How Zankou Became a Household Name

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Zankou Chicken has been a pioneering family business in the fast-casual restaurant sector. What has Zankou’s evolution been like in the 50-plus years that it has been around, what do you think you and your family have learned through your spectacular entrepreneurial success?

My grandfather started Zankou from a single store in Beirut, Lebanon in 1962. When I father grew up, he, too, worked in the business and gave it a push. They sold the store in 1981, a year before emigrating to Los Angeles. In the U.S., they initially didn’t know what to do. In 1984, the doors opened to our first store in Los Angeles—on Hollywood and Normandie.

In Lebanon, we only sold chicken. People could buy chicken cooked or raw. Later, my family added garlic sauce to the mix, and then they added Arabic bread. All of that they brought here to America. When we came here we added items such as shawerma, falafel, dolma—marinated beef, fried garbanzo dumplings, grape leaves. We also added hummus, which is a staple in Israel and across the Middle East. Since those days, hummus has also become a staple in America—you can buy it at Vons, and in fact it’s gotten so popular that Pepsi recently bought Sabra, a leading brand of hummus and a available at most supermarkets. We have since also added tabouleh, basmati rice, chicken kabob, lule kabob which is ground beef, and tri-tip steak kabob we make with USDA Choice or higher quality meat. All of that happened because of customer feedback throughout the years.

So, we started very simple back in Lebanon and then steadily expanded our menu in America. During the early days in the U.S. we had to educate the people about the simplest things, such as, what is hummus, what is shawerma—they didn’t know. It was a really eclectic time in L.A. in 1984. There were a lot of starving artists. Hollywood was up and coming. Now, all of that action has moved to the Westside—West Hollywood, Century City, which are more eclectic and vivacious. In fact, our newest store is in West Hollywood—on Sunset and Fairfax. Now we have actors who live here. The lead actor who played Dr. Octopus in Spiderman, Alfred Molina lives in the neighborhood, and many others that are great fans and customers of ours which I won’t name. Just about everyone who lives here is in the movie or music business. Capitol Records is right down the street. Beck wrote a song about Zankou.

The 1980s were a very exciting time because people didn’t know about the food. Now, 30 years later, there’s Mediterranean and Middle Eastern food everywhere. The question for us, How do you expand while retaining the same, small-town family kind of business atmosphere? How do you do everything the right way? Because now, people are educated about food. They know what hummus is, what shawerma is. It’s not about teaching them, which is what it was back then. It’s about doing the best you can and being the first to reach customers.

What have you learned about the American consumer over the years?

Well, I’ve been to Europe, and it’s very different there. You really get inspired when you go to Europe—that’s how Starbucks started. I think consumers are generally the same all over the word. They all want good value, good customer service. In Europe, though, people are not so used to good customer service. If they don’t know who you are in Europe, you get mediocre service. Here in America, people are really used to good customer service, and when they don’t get it, they go and Yelp about it. We treat all our customers equally. We don’t call out order numbers anymore—we use customers’ names.

So, the secret, I think, is, how do you expand while maintaining good customer service. That’s why we don’t franchise—when a business starts to franchise, their concept changes. A business goes from being customer service-centric to something that’s more concerned with selling franchises and real estate. For example, McDonald’s is in the business of franchises and real estate. They are not in the customer service business. They’re very different from us in that respect. We want to expand but we don’t want to lose our reputation for customer service in the process. It’s very difficult to do both.

Almost every single day we get requests for franchises from all over—the Philippines, New York City, Chicago, Texas. In fact, we were approached by some wealthy people in Texas who offered us a very large check for franchising. We said no, and our answer is always going to be no. Because we don’t want to become a behemoth who loses touch with the idea of service quality. We also don’t want to forget where we came from—we started as a small family business that made people happy, while creating a Zankou Chicken culture and fan base. We want to keep our brand in very high esteem. That’s why we’re growing, but slowly.

What has Zankou’s success taught you about yourself?

