KFK survives ‘extreme vetting’ to win Taco Bells
It’s rare for a new entrant to be able to buy into a legacy brand like Taco Bell, especially one that’s doing so well and enjoying brisk competition from purchasers. But that’s what happened to KFK Group & Affiliates of New Orleans, which beat out more experienced franchisees to acquire eight Taco Bells last August from corporate in the city they call home.
“Not to copy Donald Trump, but we went through extreme vetting” in order to get there, says Elie Khoury, CEO of KFK Group. “We had to fly out to Irvine, California,” Taco Bell headquarters, “and bring our management team.” Taco Bell execs shopped KFK’s existing restaurants, which include 23 TGI Fridays and a handful of independents.
“Each department had Taco Bell grilling us … and they asked us all kinds of questions. We also had a financial person call about personal history and criminal history.
“It was what you’d call thorough, times two,” he adds.
What won the day? Coaching by J.B. Hewetson at The Cypress Group, which advised KFK and emphasized Khoury’s intimate knowledge of the New Orleans market and the firm’s sophistication as a franchisee of major hotels. Financing was secured through Fifth Third Bank.
“Today we operate in seven states, we have 2,100 employees, we have seven hotels, 36 restaurants, 9,000 apartments, 700,000 square feet of office space,” Khoury says, not to mention those 23 TGI Fridays, which Cypress also helped KFK acquire during that brand’s major refranchising effort over the last couple of years.
Khoury is also intimately familiar with New Orleans, and “New Orleans is a strange market,” he says. Prior to Hurricane Katrina hitting the city in 2005, his company was concentrated only in New Orleans, and focused on historic renovations.
“Things were very bad down here, after Katrina. We learned a big lesson of being a real estate developer in one spot, so we needed to diversify. So 12 years ago, I made the decision that never again” would he do business in one spot only.
Khoury calls Taco Bell “a tier-one concept,” and he’d like to buy more of those and/or Fridays. “I’m not overly interested in adding brands, just growing what we can. We have the capacity to get up to 75 stores; we’re in the good graces of banks,” he says. Now that they’ve made it through extreme vetting, he figures, they might as well keep the growth going.