WaBa Grills Up Growth as an OC Newbie

Waba Grill Franchise Corp. is placing growth on the grill as it plans a 2022 headquarters move to OC, expands a Korean chicken sandwich concept stateside, and looks into incubating new restaurants.

It’s a tall order for the restaurant chain of nearly 200 locations currently located in City of Industry, given unit expansion over the past 15 years has been on the slow cooker.

That’s changing with a surge in franchising in more recent years, with original estimates by the brand’s founders that it could support as many as 2,000 locations in the long term.

New headquarters currently undergoing improvements in Anaheim Hills will make corporate operations slightly more central within Southern California, and about double the footprint of the existing office to make room for the growth of WaBa Grill.  

“We’ve been in business for 15 years and we’re enjoying the highest sales per store we’ve ever enjoyed, and we don’t see any real obstacles for us to be able to replicate the kind of growth that we’ve had in Southern California in other parts of the United States. We are going to move methodically and responsibly, but our growth pattern we would certainly like to kick it up a notch,” CEO and President Andrew Kim told the Business Journal.

$40M Sales Record

Growth last year was record-breaking.

Second and third-quarter total sales surpassed $40 million, a first for the company, led partially by growth of digital with the loyalty program and delivery.

The company was on track to end last year with sales of $150 million to $160 million, which would represent an increase of around 20% to 23% from 2020 and far exceeding the 10% executives say they would have been happy with for the year, Kim said.

Waba was expected to have 10 new restaurants opened by the end of 2021. However, delays in obtaining construction materials and also the permitting process have hampered additional openings. Twenty new restaurants are the aim for 2022.

“We would certainly like to move faster,” Kim said of the new openings. “What we’re doing right now is discussing with potential developers who are interested in opening WaBa Grill restaurants outside of Southern California.”

That includes talks to develop in central California, the Bay Area and other parts of Northern California, kicking off a focus for next year on development outside of the core Southern California region where Kim said “our concept has proven the test of time.”

Healthy Fare

The thesis with WaBa Grill restaurants has been an emphasis on marketing healthy rice bowls, plates and salads with an ingredient roster of fresh chicken, ribeye, salmon, shrimp and tofu mixed with veggies and grains. Nothing frozen and food is prepared on an open-flame grill.

More mindful eating has helped the chain win over more conscientious customers.

The pandemic also helped with the company’s bowls and plates compact and easy for no-mess deliveries.

Digital accounted for about 25% of overall sales at the end of the third quarter for the company.

“We had anticipated some drop-off as we came out of COVID, but our numbers didn’t get whittled down at all. Maybe a point or two, and we think that this is going to be the new norm as people return to work but, at the same time, appreciate the convenience of online ordering,” Kim said.

“So, we’re looking to try and push that number up by creating menu items that are geared towards online ordering as we continue to focus on the digital side of our business.”

The company, to that end, is still on the hunt for an additional location that could serve as a central kitchen and production facility.

One Restaurant at a Time

With Waba looking to expansion, the big question is what the brand’s footprint looks like in the future.

“When the partners of WaBa Grill started [franchising], their goal was that this was going to be an everyday item for a good percentage of Americans throughout the United States,” Kim said of the 2,000-restaurant long-term goal.

“The growth pattern has been deliberately slow because we wanted to make sure that our existing franchisees remain competitive. Even last year we rejected requests for locations in Southern California, about 80% of the applications, because we wanted to make sure that the existing franchisees were not going to be impacted.”

Still, Kim said the future is “an open book.”

“Now, how fast can we do it with the organic growth that we’ve been focused on? Maybe not as fast as people would like and maybe not in my generation, but we are confident that this is a concept that is going to be accepted throughout the United States. We are going to take it one store at a time and we have a great foundation in terms of our team members, our core technology support and operational skills to be able to continue to drive our growth,” the CEO said.

The company has been approached by several investors and Kim said there are options. They’ve not looked at anything seriously, but there may come a point where outside capital could help to fuel further plans, he said.

Innovation

Even as WaBa’s growth continues, the parent company’s management is not resting everything on the namesake chain.

Last year, the company acquired the master franchise rights in the U.S. to develop Mom’s Touch & Co., a chicken sandwich and wing chain from Seoul that’s traded on the Kosdaq with a market cap of nearly $500 million. The first domestic location opened in Gardena, with the company charting a five-year plan to hit 100 restaurants.

“We think that given the growth of the chicken sandwich market and the wing market that is on the more conservative side,” Kim said of the 100-unit estimate.

“And given the exciting response that we’re seeing from the marketplace to this brand, we certainly think that’s doable. The opening of the concept got slowed down because of COVID obviously, but we want to get things off the ground this year and then start looking to expand a little more aggressively.”

OC Move

Mom’s Touch and more staff to support that brand is another reason new, larger headquarters were warranted.

At the same time, Waba’s Anaheim Hills office will also offer space for incubator brands.

“What we want to try and do is put together a pipeline of concepts that not only will provide some synergy in terms of growth, but to work with them as an incubator to expand not just in Southern California but throughout the United States,” Kim said.

These concepts could be overseas or locally-grown brands that could take up office space in the Anaheim Hills building and potentially grow into an adjacent location. The nature of the relationships isn’t fixed and could range from joint ventures to consulting.

Kim said the company is currently in talks with one Los Angeles concept.

“We’re very excited about what that could lead to in terms of opening up doors and opportunities for growth for a lot of these smaller brands,” said Kim, an attorney focused on franchise law for more than three decades, who said he has a network of brands locally and abroad that he could see the company working with.

“For now, we want to be able to provide guidance and add value in the fast-casual industry, but if opportunities come our way and we think that we can add value we wouldn’t want to limit ourselves [to a single industry segment],” Kim said. “The Anaheim Hills building is “exciting for us because it does have a lot of room there for us to be able to create a working environment that can benefit these types of concepts that are looking to grow and expand.”