I come from an artistic kind of background. I do a lot of art—I’m into painting and drawing and photography, which are my hobbies. The restaurant industry is very difficult. It swallows up a lot of people and creates difficulties for them in their personal lives. I don’t want to name names, but there are people in the high echelons of our industry who have fallen into drug use and injured themselves and hurt themselves, ultimately killing themselves. I mean, this business can kill you if you’re not careful. It’s extremely stressful because you have to deal with family, the difficulties of running a restaurant, employees, taxes, landlords, parking problems. It’s like a big juggling act—and you have to be really good juggler, but then you don’t have time for yourself, your health, your self-esteem.

So what I’ve learned is that you have to make time for yourself. You have to explore the other side of you. We all have an artistic side—a left and right side of the brain. But you tend to forget the imaginative side of yourself in the restaurant business. If you ignore that side of yourself, you’re not going to be happy. So I keep myself busy through my artistic projects. When I get too stressed working on our restaurant business, I go to my left side of the brain—the painting, the artwork, the photography.

You have to make time to socialize—meet people, network. You have to set aside time and tell yourself that you’re going to meet three to five new people every day. If you don’t do that on purpose it tends to not happen. The restaurant business is like a black hole. It just sucks you in—all your energy, all your time, if you let it. So you have to consciously decide to make time for yourself—number one. Number two, make time for your artistic side. Number three, socialize and network. And that’s what I’ve learned.

We are living in a time in history when the world of business, especially big business, appears to have lost its genuine sense of connection to humanity and to nature, resulting in a series of global crises of which climate change is perhaps he most serious. How do you think business leaders such as yourself are responding to these challenges and restoring shared human connections and a balance with nature?

As a business owner, you have to strike a balance. You can’t be one-hundred percent pro environment and lose money. For example, bio-degradable materials are too expensive to use right now. Yet we are in the process right now of trying to get bio-degradable containers. That’s because me and my team and family deeply care about the environment. Our restaurant trash is recycled. We all recycle at home. I myself try not to buy too many things and I try not to drive as much as I used to. The only thing I buy a lot of is books—and my fiancé complains about that.

But what’s the right balance? You always have to strike the right balance. The cost of going bio-degradable will be about 10 cents extra per plate and that’s going to pass down to the consumer because our profit margins are already so low. But I don’t think the consumer minds paying 10 cents more for the sake of the environment.

As for shared human connections, Zankou Chicken has always given back to the community. We donate to different schools—in Pasadena, Altadena—a 50-percent donation, which means we match whatever the schools raise in funds. We give back to churches. We throw fundraisers for schools and nonprofit organizations at our restaurants. We donate 20 percent of our receipts to them. Right now, for example, we are working with the sports department of Burbank High School. The only caveat is that the organization we help raise funds for hast to match our goals, ideals, principles and philosophy. If a group is too radical or ideological, we don’t get involved because we don’t want to get too political.

So if you’re reading this and want us to help your organization, let us know. Come into one of our restaurants and talk to one of our friendly managers and we’ll see what we can do to help.

Okay, so you’re a thinking person who likes to read. How do you put your knowledge into action, and why do you think knowledge gained from introspection is an important part of business leadership?

I have a bachelors degree in business administration, a masters in business leadership and a certificate in business marketing from UCLA. But that alone does not help you in this business. What helps you is working hard and your imagination. For example, I get inspired by things you can’t imagine. I get inspired by graphic novels, magazines and journals such as IDN, which is a publication for designers. So I get inspired by all these sources, which help me design our menu. For example, I recently noticed something about our old menu. It’s clean and it looks good but it doesn’t really make you hungry. When you look at a menu on paper, it should make you hungry—even if you just ate.

Where does such inspiration come from? It doesn’t come from your school. You have to have an appetite to always do better. What’s called CAN-I: Constant and Never-Ending Improvement. I think the writer and motivational speaker Tony Robbins came up with that. So we’re always improving our food, service, menu, signage, the way our locations look. For example, our West Hollywood location looks completely different from the one in Pasadena, which we built 20 years ago. So that’s our philosophy—always improving what we do.

