As a younger man 25 years ago, Mike Rafipoor was really into health and fitness. Nutrition was important to him, but nobody was cooking at home.
At the time, he was in the car wash business. “I thought, maybe I’ll open a small restaurant, develop the menu and they can cook for me. And if the customers like it too, they can eat it as well,” he said.
And that’s how Panini Kabob Grill was born.
That first restaurant in Orange County, Calif., was 1,300-square feet in a mall. It opened in 1998 with a chef Rafipoor had hired away from a Persian restaurant, and that meant a focus on kabobs.
“Everything that went on the menu, they did it for me the way I wanted it,” he said. “The purpose was to create a preservative-free-zone kitchen, to create all the proteins antibiotic-free, hormone-free, and to get any product available as organic as possible.”
He jokes that he was MAHA before Health and Human Services Secretary Robert F. Kennedy Jr. was trying to Make America Healthy Again.
The first year, sales went through the roof, Rafipoor said.
So much so, he decided to sell his car wash business. (Rafipoor initially also attempted a nightclub and sushi bar, but he quickly learned the liability risk was too big, and, he said, “I didn’t like the atmosphere.”)
Instead, he decided to grow Panini Kabob.
And he did, very slowly.
Rafipoor opened one unit every one or two years, targeting neighborhoods in and around Los Angeles. They were mostly self funded.
“What I figured out was [the restaurant industry] was different from the car wash business. No banks lend you money, because there is an 80-85% fatality [rate] for the restaurant business in the first three years,” he said. “So I had a buddy in the bank who told me, ‘Mike, until you get to a $20 million gross, banks don’t even look at you, let alone lend you money.’”
But he kept going, as he put it, “one kabob at a time.”
Now, Panini Kabob has grown to 26 units and Rafipoor is in a position to ramp up growth, he said.
The chain opened five restaurants last year, and this year expects to add another six or seven, all company-owned. In September, the first Panini outside California is scheduled to open in Las Vegas, for example, followed by units in Arizona.
Panini Kabob Grill in Del Mar, California. | Photo courtesy of Panini Kabob Grill.
It's casual dining with table service, but about 67% of sales come from off-premise, including takeout, delivery and catering.
Rafipoor said units average $6.3 million in sales, with some doing $12 million. Systemwide sales this year are expected to hit $168 million.
His goal now is to push to $400 million in systemwide sales, and then to take the chain public with an initial public offering, maybe by 2028 or 2029.
“I want the valuation to start from $1 billion and up,” he said. “I don’t want to go IPO and start in the millions. Millions is not good.”
Rafipoor said the chain tried franchising back in 2017, and five franchisees opened restaurants. But he didn’t feel the franchise operators were living up to his high standards, so he bought the units back—all but one, which is still franchise operated.
Rafipoor, for example, wanted operators to spend 55 to 60 hours on site at the restaurants, and to live within a five-mile radius.
“I realized the whole mentality of the franchisee is, really, a guy wants to have 30 of them, 50 of them, not paying attention to the brand,” he said. “And maybe it’s good for hamburger, pizza, taco restaurants. You can do that because it’s simple. But, for us … everything is from scratch.”
Rafipoor is adamant that food is made fresh daily in each unit. There are no freezers, and no central kitchen. Food is cooked to order.
Panini Kabob is has table service, but almost 70% of sales are off-premise. | Photo courtesy of Panini Kabob Grill.
And the menu has become increasingly complex, in part to remove the veto vote. What began with kabobs has grown to include paninis, wraps, pastas, soups and salads, and desserts. Some units also offer breakfast.
As it did in the 1990s when he first started, Rafipoor feels the healthful aspect of the Panini concept makes it stand out.
“I never understood why these [other] restaurants are wanting to kill their customers,” he said. “You should give the customer good food so they live longer, not give them some kind of preservative to kill them faster.”