to be very strategic with our use of cloud kitchens because they come with very high delivery fees. You also need to allow for a lot of marketing in order to let people know that you’re there. It’s not like a brick-and-mortar location that everybody can see; it’s more of a hidden kitchen.

“We’re only looking for multi-unit operators because they will be heavily invested in the day-to-day operation of locations”

We’re continuing to test the concept and are seeing what the pros and cons are, but so far, it’s been good. 2020 has been a tough year for sure, and while cloud kitchens haven’t been the savior, they did help to increase sales and brand awareness.

Do you think we’ll see more of an incorporation of cloud kitchens into the F&B industry, or will brick-and-mortar be here to stay?

AA: I think it may become a bigger discussion in the industry, but I think brick-and-mortar locations are just going to increase their technological side more, with regards to things like delivery, pick-up, and curbside and online ordering.

You can’t solely depend on cloud kitchens for your organization, because as I mentioned, they come with a high cost and a lot of marketing spend. If you’re not a popular brand and you go and open a cloud kitchen, you could have difficulty sustaining in the beginning or even growing the brand.

For The Halal Guys, we’re evolving our entire system on a technology side to keep up with delivery and online ordering. We’re going to increase our brick-and-mortar locations, but also incorporate more delivery options and safety measures to keep customers safe when they come to pick up their food.

Which international markets do you think The Halal Guys would fit nicely in to?

AA: Our vision is for the Asian market, the European market, and in the next five to 10 years, we have plans for the Middle Eastern market as well. We see a lot of customers from the Asian market, but our brand is for everyone; wherever The Halal Guys goes, we can build a customer base there.

The brand was initially built for Muslim cabdrivers in the early 90s, but after that, it became for everybody. In fact, 90 to 95 per cent of our customers are non-Muslim.

The main thing is that we need to be strategic; we need to be very knowledgeable of these markets before we hit them and make sure that the demand is there. We’re seeing increased exposure in the South Korean market right now, as well as in Indonesia and the U.K.

Back in 2018, The Halal Guys required franchisees to sign up at least five units at once. Is that still the case, and what does your ongoing growth strategy look like?

AA: We still require a minimum of five units, and the reason we do that is that we want to make sure that any franchisees that come through our system will help to build The Halal Guys brand. We’re only looking for multi-unit operators because they will be heavily invested in the day-to-day operation of locations.

We can of course do many more than five units at once, with 10 or 20 units available for agreements, but only with quality groups that can help to promote growth. Not necessarily from just a financial perspective, but more operationally.

We recently had our best two months ever with multiple openings, and I think it’s amazing that we’re still continuing to open new locations through the pandemic.

This interview is an extract from our full conversation with Ahmed on the Global Franchise Podcast.

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