How do you and the key members of your team define Zankou Chicken’s success? What does success mean to your managers and employees—and how do their ideas of success differ from yours?

There’s a difference between leadership, management and employees. We treat our employees, whom we call associates, like family members. We treat them as best as we can. We pay them better than other fast-casual restaurants and give them opportunities to grow. We always want employees who smile naturally and have a good personality. That’s because personality cannot be taught. If someone walks in and they want a job and they’re not smiling or they’re bitter you cannot change that. As long people are intrinsically positive, they’re likely to make good employees. Our hope is to make them even better by teaching them everything we know.

Now, what management does is implement what the leadership has decided to do. Managers are like car mechanics who make sure the car is running smoothly—that the oil is right, the temperature’s right. A restaurant manager’s job is, number one, food quality; number two, customer service; and number three, making sure we take good care of our employees, the timing—clock in, clock out, paying them in the correct manner. So we try to get people who are really good at that—at managing.

And then you come to the leadership, which is us, the owners. Our philosophy is to give the customer the best dining experience possible—to make the experience about food and nourishment. We also try to make ourselves always better. I’m always learning, always taking classes, and my brothers are always doing that, too. We’re taking cooking classes, educational classes, finance classes—we’re always pushing ourselves. So the leadership in a restaurant has to always push themselves. The managers, employees and customers can’t do that for you. You have to do it yourself.

What does business success mean to you and your family members?

Right now, from the point of view of the company, we really want to grow. Success for us is this: To grow and be true to our vision of being customer-centric and good to our employees. We don’t want to dilute the quality that people expect from Zankou Chicken for more than 50 years now—it will be 53 years in 2015. So you can imagine, thousands upon thousands of people—probably millions by now—rely on us, trust us and do word-of-mouth advertising for us. We can’t let them down. So if we can grow exponentially—have 100 stores in the next 10 years, which is what we want to do—and retain our vision, that’s success to the team.

Personally, I’m changing too. I used to party a lot, I went through a difficult divorce in 2007, but I’m getting married again this year [2004] and taking more time for my family and for God. I really want to teach a class at UCLA Extension or one of the community colleges.

So success to me is doing what you love and making some money while doing it. That way it doesn’t feel like work. You’re reaching out to people and helping them, making them feel good about themselves. In the end, we don’t take anything with us when we die. What we leave behind is our legacy, and that’s another reason why I want to teach—I want to remembered for what I taught people.

What do your managers consider as the company’s success?

Our managers consider themselves as family. They watch out for the restaurant as if it’s their own restaurant. For them success is two things: One, Being on top of problems and solving them. Two, success for them is growth—the company’s growth. If they see the company has the potential to grow and they communicate that to us and help us make that happen, that’s success for them. Managers want to make more money, too, but how can we pay them more if we’re not growing and making more money overall as a company?

How can Zankou Chicken differentiate itself in a highly competitive industry?

We’re in the fast-casual sector, which includes companies such as California Pizza Kitchen and Chipotle. So, first of all, how do we differentiate ourselves from the fast food sector? One measure is the dollar rate: For McDonald’s and Burger King an average check might be #3 to $4. For us, the check average is $17 to $20. We offer a higher quality, higher class of food. So how do we differentiate ourselves in the fast-casual sector? The truth is that right now there is no one really like us. There’s no one in the Middle Eastern/Mediterranean fast-casual category that really wants to grow like we want to grow.

Speaking for myself—I can’t speak for the whole team because everyone is a little bit different—I want to grow the fastest so that we can be the first to market. Being the fist to market is a huge benefit in any category. To be the first in Chicago, the first in New York—we really want to reach all these places. We want to open in Las Vegas. We want to open all over Southern California. If we work together as a team to be the first, it’s possible to have 1,200 Zankou Chickens in the Unites States alone—there’s that much room. But it’s all in us—how many stores can we open in a lifetime. We’re the third generation of Zankou Chicken and we’d love to be the one that takes the business to the next level and makes it national. And then the next generation or the one after that may want to be the one who takes it international.

