Khazen

Franchise chain Semsom hopes to capture American diners with traditional Lebanese dishes.

In 1996, Christine Sfeir decided to introduce Dunkin’ Donuts to Beirut. It
wasn’t an easy sell. Not only had her home country of Lebanon been
through a civil war less than a decade earlier, but the foods she was
trying to push—doughnuts and American-style coffee—were alien concepts.
Fast-food franchises themselves were uncommon.

Now the 42-year-old Ms. Sfeir has what may be an even tougher
mission: to bring her own Mediterranean-food franchise to the U.S.
Preparing American palates for shawarma and authentic Mediterranean
hummus has meant huge investments in promotion and market research. “I’m
passionate about Lebanese cuisine, and I want to take it all over the
world,” says Ms. Sfeir. It has “been very challenging, but we are
determined to make it happen.”

Battling the odds

Ms.
Sfeir faces long odds. Not only is food franchising one of the riskiest
businesses in the U.S., foreign franchises rarely successfully penetrate
the U.S. market, says Benjamin Litalien, adjunct instructor and
program adviser of the Certificate in Franchise Management at Georgetown
University, who also works as a consultant to various franchises. Other
Lebanese chains have tried and failed to make a go of it in the U.S.,
according to the Lebanese Franchise Association.

Ms. Sfeir comes
from an entrepreneurial family and graduated with a degree in food
science from Montreal’s McGill University. She says she spent more time
at cafes than in the classroom, observing how the restaurant business
worked and dreaming of opening a place of her own. One restaurant in
particular caught her eye: Dunkin’ Donuts. She thought she could
replicate its North American success back home if she promoted it in the
right way. Lebanese like sweets, and she thought they would take to
doughnuts even if they hadn’t seen them before. The country is also open
to foreign concepts, she says.

Ms. Sfeir, just 22 at the time,
spent months at malls and universities and on the streets of Lebanon
handing out samples of doughnuts and hot drinks to get people used to
flavors and concepts that Americans take for granted.

She also
made a key design decision: making her restaurants hangouts for college
students. Many shops had closed during the civil war, and young people
had few fun places to meet, she says. So she created outlets that were
often more spacious and higher-toned than those in the U.S., with full
seating and couches—sometimes even valet parking.

Christine Sfeir (right) celebrates the launch of her New York eatery Semsom with sister Carine Assouad and investor Julien Khabbaz.

With each neighborhood they moved into, they adapted their design as a
way to fit in with the community and be a good neighbor, she says. For
example, she says, a restaurant in a university neighborhood will have
bright colors and communal tables; one in a residential area might have
areas for strollers. “I always say that our stores look like brothers,
not like twins,” Ms. Sfeir says.

Her idea took off. She now runs
29 Dunkin’ Donuts in Lebanon, with two more scheduled to open this year.
Her own franchise, Semsom, came later. The chain—whose name means
“sesame” in Arabic—spread across the region, with its ninth and 10th
outlets due to open soon. Plans to enter the U.S. crystallized in 2014
when Ms. Sfeir visited her sister, Carine Assouad, and they were
frustrated trying to find what they considered authentic Mediterranean
food in Manhattan. “When you taste hummus in the U.S., it doesn’t taste
good,” with restaurants using canned ingredients instead of fresh, Ms.
Sfeir says. “It’s a misrepresentation of how it’s supposed to be.”

She
secured financing from Beirut-based investment bank FFA Private
Bank—$4.4 million so far, with an additional $3 million due by the end
of this year. About $1 million went toward pre-opening expenses,
including research into the U.S. food-franchise market.

The biggest issues were presentation and service. In Semsom
restaurants in the Middle East, there’s table service with menus and
it’s not uncommon for customers to linger over a three-hour lunch. That
wouldn’t mesh with U.S. fast-food culture, so table service was scrapped
in favor of ordering from a counter. And because the food wasn’t
familiar, the company let customers choose their dishes from pictures
and displays of food. And it comes in bowls and wraps, as opposed to big
plates in the Middle East. “People want the healthy and the familiar,”
Ms. Sfeir says. “When we go to an ethnic store, we sometimes feel
anxiety if we don’t know what or how to order.…You really have to be
specific in the way you describe the food.”

The flavors also got
tweaked. The company held hummus-making competitions and quizzes and
discovered that U.S. consumers liked hotter spices than in the Middle
East. On the other hand, U.S. customers weren’t crazy about the heavy
use of lemon juice—which gets poured on almost everything in Lebanon,
Ms. Sfeir says—so the restaurant has cut back heavily on it.

The way forward

The
first store opened in New York last year, and two more are due to open
there this spring. Revenue from the first location is meeting
expectations at roughly $1.5 million, and Ms. Sfeir says they’re seeing a
lot of repeat customers—around 20% are now regulars. “There are people
who didn’t know what hummus and shawarma were, and now it’s their weekly
habits,” she says.

Ms. Assouad, who left her financial consulting job to run Semsom’s
U.S. operations, says they scouted more than 100 spots in Manhattan
before finding their first location in Greenwich Village. When they
finally settled on their spot, bureaucracy delayed their opening by five
months. All of this surprised them—they expected New York to be more
efficient than the Middle East.

“Every step of the way there were bad surprises. But we felt the perseverance in our bones,” says Ms. Assouad.

For
Ms. Sfeir, the support of her family and colleagues has been
invaluable. Her mother helps take care of her two daughters, 10 and 12,
while she’s traveling. Her husband tries to schedule his own business
trips to make sure he’s home with the children when she’s away. And the
former CEO of Dunkin’ Donuts, Jon Luther, now serves as an informal
adviser to Semsom.

As a Dunkin’ franchisee and businesswoman,
“she earned my respect for her courage,” he says. One of his key pieces
of advice now is to take time to tweak the concept before going into
different cities—one reason Ms. Sfeir is focusing on New York for the
time being.

The long-term plan is to open the chain up to
franchisees at the end of the year and have capital raises every few
years as needed for expansion. “Once we get to a critical mass, then
we’ll go out and get good franchise partners,” says Julien Khabbaz, head of corporate and investment banking at FFA, which has a 49% stake in Semsom in the U.S.

Not
only is Semsom fighting the odds, it’s fighting potential competitors
from back home. The Lebanese Franchise Association says other restaurant
chains expressed interest in expanding to the U.S. after Semsom made
its move. “There’s a lot of pressure to make it work,” Ms. Sfeir says.
“It’s a race.”

Ms. Anderson is a writer in Beirut. She can be reached at reports@wsj.com.