Motley Fool Money - Asian Food Chains Moving Stateside

Episode Date: September 30, 2025

American palates are shifting, and investors are starting to take notice. In today’s episode of Motley Fool Money, host Emily Flippen is joined by analysts Sanmeet Deo and Jason Hall to unpack four of the newest Asian food chains looking to expand across the United States The team dives into: - Whether or not Jollibee’s rise is sustainable - The re-emergence of Luckin Coffee and changing consumer tastes - If the experiential dining of Kura Sushi and Haidilao Hot Pot are replicable - Which chain offers investors the best opportunity today Companies discussed: JBFCF, LKNCY, KRUS, HDALF Host: Emily Flippen, Jason Hall, Sanmeet Deo Producer: Anand Chokkavelu Engineer: Dan Boyd Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit ⁠⁠⁠⁠⁠⁠megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

We're eating up the tastiest trend in restaurants, Asian food chains expanding across the United States and what this means for investors. Today, I'm Mottley Full Money. I'm Emily Flippin, and today I'm joined by analysts Jason Hall and Samit Dale to discuss the rise of Asian food chains in the United States, and if they're expanding reach and changing palates, offer up an opportunity for investors to take a bite out of something new. We'll be discussing luck and coffee, of course, but also some businesses that you may be less familiar with. That includes kurosushi and Heidi Lowe Hot Pot. We'll be discussing their unit economics, the franchise versus company-owned models, brand power, and if these concepts actually do transition across cultures. But we have to

start with one of my favorites on the list today, and that's Jollaby. For anybody who's unaware, Jolabee is this Philippine-based fast food chain, perhaps best known for its fried chicken and what they call their Jolly Spaghetti, which is, yes, spaghetti topped with this unique banana ketchup-style sauce. It's really hard to oversell what a big name Jollapy is in the Philippines and across Southeast Asia. They have over 1,300 locations in the Philippines alone, nearly 500 more internationally, including over 100 in North America. Although across all the brands this company owns, they have more than 10,000 stores nationwide. It's a really thinly traded stock. It's on the pink sheets here in the United States with the ticker symbol JBFCF. But when you include its Philippine listed shares,

It has an enterprise value of nearly $6 billion. So, I mean, is there a real growth thesis here for Jollaby? Or is it really just another example of a franchise model that's likely to flame out? I'm really upset that I haven't heard about this already. This is the first time I'm hearing about Jolabee, and there's, you know, being in New York, there's quite a few in Queens and Manhattan and all around New York City. So I'm coming around to this just now, too. But, you know, as I was looking into it, you know, it's a brand that is popular.

is McDonald's and Coca-Cola in its home country. Well, as popular as McDonald's and Coca-Cola is here, is how popular Jolvi is in the Philippines, kids love the mascot. They have birthday parties there. You know, it's quite a thing. Its growth thesis really relies on expanding outside into North America where it has, you know,

only about 100 locations. They're looking to expand out to about 250 in the next few years through franchising. I was surprised to learn that their average unit volumes are 4.2 million a year. That is just for company-owned locations, which is what they have now. Filipinos are the third largest Asian origin group in the United States, but 60% of their customers in the United States are non-Philippinos.

So while you think maybe is just appealing to the Filipinos in America that maybe know the chain and are accustomed to the food, it is gaining some traction with customers here as well. So they have the ingredients to be successful and grow. it's just whether to be, whether it's seen if it catches. And anecdotally, with my own experiences, you know, I've seen a lot of Korean fried chicken, hot pot, Thai concepts gain a lot of wide appeal. Although being in New York, you know, I think I might be a little bit early exposed to those.

Yeah, which really interesting about Jollaby is that, I mean, you and I live in places where there's Jollabies actually near us. And it's not one of those brands that you can particularly hear about unless you're already exposed to it. But Jason, I know this is one that you've looked at before. And I know you have thoughts about the Jolabee menu and how that has transitioned from the Philippines here to the United States. You know, I get it trying to find the balance between offering something new while not being quote unquote weird. But, you know, this world does not need more mediocre mac and cheese and dehydrated mashed potatoes.

