Living the American Dream Featured

11:59am EDT May 26, 2004
Fady Chamoun breaks into a large grin as he watches four senior women amble through his restaurant's front door just moments after it opened for lunch.

"It's great to see them in here," says Chamoun, owner of Aladdin's Eatery. "These women wouldn't have come in here five years ago."

That, he says, is because the traditional Lebanese food that Aladdin's serves has only recently become a more mainstream option. Attracting non-Lebanese senior women into a place where the main spice staple is garlic -- loads of it -- and the menu items include hummos, tabouli, baba ghannouj and pita breads, has taken a bit of time.

Chamoun, who cut his teeth in the restaurant industry in 1972 while he was a graduate student at the University of Michigan, has gone to great lengths to reach out to new customers. He claims that 75 percent of his customers are women, who, he says, like the lighter meal options he's introduced to the menu in recent years.

Restaurants have always been unofficial cultural ambassadors and have served as an outlet for new immigrants to make a good living and employ family and friends. The past 20 years have seen the rise of a variety of ethnic restaurants, from Thai to Cuban to Middle Eastern, and the entire food industry has benefited from a trend toward preparing fewer meals at home.

All of this suits Chamoun just fine.

He started with one Aladdin's restaurant in the mid-1990s after selling his portfolio of Little Caesars franchises. Today, he boasts 17 Aladdin's locations in five states, more than 1,000 employees, a centralized training facility and an independent bakery and commissary. Under Chamoun's frugal eye, the restaurants have experienced 30 percent annual sales growth over the past few years and he has not suffered a single location failure. He chalks up his success to hard work and experience, but also admits that good timing factors into the equation.

However you explain it, one thing is clear - Chamoun has almost helped introduced affordable, quality Lebanese cuisine to Northeast Ohio and parts of the Midwest. His Aladdin's empire includes locations in Cleveland, Columbus, Youngstown, Pittsburgh, Chicago, Washington, D.C., and two in Virginia. Not too shabby for someone who didn't never planned to stay in the United States after graduation.

Humble beginnings

In 1972, Chamoun, 19, arrived in the United States, determined to earn a graduate degree in engineering from the University of Michigan, then return to Lebanon to help run a water plant near his hometown.

Political timing, however, was not on his side.

During the 1970s, political unrest marred Lebanon and it endured violent clashes with Israel. And an influx of Jordanian and Palestinian guerrillas would later use Lebanon as their base for the Palestinian Liberation Organization.

But for Chamoun, there was another issue -- his name.

Camille Chamoun (no relation to Fady) was Lebanon's first president and prime minister during the 1950s. He was overthrown in 1958, then elected to the National Assembly in the 1960s. By the 1970s, the name Chamoun carried both power and controversy across Lebanon.

So when the time came for Fady Chamoun's anticipated return home, he not only had secured a job in Detroit, but also found "in many parts of the country, it wasn't good to have the same last name as the Christian Maronite prime minister."

That left him with a serious decision.

"I could have gone back home and made about $12,000, or stay here, where I was making $25,000 a year," he says.

Chamoun chose to stay.

The job he had secured was with Little Caesars restaurant, a chain of pizza shops. He began working there during graduate school making pizzas, and by the time he graduated, he'd earned a series of promotions -- to store manager, then franchise coordinator for the company's owner, Mike Illitch.

His decision to stay in the United States and work for Illitch put Chamoun in a position to capitalize on the meteoric rise of the pizza chain.

"Back when I started, we got our biggest rush after the bars closed," Chamoun says. "We were open from 3 p.m. to 2 in the morning."

At that time, pizza was more of an easy way to grab food than a regular meal. But Illitch was convinced there was serious potential for something more.

"He told us that pizza was going to be hot, and that Italian food was going to be the next big thing," Chamoun says.

He was right. Little Caesars went from 80 locations to 5,000 in less than 10 years. One year during Chamoun's tenure, the company opened a record 600 locations in one year.

"I learned a lot, those years," says Chamoun. "A lot more than in college."

Change of pace

Before Chamoun left the company in 1993, he owned 40 Little Caesars franchises. More important, he learned every aspect of the restaurant business, working in sales and management, fine-tuning his people skills and understanding how to purchase and produce food. And, he developed his own unique business philosophies.

It was those philosophies that led to Chamoun's break with Little Caesars.

"I was watching what was going on around me, and I thought it was on the way out," he says. "Twenty stores in one city is too much. It was the flood of pizza delivery places that hurt us most."

Another thing Chamoun noticed was the changing American diet. He recognized the popularity of Italian and Mexican food, and the growing popularity of Lebanese and Middle Eastern cuisine.

He also understood that this new direction would require educating consumers about the product.

"The food is a philosophy," he says. "It's about culture. And it takes time to build that up. You sit down and try this new food, and then understand what it's made of."

So Chamoun liquidated his pizza franchises, walking away with just $10,000 after paying off all his debts and loans, and set off on his new course. After more than a year of searching, he came across Rankin's Deli, a small deli on Detroit Avenue in Lakewood.

Rankin's was owned and operated by John Poulos, who was looking to sell. Poulos wanted $70,000 for the deli, which was $60,000 more than Chamoun had, but accepted a $10,000 down payment and monthly installments.

Aladdin's Eatery was born.

At first, Chamoun concentrated on improving the existing items on the menu. But he slowly began to add new items and focus on healthier Lebanese foods.

