Randy Murphy is president and CEO of Mama Fu’s Asian House, based in Austin, Texas. In March 2008, as the brand’s largest franchisee, he formed Murphy Adams Restaurant Group and acquired Mama Fu’s from Raving Brands. Since then, he has re-engineered the brand, which currently has 13 units (nine company owned and four franchised) and 29 new store rights in various stages of development. I reached out to Murphy to discuss the dining category flex casual.
You coined the dining category called “flex casual.” What is it and how does it fit into the current dining landscape?
We define flex casual as the unique combination of both fast casual and casual dining where the customer gets the best of both service models — fast casual counter order and table delivery during lunch and full table service during dinner — but at the same price point. It is an important addition to the current landscape as it not only provides a service model most consumers want (different service levels per day part), but also delivers a high value proposition to the consumer as they receive that higher service level at traditional fast casual pricing. This is very important with today’s economy, and I don’t think that will change anytime soon regardless of the economy.
What prompted your creation of flex casual and why did this segment stand out to you?
I was in the high tech industry before I started operating Mama Fu’s, and before opening I realized that other Mama Fu’s locations revenue split was about 55% lunch and 45% dinner, which was typical for the fast casual segment. I considered ideas on how to get more of the revenue split moved to nights and weekends to increase our ticket average, and the best answer was to do the hybrid service model so we could realize more appetizers, alcoholic drinks and desserts and enhance the service experience. Plus, considering our customer base is weighted toward families, we knew the switch to higher service level would be well-received. We started doing full service at night with our first operating location in Austin back in early 2006 — the result was that our revenue split flipped to 45%/55% lunch to dinner, and our ticket average increased from $14.50 to $18.50. So we decided to keep that model going forward with our second and third locations in Austin, and after acquiring the brand in 2008, we made flex casual our standard service model for the brand going forward. We started the trademark process for the name “flex casual” earlier this year.
What are the challenges in the segment?
Probably the biggest challenge we are seeing right now is simple communication to our new customers that we have the flex casual model. We know we have customers that come to Mama Fu’s because they like our split model, but we also know that we have newer customers who use us just for lunch and don’t know we have a higher service level in the evening, and conversely dinner guests that might not realize they can get in and out quick during the day time. We are evaluating methods right now to better communicate this to new guests to Mama Fu’s.
What are the opportunities?
Opportunities for flex casual are extensive because we see higher frequency levels from our loyal customers as they have a restaurant they love that works to their needs for lunch and dinner. The higher ticket average is also a tremendous benefit as our startup costs are in line with other fast casual concepts, but the higher ticket average at $18.50 is well over the typical range in fast casual from $8 to $16.
How to you think flex casual will evolve?
I think flex casual will evolve first through recognition by other national and regional brands, and then through acceptance by consumers as they get to understand what the offering provides and where they can find it in their markets. I believe casual dining chains will adopt it first as they look to increase lunch day parts, then fast casual concepts will consider and adopt as they look to increase ticket average of current guests and incremental revenue of new guests, especially during dinner day parts where their biggest opportunity exists.