I'm a little salty that they're doing some of the usual southern sides to pair with their fried chicken in those U.S. restaurants. But I do think if you look beyond that, my little one, little quibble there. One of the things that's interesting about the model is the diversity of the food on the menu. You've got burgers, you've got fried chicken sandwiches, which are supposedly incredible. Sounds weird to American palettes, the spaghetti you were talking about. It's a meat sauce with banana ketchup. It's supposed to be really sweet. And then there's some of the other more like Filipino influence things, rice and noodle dishes. So maybe it's kind of a something for everyone, which I think is compelling. Is it going to translate into the U.S.? I think that's only part of this. It is a big part

of it, right? We talked about going from around 100 to 250 locations. But you also mentioned the global reality. There's more than 10,000 locations. Franchising is a big part of that model. They own some U.S. brands, Coffee Bean and T. Leaf, which is a 40-year-old U.S.-based company that actually has more locations internationally. Smashburgers are U.S. business they acquired recently. So I think the point for me is that investors that are interested in this, they need to know kind of everything you own if you buy into this, what the global strategy is, because it's more than just opening a bunch of Jollybee locations in the U.S. And also know that you're along for the ride with the founding family that have a,

they own a vast bulk of this company. It's very concentrated ownership. So it's not just thinly traded in the U.S. You're ponied along with the people that have controlling stakes in the business. Yeah, it's a little bit of a headscrub. for me because you see this Jollaby brand that you think can have so much power, but the company actually spends a very small amount of its total cost in terms of marketing, especially here in the United States. So despite the fact that its brand is so pervasive in the countries where it got

started, as they're expanding internationally, it doesn't seem like they're building up that same brand recognition. And I think that's a really big misstep on the part of management, because I think if you're spending less than two and a half percent of your total cost of goods on advertising, as a franchise-based restaurant chain, especially as you're looking to expand and double your store locations in a new country, that is, in my opinion, a way to just ensure that your average unit volumes fall. But to your point, Jason, it almost feels like Jollaby is an afterthought for this company, because it's not so much about turning the United States into the next big market for Jollaby, for fried chicken, for banana ketchup spaghetti. It's about what smaller, almost drink chains can we

acquire to expand just total number of store units in the United States, Smashburg, coffee, bean, and tea leaf, obviously being two good examples. But in my opinion, it's one of those head scratchers to me because it begs a question of, like, is this business too diverse to succeed? Are they just trying to grab any growth and losing focus on that core of Jollaby brand in the process? Yeah, it strikes me as more empire building than a targeted focused growth. And again, there's more than a dozen different restaurant and beverage brands in the portfolio. That makes it harder to focus your spend. Sandmeet, I think you're a good example. you where you live that's where there is a concentration of their stores and until we started

talking about it hearing it from emily you know you didn't know you didn't know i didn't either yeah and i get lots of advertising and flyers and you know you see them all around as i kind of go around in terms of like different concepts and a lot of these other Asian concepts are very focused i think emily you hit on that point they're trying to do too much they got to stay focused on what who they are and demonstrating that in the market. Well, either way, I'm putting it on my to-do list to go visit the Jollapie location. That's only a 20-minute drive for me and report back about exactly how I feel about this interesting spaghetti.

But up next, we're going to be transitioning from fried chicken to caffeine. Stick with us. The old adage goes, it isn't what you say. It's how you say it. Because to truly make an impact, you need to set an example and take the lead. You have to adapt to whatever comes your way. When you're that driven, you drive an equally determined vehicle, the Range Rover Sport. The Range Rover Sport blends power, poise, and performance.

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invested or lived through the pandemic. I mean, this is the Chinese-based coffee chain that pioneered the model for low-cost, quick-service coffee before, of course, playing. out due to fraud and scandals. It shares were delisted to the pink sheets, but they still trade there under the ticker symbol, L-K-N-C-Y. And I'll tell you what, Jason. I mean, this business has made a voracious comeback from its fall from grace. They have over 20,000 locations globally, including a handful that are growing here in the United States, and people are picking up on its model. From your perspective, is there really anything to get an investor excited about beyond caffeine, of course, with an investment in Luckin Coffee or resetting ourselves up here for

failure a second time in a row. Failure 2.0. Well, it's interesting. Like, I think the big thing, I think a lot of people that maybe heard about the original story don't realize this wasn't just a fraud, right? The fraud was massive. But there was always a core, a good core business. You know, you just had some leaders that were cooking the books. Another takeaway, I think's interesting, is the fact that the PRC government, they just, as much as we've seen a lot of autocratic things over the past few years, they let this, they didn't try to sweep it under the rug. They let it play out in the public sphere.

