Hawaii-based L&l Shoots For 400% Growth, Keying On Mainland

Sunday, August 22, 2004

The plate-lunch chain eyes New York City, Boston -- and China

When Eddie Flores bought a small walk-up restaurant for his mother on Honolulu's Liliha Street in 1976, he knew nothing about the restaurant business and neither he nor his mother knew anything about restaurant cooking.

"The cleaning lady taught us," Flores said.

And although he claims he still doesn't know how to cook, he quickly learned the restaurant business. He and partner Johnson Kam this month opened their 100th L&L restaurant in the San Francisco Bay area.

The first restaurant, about a block from the family home, was owned by a family that opened it to sell products from their L&L Dairy. He retained the name.

With 100 outlets in their chain, Flores said he and Kam, who joined him in 1976 shortly after the first purchase, are not going to stop. He predicts there will be 400 to 500 L&L outlets in five years.

About half of the restaurants are on the mainland, where they are known as L&L Hawaiian Barbecue. The Hawaii restaurants, except for one in Waikiki which also carries the "barbecue" name, are known as L&L Drive-Inn.

Most of the mainland restaurants are on the West Coast, but Flores and Kam are moving East.

"We have restaurants in Arizona, Colorado and Utah and all three are doing very well. In fact, better than California," Flores said. "The reason is a lack of competition. The stores are jam-packed." Later year, L&L plans to open in Illinois; East Lansing, Mich.; and two in New York City.

"There's no way we can fail in New York City; there are so many people there," Flores said.

"We don't do demographics before selecting a location. It's just a lot of gut feeling," he said. "We are looking for places with Hawaii transplants, an Asian population and young people. So far, we have been very lucky." "Some people haven't seen local food since they left Hawaii," said Flores, who tells the story of a man drove on hour to a ferry, caught the ferry and then drove another half-hour just to eat in an L&L in Seattle.

"Local food" means a plate lunch -- two scoops of rice and one scoop of macaroni salad accompanying such entrees such as chicken katsu, beef curry, deep fried shrimp, mahi mahi, lemon chicken, barbecue shortribs, hamburger steak.

And with barbecue in the name, "some people ask where the barbecue sauce is." "On the mainland, we offer the whole line of Hawaiian food," he said. "We're the only game in town." But L&L doesn't offer the same thing at each place, "just what the people want," he said.

For example, in New York, Flores expects to make some menu adjustments, offering more salads, more chicken white meat and more brown rice.

L&L plans to open 52 new locations this year, and so far has opened about 30. Another 30 to 50 are planned for next year, with Florida, Boston and Oregon as possible locations. L&L expects to open three to five new locations each year in Hawaii.

But even in California, with about 50 locations, there is room for expansion, Flores said.

"We have 27 in Los Angeles and that can double; eight in San Francisco and that area also can grow; five or six in San Diego; and two in Sacramento with a third to open soon," he said.

Flores and Kam also are looking at Asia.

"I think the Tokyo market is ready for us," Flores said. "China maybe in five years. We're looking for partners to lessen the risk.

"L&L will become a brand name," he said. "In five years, I have no doubt we'll have 400 to 500 L&L restaurants.

"The big fast-food chains have had to close a lot of restaurants, but our record is very good," he said. "We haven't closed any stores except for two in Connecticut." Sales on the mainland are higher than in Hawaii. "It's cheaper to operate; that's the reason we went to the mainland," he said.

The restaurants are successful, averaging $550,000 a year in sales, he said.

They're also all franchises, and about half of the franchisees are employees, relatives or friends, with the other half being interested strangers, Flores said.

He and Kam have an interest in about 20 of the outlets but their company doesn't own any.

San Francisco Giants pitcher and former Hawaii resident Jerome Williams is a part-owner of the just-opened 100th store in Union City, Calif., in the East Bay.

The franchisees of the 99th outlet in Provo, Utah, are Seattle Seahawk and former Hawaii resident Itula Mili, former Seahawk Dustin Johnson and former Carolina Panther Spencer Reid. The three played football at Brigham Young University in Provo.

Mainland owners, who must sign strict franchise agreements, are required to come to Hawaii for training, and Mili, a pass receiver for the Seahawks, cut his finger learning how to cut chicken, Flores said.

Flores also tells the mainland franchisees they must communicate the aloha spirit. "That's what sets us apart from our imitators," he said.

Flores, 57, and Kam, 56, are equal partners in the business. Kam is chairman and Flores is president and chief executive.

"He's the guy behind the operation. He knows how to run it," Flores said of his partner. "I'm the front guy."

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