So, that’s about taking things to the next level. How do we differentiate ourselves from any other competitor, real or potential? By treating each customer as special—as if he or she were the only customer. By calling customers by their names. By making sure that we ingrain that level of service whereby we treat each customer as unique and extremely valuable into each and every employee. And if customers complain, we have to reach out to them and make it up to them. Tell them, Hey, come back, your next meal is on us—we’re sorry we messed up; we serve thousands of customers every single day, so of course we’re going to make mistakes. We have to develop some kind of system whereby we do that routinely—tell managers to follow up on complaints on Yelp, City Serach, Zagat and Trip Advisor.

From the point of view of your business model and the dining experience, what is it that Zankou Chicken offers to potential customers that a company such as Chick Filet does not?

We are in our own category. We do Mediterranean food. We invented garlic sauce and chicken. People copy us and that’s another reason why we want to differentiate ourselves. Are there other places that sell shawerma? Yes there are. Other places that sell falafel? Yes. We want to be the freshest, tastiest, fastest, most delicious and reliable. That doesn’t mean we want to be the cheapest, because that lowers your food quality. We have USDA meat and hormone-free, antibotics-free chicken. We can’t call ourselves cheap—we can’t even say we’re inexpensive. But we can say that we have the best quality and that we offer the best value.

How are we the best value? You can get a kebab plate at Zankou Chicken for under $15. If you go to any sit-down restaurant it will cost you $20 easily for the same dish. And it’s the same quality if not lower quality of food. What’s the tradeoff? You’re saving $3 to $5 every time you eat with us, and you’re getting as good food quality if not better than all of these sit-down reataurants.

How do you ensure that employees resolve customers’ problems on the spot?

The team differs a little bit on this, but I would give employees discretion to solve a problem on the spot if takes under $20 to solve it. So what does that mean? A customer wants more bread? Give it to him. A customer wants extra garlic sauce? Give it to them. We get an order wrong. The customer ordered kebabs—a $13 plate—we gave him something else. Give him a new plate, plus extra bread and a free drink. Keep the customer happy. Why? Because that $13 or $14 doesn’t matter—a customer’s lifetime value is something like $1,200 a year. That is, if a customer eats at our restaurant a couple of times or three times a week, he spends around $1,200 in our restaurants every year. And if you crib about $13, you risk losing all that money. That’s why it’s important to give employees discretion about how to solve problems on the spot, especially in light of the fact that the owner cannot always be around to solve problems. But you should set a cap—personally, I think, for us, $20 is reasonable.

Now, imagine if somebody ordered a catering menu worth $1,500, and we mess it up. What are you going to do—give him another $1,500 order for free? No, we can’t afford that. But you can give the customer the part of the order you messed up for free. Let’s say, the customer ordered a tray of beef but you gave them chicken. You can give them that free, which would still work out to be in the $20 or $30 range.

What were the formative influences in your life that shaped your views about customer service?

I have learned certain things over the years, and one of them is to focus on your best customers. There’s a saying that 20 percent of your customers are 80 percent of the value to your business. It’s called the 80-20 rule. I think that in the restaurant business it’s not 80-20 but more like 99-1. That is, 99 percent of your customers are awesome. But you always have 1 or 2 percent who are always complaining. So you have to fire the worst 1 or 2 percent of such customers. They are the ones who destroy your employees’ morale. They’re the ones who don’t even bring you any money because every time they have a problem they slow down the service for everyone else.

What are some of the major challenges you face as a business and how are you planning to overcome them?

The number one challenge right now is money because money is of course the fuel that funds businesses. We’re fortunate enough to be in the United States, where we have the Small Business Administration and angel investors. So, we want to grow by teaming up with the right people at the right time. We’re formulating a plan on exactly how to do that. We don’t have the details yet, but it’s kind of an issue of leverage. You need leverage to grow. And what is a lever? It’s usually a device—a rope or a pole or see-saw with which a single person, weighing say, 200 pounds, can lift 2,000 pounds on his own, which would be impossible to otherwise even budge. And that’s where the banks come in, the Small Business Administration and all these good people come in.