And investors, that should give you a little bit of confidence, right? I don't know how much, but maybe a little bit. But I keep coming back to, there's still two co-founders who were with the company and on the board when the fraud happened. There's still now, one of them is the CEO. And that always just kind of hangs in the back of my head. But if we look past it, I think we can probably trust its numbers better than any other coffee in the industry, a business of the industry. The growth rates, man, there's something else. You mentioned that story.

The actual store account surpassed 26,000 last quarter. They had a few thousand when all of this was first going on. They're opening like 2,000 a quarter. And here's the thing. The revenue growth's 47% last quarter. That wasn't just new locations. Comps are up by double digits, too. So there's a lot of things that are really working well for their format,

their go-to-market strategy. Chinese customers are coming to the stores and maybe not going to Starbucks anymore. Also, as much as the stocks run up, Emily, I'm not sure that I would really say that it's expensive. Sales multiple price to sales is kind of empty calories sometimes, but it can be useful directionally. And it trades for a lower price to sales multiple than Starbucks, which we know is struggling, and it's earning much higher margins. So maybe there is something there.

You know, that's eye-popping growth for luck, but given his checkered history, as they see on Shark Tank, come out. I think that's a completely fair takes, I mean, I will say, though, there were red flags to me at the time that made me more concerned for Luckin back in 2020 than I am for today. And there are some classic examples of fraud that I think investors can look for. For instance, when Luckin Coffee started launching vending machines. I mean, gosh, tell me more about the cash-based business that is vending machines. And I'm happy to see that their expansion here has seemed to be a bit more in good faith. We do not see a lot of the same missteps that. I think colored their previous run-up public markets. But it's always a fair point that once you've

broken somebody's trust, it's harder to build that up. In the case of Luckin, from a business perspective, their strategy was always almost the opposite of what you built for Starbucks. They wanted the low brand recognition, which is to say they're the cheap brand, right? You're not walking out the Luckin coffee to look premium and expensive. You're doing it because they offered you four free coffees when you purchased your one coffee and they were hoping you'd bring it to your coworkers. Whereas Starbucks was much more about larger format stores, higher-priced drinks, a cachet associated with the brand, and thus the drinks associated with their brand. And then, of course, the idea of the third place where you'd go, you'd sit down, you'd work, you'd have coffee, you'd have a ceramic cup,

which of course Starbucks is bringing back now. Fucking coffee says, to hell with all that. We don't need any of that. We're going to have these small format stores. You don't even engage with a barista. For the locations here in the United States, you can't walk in and just order at the counter. You have to place that order digitally. So it's almost the exact antithes. a thesis that brought Starbucks to power. And it's really interesting to see how consumer dynamics have shifted so dramatically that it is now about speed, efficiency, and price, and less so about convenience, customization, and connection. The smartphone influence on coffee ordering, maybe.

Yeah, exactly. And also, I think there's a desire here from American consumers to be a little more to the point. I mean, we see the success for businesses like Dutch, and other drive-through coffee chains where it's a little less about the experience and the location and a bit more about the convenience and accessibility and the cost associated with those daily purchases. And I'm actually maybe more positive here on the future for Luckin Coffee in the United States than I ever have been. I never thought I would have said that even just a couple years ago. Their franchise expansion model is incredibly risky to be very clear at that. But the business is driving much higher profits, expanding store count, and they seem to be doing something

that is actually resonating with consumers, which in my opinion is a stark difference from where the company was even just a few years ago. Before we move on to discuss our last course, which is, of course, conveyor belt sushi and hot pot. I do have a quick note for our listeners. David Gardner, the co-founder of the Motley Fool and Chief Rule Breaker here at the Motley Fool, just released his newest book, Rule Breaker Investing, How to Pick the Best Stocks of the Future and Build Lasting Wealth. It's a great read, and it speaks a lot to the mentality behind how we think about investing here at the Fool, but there is even more. David will be serving as a strategic advisor for our newest portfolio service here at the

