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Thanh Lam sees the recession as the right opportunity to expand his Ba-Le Sandwiches & Bakery business.

Lam recently launched a bakery brand that he hopes to expand into a concept for a new restaurant. He’s also beefing up Ba-Le’s wholesale customer base to include more hotels, restaurants and stores. And earlier this month, he bought the cavernous old Weyerhaeuser box plant on Nimitz Highway for $20 million.

He plans to move Ba-Le’s main bakery and offices into the space and to rent the rest to other restaurants.

“I want to make it sort of like Restaurant Row,” he said.

That’s pretty ambitious talk in the shadow of a recession, especially in the turbulent restaurant business. Ba-Le hasn’t been immune; the company recently cut the hours of its 80 full-time bakery workers.

To Lam, that just means he has to find more business to keep his employees busy.

“People have told me that a bad economy is a good time to make money,” said Lam, 51, whose privately owned company generated $11 million in revenue last year.

Earlier this year, the company created the LaTour Bakehouse name to focus on healthier and more upscale bakery items, such as multi-grain breads, granola, sugar-free cookies and biscotti-like crisps. It’s a significant shift from Ba-Le’s cheaper noodles-and-wraps fare.

“People of Hawaii think of Ba-Le as just sandwiches,” he said.

Ba-Le has two branches: its chain of 21 franchised Vietnamese-style restaurants, and its wholesale business, which sells bakery items and pre-made sandwiches to restaurants, hotels and stores. The European name stems from the company’s use of French breads and croissants for its sandwiches.

Ba-Le’s biggest customers include Papa John’s Hawaii — Ba-Le supplies all the pizza dough for the chain’s 14 stores — and Hawaiian Airlines, which buys up to 2,500 sandwiches a day for in-flight meals.

The company started selling some of the LaTour Bakehouse products online and to wholesale customers, including Whole Foods Market in Kahala Mall.

Lam wants to open three or four shops on Oahu to carry the LaTour items and sell made-to-order foods including salads and soups.

He also sees the new concept as an opportunity to create a more traditional franchise chain apart from the Ba-Le restaurants.

Despite the company’s success over the past 24 years, Lam admits Ba-Le has struggled with inconsistent food and service at its restaurants. There are no set standards or menus and maintaining quality has been an issue.

“When I started opening more and more Ba-Le restaurants, I didn’t plan to franchise,” he said. “I was opening them for my family, friends and employees, and it just happened. I feel a little bit unhappy when I hear from customers that one restaurant is not as good as another.”

He said the company recently closed a Kapolei store because of inconsistent quality.

Ba-Le now has 16 stores on Oahu, four on Maui, and one in Kona on the Big Island. Lam operates the Ba-Le shop on the University of Hawaii campus in Manoa, while the rest of the stores are franchises owned mostly by relatives and former employees.

Rather than try to reinvent the Ba-Le restaurant, Lam said it makes more sense for him to start over with LaTour Bakehouse. He wants to create a standardized product line and store appearance for the new brand.

“From the first location, it will have to be standardized,” he said. “They all have to be the same, follow rules and sell the same things. I want LaTour to be a more traditional franchise.”

Lam plans to focus on the Japan and Mainland markets for franchise opportunities for LaTour Bakehouse.

Though the business is moving forward with expansion plans, the company is taking a hit from the recession. Lam said business is off about 5 percent this year and it troubled him that he had to cut hours for the workers who staff the main bakery on Kamehameha Highway, near Middle Street in Honolulu.

“I’m trying to get new customers for my employees,” he said. “It’s my job to create work for them because I like to keep my workers full-time.”

To that end, Lam is promoting about 25 of the company’s products as part of a month-long “road show” demonstration in the four Costco stores on Oahu.

The company is selling samples of its chantilly and dobash cakes, different breads and granolas, and even one-pound bags of the popular pickled vegetables used in its Vietnamese-style sandwiches.

“I’m going to review what sells and get maybe 10 products into Costco,” he said.

Lam recently sold the two-story, 17,000-square-foot Kamehameha Highway location, which he bought in 1994, and has filed permits to build a new bakery in the 50-year-old Weyerhaeuser space, which was a cardboard box plant before closing last year.

He holds a 51 percent ownership stake in the building, which was purchased for $20 million with four other partners that include Honolulu-based Island Flooring Co. and one of Lam’s six brothers. Lam declined to name the other partners, saying they wanted to keep a low profile.

He said the partners are in the process of getting the 3.9 acres of fee-simple, industrial, mixed-use land rezoned so that it can be divided into sites sold as condominium property that will share common areas.

In his share of the 165,000-square-foot building, in addition to the bakery and company offices, Lam plans to rent out five to seven restaurant spaces.

He said a Papa John’s and a LaTour Bakehouse shop will occupy two of the restaurant spaces, and Boulevard Saimin will relocate from its current restaurant site at 1425 Dillingham Blvd.

Lam said he took out a bank loan for the purchase, but declined to say how much the build-out will cost. He already has installed new air-conditioning, plumbing and electrical systems, and new equipment including a commercial oven and freezer.

Ba-Le plans to move into the new building by November, a month shy of the company’s 25th year in business.

Jun 21, 2009, 6:00pm HST: View Article Online: Click Here