GlobalBX

According to an article in USA Today, ShopHouse Southeast Asian Kitchen may do to Asian cuisine what Chipotle did for Mexican food.  ShopHouse opened in the nation’s capital amidst high expectations and media hype.  As at Chipotle, ShopHouse boasts the use of natural ingredients and meat that has no antibiotics or added hormones.  “ShopHouse has an enormous opportunity”, John Glass, analyst at Morgan Stanley says, “because Americans already have the Asian food habit.”

Chipotle’s new venture ShopHouse Southeast Asian Kitchen attempts to do for Asian food what it did for Mexican food.

The lunch-hour line to enter the newly opened ShopHouse Southeast Asian Kitchen curves out the door, around the corner and down the block on a recent Monday here in the nation’s capital, where the eclectic-but-electric restaurant is attracting far more buzz than any political candidate.

It’s no exaggeration to say that the restaurant world is salivating to see whether Steve Ells, the food-centric, bespectacled fellow who founded Chipotle 18 years ago with a single shop in Denver, can successfully expand his company beyond the burrito to the Asian noodle. If he can turn this repeat performance, Ells will accomplish something that even mega-giant McDonald’s (which briefly owned a big stake in Chipotle) couldn’t: excel in two restaurant concepts at once.

“Chipotle is the most successful restaurant concept of the past decade,” says John Glass, analyst at Morgan Stanley. He compares it to nothing less than what Starbucks did in the 1990s. “Chipotle transformed the way people think about Mexican food. ShopHouse can do the same for Asian.”

Or not. If ShopHouse succeeds, it could ultimately play a central role in turning the very definition of fast food on its head by keeping the service fast yet making most of the ingredients sustainable, better-for-you — and tasty. Or, if it’s a flop, it puts serious egg on the face of not only Ells, but the many industry analysts who already are christening ShopHouse a success and the many investors who are buying into it as Chipotle’s stock reached record highs the week ShopHouse opened before moderating this week.

Just days after the “soft” opening of ShopHouse, Ells, 46, and co-CEO Monty Moran, 45, spent nearly two hours with a USA TODAY reporter — their very first media interview to take place inside the tiny but bustling restaurant. While ShopHouse has had zero advertising, the buzz has gone utterly viral. Executives have given up trying to keep a lid on the hype and soaring expectations for the chain whose name is derived from ShopHouse-style architecture popular in Southeast Asia where the family typically lives upstairs and the restaurant or retailer is on the ground floor.

“We have more potential than anyone else to change the food culture in a positive way,” says Ells, speaking for both ShopHouse and Chipotle, while noshing on a ShopHouse bowl of grilled steak, brown rice and veggies. “The act of eating shouldn’t be based on any form of exploitation,” says the rail-thin CEO. Both Chipotle and ShopHouse, he says, are about treating customers, employees, farmers and even animals with respect. “I’d like to change the way Americans think about and eat fast food.”

Going all-natural

At ShopHouse — as at Chipotle — all ingredients are natural, some are organic and the meats have no antibiotics or added hormones.

The deep desire that Ells has for the success of ShopHouse is, perhaps, best evidenced by the fact that he spent much of this same morning interviewing applicants for crew work. Everyone from line workers to dishwashers had to get a thumbs up from Ells.

In a report, analyst Mark Kalinowski of Janney Capital Markets offered an “enthusiastic thumbs up” to the concept, following a visit there. Morgan Stanley’s Glass effuses, “If anyone can crack the code on Asian fast casual, it’s Steve Ells.”

Not the usual Chinese fare

Traditional Chinese takeout, it’s not. No sweet-and-sour anything. No wonton soup. No chow mein. The menu is about as simple as Chipotle’s, but considerably more spicy. Bowls of beef, pork or chicken (or even organic tofu) are served with veggies, toppings, garnish and sauce for about $7. Sandwiches with one meat choice also are served with green papaya slaw, herbs and crushed peanuts for slightly more than $6.

A customer can read through the entire menu quicker than the cocktail list at many casual-dining joints.

Like Chipotle, customers wait in a cafeteria-style line and then are offered customized choices by servers decked out in orange shirts and black aprons.

Then there’s Ray House, a D.C. accountant who likes the food so much he’s back for his second visit in four days. “I like the simple menu,” he says. But he doesn’t like the fact that he has to bring his own chopsticks, which he holds in his hand. “Any self-respecting Asian restaurant should provide chopsticks,” he says.

Not really, responds Ells, who strives for authenticity. “You won’t find them in Bangkok,” he says. That’s where he traveled last year with a small team; as well as to Singapore, Kuala Lumpur, Malaysia and Vietnam, to come up with the ShopHouse concept — and recipes. Many of the original recipes, he says, they scrawled on the backs of napkins while at their hotel.

Glass, the analyst, expects to see just two to four more over the next two years. But even if ShopHouse is a hit, he says, it would take at least a decade before it was any kind of “player” in fast-casual dining, which can require at least 500 units.

CNBC’s stock picker Jim Cramer, who for years has been an outspoken fan of Chipotle, says the stock’s recent run-up following the single ShopHouse store opening is simply too much.

“These are unsustainable numbers,” the Mad Money host advised viewers this month.

What’s more, the typical American diner hasn’t a clue what the ShopHouse name means, says Valerie Killifer, editor of FastCasual.com, a site and blog covering the industry. “There could be a consumer disconnect,” she says.

“The Asian model of fast-casual dining is untested,” she says.

Then there’s the calorie question. The starch in ShopHouse dishes, in the form of rice, noodles and oversized banh mi breads, can potentially load meals with “too many empty calories,” warns David Zinczenko, author of Eat This, Not That!

But the numbers are compelling. At $18.4 billion annually, the Asian dining segment in the U.S. is just an eyelash less than the Mexican segment, reports research firm Technomic. Most of that, however, is full-service Asian dining, Glass notes. That leaves ShopHouse with an enormous opportunity, he says, “because Americans already have the Asian food habit.”

Photo by thefoode