Franchising Insight TV Persona Franchises His Surly Soup Business

Provided by

Later this year, the real-life "Soup Nazi" made famous by "Seinfeld" will begin selling his soups at franchised locations throughout the country--but with one missing ingredient.

About a decade ago, Al Yeganeh, a surly New York City soup seller, gained global fame when he inspired a character on the hit TV sitcom "Seinfeld." Now, the notorious chef--known for chewing out some customers and refusing to serve others--is taking his own show on the road.

Later this year, the real-life "Soup Nazi" will begin selling his legendary bisques, chowders and gumbos at franchised locations throughout the country--but with one missing ingredient: Mr. Yeganeh plans to bar the franchisees from using the term "Soup Nazi" in their promotional materials. In fact, he doesn't want his simmering soup empire to have any overt association with the show that helped make him famous. Tie-ins with "Seinfeld" will be "strongly discouraged" among franchisees, the company says.

For all the attention and business that the "Seinfeld" publicity has brought him, Mr. Yeganeh is not exactly grateful--in fact he says he loathes the show's star. He refers to Jerry Seinfeld as quot;Jerry the Clown," and insists that it was he who helped make Mr. Seinfeld what he is today. The source of the friction is the nickname that the show made famous, the "Soup Nazi," which he says is offensive.

Mr. Yeganeh has long been a fixture in the New York City area--he counts everyone from entertainment mogul Barry Diller to "60 Minutes" grouch Andy Rooney among his regular customers. Soup Kitchen international, his 20-year-old cramped storefront shop, has a higher Zagat's rating than some of the city's top restaurants. During the six months of the year it is open, the customer lines snake around the block, despite his not-cheap prices.

Now, the chef and his new management team are aiming to have those same soups available at some 1,000 locations in the U.S. within five to seven years. The idea, he says, grew more out of his quest to spread the gospel on soup than a taste for profits. "I don't need the money," he says, eyes widening slightly. "I'm already rich. I was rich before 'Seinfeld.' "

Tens of thousands of people try to franchise business concepts every year, but Mr. Yeganeh's soup venture promises to be one of the more unusual. Mr. Yeganeh has already begun to put his quirky stamp on the business. At his insistence, for example, the form letters sent out to prospective franchisees were stripped of niceties like "dear," "thank you" and "we look forward to speaking with you soon."

Mr. Yeganeh, who has jet-black hair and a stolid expression etched onto his face, says he has been approached many times before by would-be business partners. But they all made the same fatal mistake, telling him: "Just give us your name and we'll do the rest."

Franchisees will each have to pay $30,000 for the right to sell Mr. Yeganeh's soup, plus 5% of their annual gross sales as royalties, says Bill McCreery, vice president of business development for the new company. As for Mr. Yeganeh, he gets a 20% stake in the franchise business, Kiosk Concepts, and stands to make up to $5 million in royalties if the growth targets are reached. Most importantly for the soup maestro, he will have complete control over the soup-making operation.

"He's a total character and characters sell," says John Bello, chairman and acting CEO of the new venture, also called Soup Kitchen International. Mr. Bello founded the company that makes SoBe teas and juices, South Beach Beverage Co., which he sold to PepsiCo Inc. for $370 million in 2001. He says he is one of about 15 investors who have put "at least six figures" into the soup venture.

Most of the soup franchises will be in malls, airports, and other high-traffic locations. The company is also in talks with several supermarket chains, including Giant Food Stores, which has over 260 outlets in six states, to carry Mr. Yeganeh's soups in a pouch in deli sections. The soups, both at the franchised outlets and in supermarkets, will be sold under the name "The Original Soup Man," and adorned with an image of Mr. Yeganeh's face.

Yet some franchising experts say that depriving the new franchisees of perhaps their most powerful marketing hook may well complicate their business challenge. "This gentleman is not going to be in the soup business, he is going to be in the marketing business," says Daniel Murphy, president of the Growth Coach, a Cincinnati-based company that offers small-business coaching services in over 50 markets in the U.S. and Canada. "He is going to need to provide the franchisees with the marketing skills so they can sell the soup."

Mr. Yeganeh makes for something of an unorthodox pitchman. He doesn't believe much in traditional marketing, arguing that the quality of his 30-plus soups, like Beef Barley, Seafood Gumbo and Black Bean, speaks for itself. For the uninitiated, Mr. Yeganeh has a low tolerance for anything that slows down the soup line. That includes customers who don't have their cash ready, who fail to move to the "extreme left" after ordering, or who try to make small talk with him. (Mr. Yeganeh says he has no plans to insist that franchisees adopt his same militaristic approach to service.)

So far, the company has yet to do any formal marketing or advertising. But a small two-word poster on the door of Mr. Yeganeh's shop announcing the expansion ("Now Franchising") has already created a buzz among potential franchisees. Mr. Yeganeh has received some 250 e-mails from people eager to sell his soup in cities as disparate as Asheville, N.C., Roseville, Calif., and Boston. Several have indicated a willingness to invest up to a quarter million dollars in the idea.

"We love the show," says Sureet Sandhu, who zipped off an e-mail to Mr. Yeganeh after his wife told him about the fictional "Seinfeld" character's expansion plan. Mr. Sandhu, a 28-year-old network administrator for the National Institutes of Health, hopes to buy a franchise or two with his father and a few friends. Even with his fondness for the TV hit, he says Mr. Yeganeh's marketing restrictions don't diminish his interest.

All the soup will be made at a single plant in Piscataway, N.J., and then shipped to the franchisees. They will reheat and sell it for between $12 and $20 a quart, depending on the soup and the location. (That's cheaper than his New York prices: At his Manhattan store, the seafood soup sells for $30 a quart.)

Mr. Yeganeh isn't the only likeness of a "Seinfeld" character that has tried to spin off a new business. Kenny Kramer, the basis for Jerry's frenetic neighbor "Kramer," offers a half-day bus tour of various New York City locations that appear in the show.

For the past month, he has been refining his recipes and getting the production crew up to snuff. When he first arrived at the plant, he noticed that the employees worked with the radio on, and sometimes even stepped away to take a cellphone call. He quickly put an end to that, banning every activity other than soup making. He even snipped the speaker wire in two just to make his point.

Despite his intimidating public persona, Mr. Yeganeh can be quite personable outside of work--just as long as you don't ask him about something other than soup. He refuses to provide any biographical information, like where he was born or how old he is. And those who operate in Mr. Yeganeh's business orbit, fearful of angering the talent, are careful not to let any of those details slip. "My profession should be the subject," says Mr. Yeganeh. "Leave the rest to the tabloids."

Before they can get their kiosks, the soup franchisees will have to pass muster with Mr. Yeganeh, who says he will be looking for people who know something about food and hygiene and who are "passionate about soup quality."

"I don't want microbiologists, but they have to be well-qualified to handle my baby," he says.

From StartupJournal.com
Copyright © 2005 Dow Jones & Company, Inc. All Rights Reserved