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Molly. As we wrap up the show today, we have to talk about two of the more experiential style Asian food chains expanding across the United States. That is Kura Sushi and Heidi Lowe Hot Pot, two of my favorites here, at least from a consumer perspective. But some meat, let's start with Kura. This is the conveyor belt sushi restaurant that's looking to capitalize on like the desire for both dinner and a show to some extent. I'm not a huge sushi fan myself, but I do love how they gamify the process of eating. And even more, I like how this company is expanding not through a franchise model, but through actually a company-owned location model. It's a bit slower, but in my opinion, maybe a bit more lucrative for investors. Cura Sushi is actually headquartered and listed in Japan

for the parent company, but investors can get a slice of Kura's U.S.-based arm by buying shares of KRUS on the NASDAQ. So, what do you think? Is there something to be excited about here for investors? Well, you know, you're right, Emily. I've been to Kura with my family, and it's definitely a fun experience. You know, you get the touchscreen ordering, grab sushi off the conveyor belt. robots serving drinks, etc. You know, it's a fun, you know, a few, like, flashing lights. It almost feels like you're in a casino to some extent. But most importantly, the food is quite good.

The sushi is very good. The other food items they have is very good. They have about 75. I don't know if I would ever want to associate sushi and gambling, though. That's exactly what I was thinking. There's no gambling involved. It's just like a lot of a lot of fun lights and stuff. But they have about 75 to 80 U.S. locations.

So, you know, smaller and small. some of the other chains. They report around 17 to 18% restaurant level operating margins, which is pretty good, and 4.2 million in AUVs. Very impressive as well. However, they aren't profitable because they just have very high expenses because they're pretty much building out for a larger footprint. They're aggressively pursuing unit growth of 20% plus. So it remains to be seen if this concept would kind of take off. It's fun. And whether they'll make, whether diners will actually make it a regular habit. It's not a one-and-done experience, but I don't see it being a very often experience.

I think more of maybe like a Benihana for special occasions. So not sold yet on how much it'll gain traction. The Las Vegas of sushi, if you will. I love the experience that is Kura. But, I mean, I'm curious, when I think about these food chains that we've talked about today and the distinct brands that they've built, I think that current, is maybe the area where I struggle the most because it feels like it's the most easily replicatable. I have probably a half a dozen conveyor belt sushi places that are located near me.

Now, granted, I'm in a major metropolitan area, but in your opinion, is there anything that's unique or special that would cause somebody to say, hey, I have to go to Kura to get my conveyor belt sushi? I can't go to that place down the street. I mean, it is relatively clean and well organized and maintained. So that definitely helps. I think I'd be more suspect to go to a random conveyor belt sushi because that concept to me doesn't sound appealing in general. They're trying to build up a little bit of their brand name, which over time, if they can,

then it might be kind of associated with that conveyor belt sushi concept. Yeah, if the best we're coming up with is the restaurants are clean, then part of me thinks that maybe investors can do a little better. Scalability is a challenge with that sort of format, too. think that's one of the things that can stand in the way. And part of the reason why you see it not generating profits yet. Jason, the stock I want to talk to you about is actually one of my favorites of the bunch. That's Heidi Lau Hot Pot. It's traded over the counter here in the United States with the ticker H-D-A-L-F. I spent four years of my undergrad living in China, and I can never really afford to eat at Heidi Lao,

but I did love it whenever I got the opportunity to have somebody else treat me to a meal there. There's a high-end staple for Hot Pot. They have a real rags to Rich's story and its founder and CEO, but there are over 4,100 locations across the globe and they have more than a dozen here in the United States. They've been expanding pretty aggressively. Jason, I know I love to splurge here for some food, but is there anything to, I guess, wet the appetite of investors? I think the thing that stands out to me, and this is to a certain extent, sort of the case

for Kura sushi as well, because you're starting to move into these more specialty restaurants where they're just not going to have the mass market appeal. People either like sushi or they will never touch it, right? It's not like fried chicken where it's like the vast majority of people are going to be cool with it. And hot pot is a little more specialty as well. And again, you talk about the price point. You can get pretty expensive before you know it. In the restaurant business, the fundamentals just blocking and tackling are so important,

especially compared to like a SaaS company, where high margins is wallpaper over being mediocre operators. You just can't get away with that and super high as the parent company here. It's operating margins in the first half of the year were 3%. So that should make it really, really clear how important it is for restaurants to be disciplined growers, especially in this case if they're also the operators. You look at Luckin and Jollaby that we talked about earlier. They've made franchising a big part of their growth strategy,

