Masu Sushi & Robata is opening a second location this month at the Mall of America and owner Nay Hla has been working with us at Shea on plans for even more locations, including a new fast sushi concept that may go overseas. Read the following article by John Vomhof of the Minneapolis St. Paul Business Journal for more on this growing company:
|photo by Nancy Kuehn|
Masu Sushi adding locations
Nay Hla has built an inland sushi empire in the Twin Cities, and he wants to expand it.Hla is owner and CEO of Sushi Avenue Inc., an Eagan company that provides fresh sushi for 280 supermarkets in 17 states, including 31 locations in the Twin Cities. Revenue reached $30 million last year and is expected to grow 20 percent to $36 million this year.
Hla’s biggest growth vehicle, however, will be Masu Sushi & Robata, the critically acclaimed restaurant concept he launched in April 2011 in Northeast Minneapolis. A second location will open in mid-July in a 2,400-square-foot space at Mall of America in Bloomington, and Masu is close to finalizing a lease for the 6,500-square-foot former T.G.I. Friday’s restaurant space at Eden Prairie Center . Masu also is negotiating a letter of intent for a location in Cincinnati.
“We plan to have about 10 of these by 2015,” said Hla, who founded Sushi Avenue in 2004 with his brother, Nay Lin. “There’s room to grow, and we know how to manage the people, the inventory and the finances.”
Most of the future growth will be outside of the Twin Cities, primarily targeting markets where Sushi Avenue has its most successful supermarket operations. Cassidy Turley Vice President Andrea Christenson is representing the company on its site search.
Masu self-funded the Northeast Minneapolis and Mall of America restaurants; the Eden Prairie and Cincinnati sites will be funded with a 50-50 split of cash and financing, Hla said.
Access to cash is important because many banks and private equity firms are reluctant to finance expansion in the current economic climate, said Phil Roberts, chairman and CEO of Edina-based Parasole Restaurant Holdings .
“You get a lot of pressure from the money guys to stay local, but if the concept has legs, then the heck with it. I say go for it,” he said.
Hla also is pursuing international growth. His first target is Singapore, but from there it could expand into Kuala Lumpur, Indonesia and other Southeast Asian countries.
“I know the culture of southeast Asia,” said Hla, a Myanmar native who lived in Singapore for a couple of years in the mid-1990s. “There’s about a 99.9 percent chance of success for an American brand coming into the market. It’s a very wealthy country, and they’re crazy about Western companies.”
Masu will need to collaborate with a partner there because the law requires a Singapore citizen to own at least 20 percent of the company, Hla said. He’s had talks with prospective partners, but hasn’t finalized a deal yet.
Hla also is in the early stages of developing a made-to-order, fast-casual restaurant concept modeled after national chains such as Subway. Customers would create their own sushi by selecting a type of rice, fish and vegetables.
That business could grow even faster than Masu because the spaces would be smaller and cheaper to build out, Christenson said. “I think [Hla] can be the Chipotle of sushi.”
Keys to successHla teamed up with some of the top players in the local restaurant industry to create Masu, which features Japanese fare like sushi, robata-style grilled meats and vegetables and noodle soups. He hired James Beard Award winner Tim McKee as “concept chef” to develop the menu, lured longtime Origami Restaurant chef Katsuyuki Yamamoto to lead the sushi operations and brought in Minneapolis architect Shea Inc. to design the space.
As Masu expands, Brent Sokup and Steve Hesse will oversee the operations. Sokup, previously general manager of the Minneapolis location, was promoted to be the chain’s director of operations. Hesse, who used to be the chef at Stella’s Fish Café, is the corporate executive chef. (McKee still serves as a consultant.)
The flagship Minneapolis restaurant generated $2.3 million in revenue in its first year. City Pages awarded Masu the title of “Best Sushi” in its 2012 Best of the Twin Cities issue, and Bon Appetit magazine recently included the restaurant on its list of the “10 Best New Sushi Restaurants in America.”
The concept was designed to expand quickly, McKee said, pointing to a higher commitment to quality and sustainability than most sushi restaurants. “We’re not the first to offer sustainable seafood, but I think we might be the first multiunit concept to do so. And the overall style is a pretty great departure from any other sushi restaurant you’re likely to see.”
From a business perspective, Masu benefits greatly from Sushi Avenue’s success, which allows the restaurant to secure high-quality fish at cheap prices. That creates bigger margins in what is traditionally a narrow-margin industry.
“Every month we buy 20,000 pounds of tuna and 30,000 pounds of salmon to support our 280 supermarket locations,” Hla said. “We buy in bulk, so we have an advantage on food costs. Our [restaurant] competitors pay $10 to $15 per pound, while we’re paying $5 or $6 per pound.”
Grocery growthSushi Avenue, which rents space from supermarkets in exchange for a percentage of its sales, has posted double-digit growth each year since it was founded. It grew from 33 supermarket locations in 2005 to more than 150 by mid-2010, and now it’s nearly double that.
Sushi Avenue has grown by adding grocery partners in new states, including California, Connecticut and Utah, and through organic growth as existing partners add more stores. Locally, it has deals with Cub Foods, Festival Foods and many of the local food cooperatives.
The company leases 35,000 square feet in an Eagan business park, where it packs and ships some of the ingredients for grocery locations. It also operates a cold-storage facility in St. Paul that has room for 200,000 pounds of seafood.
In addition to the grocery business, Sushi Avenue also has a catering unit that provides sushi for the University of Minnesota and other area colleges, and for corporate campuses such as Target Corp. and Best Buy Co. Inc.
The business generated “a couple million dollars” in revenue last year, Hla said.