The number two challenge is logistics. How do you implement your business plan—presuming you have all the funding in place? To grow, you need more people. But how do you get the right team to grow—how do you hire the right people? And by right people I mean managers, employees, chefs, cooks, cashiers, constructions contractors. And you need the right location—how do you find the right location? Well, you need location scouts who specialize in finding business locations. These are people who help big companies such as Starbucks find the right locations. That’s all they do.

You have to be very wise when it comes to picing a location. Financing is not the biggest issue. Compared to location, it’s easy, because if you open a business in the wrong location it’s a complete disaster. No matter how good your food is, the business is not going to work.

If Zankou grows from eight to 100 restaurants, would it still be considered a small business?

I think so, although we would be on the border between small businesses and bigger ones. I know that if we had 500 restaurants we won’t be considered a small business. But just because you’re not a small business anymore doesn’t mean you can’t stay true to those principles that make small business feel like a small business—treating every customer as an individual, making sure food quality is supreme. Zankou, for example, consistently gets four or more starts on Yelp—we’re proud of that and we work hard for that.

Which raises the question, Do we always want to stay a small business? I think we want to grow to a point where we’re not a small business anymore and are considered a sizeable competitor in the fast-casual food industry. Personally, I would love to be the number one seller of chicken in the United States. But at the same time I don’t want to sacrifice customer service. I don’t want to sacrifice our core principles of maintaining a healthy relationship with our employees and with each other, and growing with the fact that we want to nourish people; add value to their lives, be good to the environment, help schools; do fundraisers for the community. We want to always be there for our customers in as many ways as we can.

What kind of changes do you foresee as you plan for growth? Do you see your business replicating the same eight restaurants into a hundred?

That’s an interesting question. Let me see if I can answer it in light of what we have already done as we went from one store in the 1980s to eight stores currently. For our restaurant in Burbank, we spent more than $1 million on the design, construction and interiors. That restaurant has become a kind of symbol of Zankou Chicken. It has a beautiful dome that is hand-painted on the inside. There is a splendid replica of an olive tree in the middle of the restaurant. The walls have hand-layered tiles. It’s a delicately and beautifully built restaurant because we really took our time with it—we spent more than a year on it.

But we cannot spend more than $1 million on every location. That’s impossible. Our concept is not like the Granville Café or the Cheesecake Factory, which spends over a million on each location. We’re not a sit-down restaurant like the Cheesecake Factory. We don’t sell alcohol. I’m sure that the average check at Cheesecake Factory for an average family is $60 or $70. Our average check is $17.

So we need to find a fresh concept in terms of design for our new stores. But that design has to be true to our core element, which is fresh Mediterranean food. And it has to convey that message, which is fresh food, in a clean and elegant ambience that is very affordable to customers.

Why don’t you serve alcohol?

My dad never wanted alcohol. And alcohol doesn’t go with our core philosophy of being a family owned restaurant for families. Is alcohol healthy? No. Our core message is sustenance and health.

But isn’t wine an integral part of the Mediterranean diet?

Yes, part of the Mediterranean diet is wine—but don’t forget that it is good wine. And that good wine is usually complimented by dishes such as lasagna or spaghetti that are hand-made and very well made. We’re not in that business. We’re more of a fast-casual, eat-and-go place. Sixty five to 70 percent of our orders are to-go. If we can do what we’re doing and do it better, we’re much more likely to succeed.

If we need to do anything differently it would be to start delivering food. I don’t know how exactly we’re going to do that, but customers ask us all the time to deliver. Traffic is really bad in L.A.—and customers don’t want to drive to get their food. And what’s the number one rule of marketing? It is to always listen to your customers. If the reader takes nothing else from this interview, they should take this: Always listen to your customer. And going back to the original question, right now our customers don’t request alcohol.

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