which means you get to pass along the bull. of the financial risk, offloading operational responsibilities, and just earn high margin freeze on franchising and a percentage of sales. So I think that's one of the reasons we've seen growth slow here. And again, it's also niche. So they have to be really thoughtful and mindful about where they do expand because they can't open a restaurant and maybe just come a little short of expectations, there's a real risk here of just failure. If you miss, you know, underestimate or overestimate what the market can be worth for a specific location. And they have, what, a hundred, not even 200 total locations. It's a small franchise, a small business. So I think

it's really important that they focus on executing, make sure they're in the right markets and really have good operational strength, because you just don't have the margin of safety you do with a coffee shop. or a fast food joint. A completely fair point. And as we sign off here, I'm going to force you both into a somewhat uncomfortable position, given the takes I've heard today about the companies we've discussed. But I would love to do a lightning round and force you both to put your metaphorical money where your mouth is.

If you had to buy one of these Asian-style publicly traded companies that we discussed today, which one are you buying and why? And while you think about it, I'm happy to go first. I don't think this will be too much of a surprise. but I actually lean towards Jollaby out of the group that we discussed today. And the reason is is because exactly what you were just talking about, Jason, what is a business that is doing something that is, A, really scalable and profitable, but is also really unique.

And as I think about what makes a successful chain here in the United States, they have to be doing something that can't be replicated by their competitors, at least not effectively or efficiently, and as diverse as the strategy and as crazy as it seems to be, and as much as I think the Jollaby management team could do more, especially in terms of marketing. I also think there's a lot of value that exists in that brand that is untapped with an enterprise value of only $6 billion, given there thousands of store locations.

Send meat, I think you're not picking luck and coffee. So where are you going? You know, surprisingly before this, I had a different one in mind. But now after a comment talking, I'm going with Jollaby too. I mean, I think their hurdle to clear, to be successful or do well is lower than some of the other chains. Betting on chicken is always a good thing. There can't be enough chicken places. I mean, America loves this chicken and all kinds of different flavors. And it has its unique appeal and flavor profile that I think once it's able to brand itself, get its name out and demonstrate

what it is, I think you can have some success. And especially the franchising bit will actually help accelerate their growth much more. So I would, I'll put my bet on Jolabee. Sam meat, I bet I can get you to go try it this week. They have a special Korean fried chicken on the menu right now in Queens. Okay, I'm going to look up my closest one. Okay, there you go. All right, done. So as much as I want to say, Luckin, I'm just, again, I'm not comfortable there.

You know, fool me once. Shame on you, fool me twice. So I'm not comfortable there. Kura sushi is of the cuisine types. It's the ones that I like the most, but they're gross margins are less than 12%. Right. There's so thin margin of safety, and it's probably the most binary food type for tastes. So that concerns me.

The thing that brings me back to Jollaby is scale. The size of their locations, they own food manufacturing facilities. You get to that point, and scale really matters a lot. As much as we quibble about they're not spending enough to market, they can ramp that up. They already have things to give them lower costs. That is maybe the most important thing you can do as a restaurant is lock in low. cost as a producer. They have scale. To me, I think that's probably the driver. And plus, the stock is, it's not expensive. So you have some margin of safety built in there in terms

of what the market's expecting. I love the fact that as we sit here and debate these foods, not only are we maybe getting a little hungry for some jolobie, but also they just offer businesses and investment opportunities for investors who are looking to diversify their portfolios away from the Kava, sweet greens or chipotle's of the world that tend to get a lot more. coverage from financial media. There are a lot of really interesting, fast-growing concepts here in the United States that are worth exploring as potential investment opportunities. And I hope today's podcast was at least somewhat enlightening as to what those opportunities may prevent investors over the course of the next few years. Listeners, you should be sure to join us tomorrow because

Travis is going to be discussing Open AI and the implications that its shopping initiatives has from everyone from Etsy to Amazon. In the meantime, Jason and some meat. Thank you both so much for joining me. As always, people in the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy yourself stocks based solely on what you hear. All personal finance content follows the Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Jason Hall, Samitayo and the entire Motley Full Money team, I'm Emily

Whippin. We'll see you tomorrow.