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Kona Grill (US) to Expand Internationally

Kona Grill, which has a diverse menu that draws on foods from all over the world, is expanding internationally.

The Scottsdale-based company, whose fourth-quarter sales jumped 29.1 percent over the same period a year earlier, is negotiating to open franchise locations in Latin America and the Middle East, said Berke Bakay, president and CEO.

“Interest from potential international partners is strong, and we are enthusiastic about this long-term growth opportunity,” he said.

The move, in which the company will collect royalty fees for use of the concept and company expertise, offers a different revenue stream, he said. While no specific locations have been announced yet, the first international site is expected to open in 2016, he said.

Kona Grill, which has 30 restaurants in 19 states, plans to open seven additional domestic restaurants in 2015. Leases have been signed on additional locations, whose opening dates have yet to be determined.

“We have proven the portability of this concept,” Bakay said.

The company looked to other restaurants that have overseas locations in making its decision to expand globally, he said.

“If you look at other American brands such as P.F. Chang’s … they’ve had a lot of success internationally,” he said.

Kona Grill has established a new position, vice president of international development. Carlos de León, who has 20 years of international restaurant franchise experience, has been hired to till the spot, which will be based in Dallas.

De León most recently worked at CEC Entertainment Inc., where he built Chuck E. Cheese’s international franchising program. He also was international development director at Carlson Restaurants, helping to grow the TGI Fridays brand to multiple overseas markets.

Dallas offers several benefits: De León lives there, and Dallas/Fort Worth International Airport offers convenient international flights, Bakay said. Plus, Dallas Kona Grill locations typically see an uptick in sales during the spring, when Mexican students and their families visit during spring break, he said.

The company has been in contact with potential international partners and is looking for others who are not necessarily restaurateurs, he said.

Kona Grill’s portfolio primarily includes locations that are stand alone or are part of lifestyle centers, such as its San Tan Village location, or mixed-use developments, such as its Phoenix High Street location.

Same-store sales have risen 17 out of the past 18 quarters, Bakay said.

The menu, which offers 200 items, includes sushi and other Asian offerings, tacos and American favorites such as jambalaya and pulled pork sandwiches. Grill items account for 46 percent of sales, bar business equals 30 percent and sushi sales equal 24 percent, he said.

Company research has shown that a majority of customers are female, so Kona Grill has embarked on a remodeling campaign in which existing restaurants, which formerly resembled steakhouses, are being given lighter colors, a more open look and a more modern feel.

Its Scottsdale and Chandler locations already have been remodeled.

By the end of the year, 22 of the potential 37 locations were feature the new design, Bakay said.

In February, Kona Grill announced that fourth quarter revenue was $31.1 million, up from $24.5 million in the fourth quarter of 2013. The quarter ended Dec. 31.

The Republic | azcentral.com

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