"We started with the easy stuff ... hummos, falaffel and shishkebab, and little by little, added more," says Chamoun.

Soon, the corned beef sandwiches and other deli items were replaced with pita breads and tabouli.

Because of his lack of finances, Chamoun called in favors and took on a partner. During the day, he sold sandwiches. At night, he supervised renovations to the restaurant, or did the work himself. He mortgaged his house and borrowed money from his closest friends.

Eventually, Aladdin's popularity took hold, and Chamoun not only became cash flow positive, he also opened a second location in the high foot-traffic area of Cedar-Fairmount in Cleveland Heights, taking over an existing restaurant.

"One day, it was an Italian place," he says. "We came in over the weekend, and by Monday, it was an Aladdin's. I don't think we lost one customer."

The key to Aladdin's success, says Chamoun, is having both a strong lunch and dinner crowd and plenty of carryout traffic. Those were lessons he learned from Little Caesars.

"I used my experience to duplicate what I had done at Little Caesars," he says. "Carryout takes care of overhead -- about 30 percent of sales are from carryout."

In the industry, Aladdin's falls into the "quick casual" category, loosely defined as a restaurant that combines high-quality ingredients, offers fresh, made-to-order menu items, has a limited or self-serving format, is upscale or or has highly developed decors, and a check averaging $7 to $10. Aladdin's seem to fit that bill.

The décor at each Aladdin's is upscale, the restaurant holds from 60 to 80 seats, an average visit takes under 30 minutes and the average bill for two is easily under $20.

Chamoun is well aware that quality food and good customer service will only be appreciated if there is the proper audience. So he spends a good amount of time analyzing prospective locations for his continuing expansion.

"You have to find the right corner, the right location," he says. "You have to spend time. You can not make quick decisions," he says.

Successful strategies

The first thing you see when you walk into any Aladdin's is a blinding display of mouth-watering desserts and cakes. But Chamoun doesn't consider this antithetical to his commitment to health and nutrition.

"You have to balance health and taste," he says. "It's strange for some people to understand that you can have cake and still eat healthy. But it's all balance."

Chamoun has done what many restaurants hope to do -- provide unique, fresh food that is not easily duplicated, maintain profitability and keep costs low.

As with any restaurant, food costs and overhead are fundamental success indicators. Anything over 30 percent spent on food costs must be mitigated, so Chamoun's philosophies for his recipes pose several challenges.

First, he demands fresh ingredients. He uses spices that, until recently, had to be imported from multiple suppliers. That made it difficult to control costs.

"You work within the system," he says. "That covers us so that the quality comes out the same. If you give your customers consistency, they will give you the same."

Chamoun is serious about consistency, so much so that even Aladdin's prices are the same in every city. A falafel in Cleveland or Columbus costs the same as one in Chicago or Washington, D.C.

And all Aladdin's restaurants must be located within a seven-hour drive of Aladdin's commissary, Jasmine's Bakery in Cleveland, where the pita breads are baked and the hummus and tabouli is made daily from fresh ingredients.

Jasmine's, which Chamoun founded in 1997, is a profitable distribution company, bringing in more than $2 million each year in sales and employing nearly 40 people.

"Everything on our menu is made fresh," he says. "We start with dried beans and fresh spices. When you get pita at any one of our restaurants ... it was cooked less than 12 hours ago."

Pre-made pita is easily purchased, and he could use canned beans in his vegetarian chili, but that's not why he got into the business. And that's not what the consumer wants, either.

"Everything now is about nutrition and labeling," says Chamoun. "People are concerned with what they eat these days."

Finally, Chamoun is adamant about the franchise-type set-up of his expansion restaurants, and every location must have an owner.

Expanding empire

Considering the high degree of education that Chamoun says comes with his cuisine, you'd think a targeted marketing campaign would be critical to his success. But you would be wrong. He has not spent one dime on advertising of any kind.

"It's all been word-of-mouth," he says proudly. "I've gotten so much attention from the media -- articles and reviews."

Chamoun readily admits part of Aladdin's success has been its timing as a member of the growing quick-casual restaurant trend. Although quick casual only accounts for about 2 percent of foodservice sales, its growth is projected to reach as high as 20 percent in the next few years. So he has good reason to ride the trend as long as he can.

That said, he is quick to point to Aladdin's zero percent failure rate and the fact that sales are up 30 percent over last year as other reasons his expansion is picking up steam.

He has his eye set on reaching 100 restaurants within the next five years. To do this, he says he'll stick to his strategy of growth through cash flow and profits rather than by incurring any debt.

Targets include more restaurants in Virginia, and entry into markets in Maryland, Kentucky, Illinois and Indiana -- all fertile territory that won't require him to break from his "seven-hour" policy.

And to accommodate expansion, Chamoun recently purchased additional office space adjacent to his original restaurant in Lakewood, where he's setting up a training center.

"It's not out of the question," he says when asked if he could turn Aladdin's into the next Chipotle or Little Caesars. "We can get as big as we want. We have plenty of time and can move as fast as we want."

And although he is clearly satisfied with how far he's come since 1972 and with where he sees the company heading, he does wish he could change one thing.

"I wish I was 20 years younger."

How to reach: Aladdin's Eatery (216) 932-4333 or aladdinseatery.com Associate Editor Deborah Garofalo contributed to this report.