New CEO Speaks on Mama Fu’s Acquisition

AUSTIN, Tex. (Blue MauMau) - The mouse has eaten the lion. Austin, Texas-based franchisee Murphy Adams Restaurant Group this week has announced it has acquired its franchisor, Mama Fu's Noodle House, Inc., one franchise food network in a portfolio of companies founded by Raving Brands, Inc. Randy Murphy, the chief executive officer of Murphy Adams Restaurants takes time to speak with the Blue MauMau franchisee and franchise investment community about future plans of this Asian fast-casual restaurant chain.

Why did franchisee Murphy Adams Restaurant Group buy out the franchisor, Mama Fu's Noodle House, Inc.?

Murphy: My partner, Mark Adams and I really saw an opportunity to take this wonderful brand that we were having success with and to put time, effort and capital behind it. The prior owner had a lot on their plate. We just wanted to focus on one thing. So we got the capital together to not only buy the brand but to take it to the next level. We bought the brand because we feel strongly about its intrinsic value, menus, atmosphere and customer loyalty. Asian is one of the biggest growth segments for the restaurant industry over the next 5-7 years. This concept can deliver value, quality and a good experience while catering to America's changing taste palette.

Did Mama Fu's lawsuits and problems weaken the value of the company to make it an easier opportunity to buy?

Murphy: The lawsuits did not really impact us in any way. We as the franchisee and as the franchisor are not involved in that litigation in any capacity.

[But] Owning and operating nearly a third of the current units qualified us as a natural leader of the brand. We have really played that role for the last couple of years. By having 5 stores in a franchise system that was about to have eighteen total, and with Mama Fu's Noodle House, Inc. only having one corporate store, we would be in a strong position to know the brand, the operations and be a natural leader.

Anytime you are buying a brand, the value is going to be a few things —the current cash flow, the intellectual property and how much the buyer values the brand. The litigation didn't affect our purchase because we made a purchase of the company's assets only. If you are buying a diamond and there is litigation on the diamond, it still doesn't change the value of that diamond, especially since we do not take on any of the liability or connection to the lawsuit.

How does Murphy Adams Restaurant Group think it can add value running the entire franchise network?

Murphy: We are bringing enhanced franchise operations infrastructure and systems to enable our current Franchise Partners to grow and become more profitable. There will be many top line and bottom line initiatives that we will roll out, including but not limited to lower cost of goods, enhanced training programs, a new national website, increased advertising and marketing, menu improvements, more sophisticated décor, online ordering, delivery programs, nutritional information, and much more.

We are going to be do delivery programs for our franchisees. We will increase the store package through an updated menu and significantly reduce the cost of goods across the system. There are a lot of things that we will do to this brand. We believe with the right leadership and focus we can make our current franchisees more profitable and build this to a hundred plus units nationally in the next 5 years.

What are the prospects for an ethnic fast-casual restaurant like yours?

Murphy: We plan to grow the Mama Fu's brand to 100 total units within 5 years. We are looking for franchise partners who can develop medium-sized markets from Texas to Florida, and who have restaurant backgrounds with solid financials. We value our brand immensely and will be very selective on the Franchise Partners we select, we firmly believe that the right Franchise Partner with our enhanced Franchise program/package (what we are working on now) is the perfect match for success for both the Partner and the brand long term.

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