VertsKebap: The $36 Million VC-Backed Mediterranean Street Food Startup

VertsKabap Founders Michael Heyne (left) and Dominik Stein (right). Courtesy photo

Dominik Stein, 28, exemplifies German pragmatism. He’s a numbers guy who carefully weighs risk versus reward. His early career followed the predicable MBA formula that tends to equal employment and financial success: He earned an undergraduate degree in business at Germany’s WHU – Otto Beisheim School of Management, interned at Lehman Brothers and Bain & Company, and set his sights on an MBA. Then, he did something a little crazy.

He decided to open a fast-casual food chain proffering Turkish street food in Texas. From a numbers standpoint, it didn’t make much sense. The restaurant industry is ruthless. It requires a hefty up-front investment and returns notoriously slim profit margins. Few MBA professors worth their salt would advise students to pursue a restaurant startup.

But Stein and his WHU classmate, Michael Heyne, 31, sensed a nascent market for fast-causal Mediterranean food in the U.S. The two Germans met as undergraduates in 2006 and spent a semester abroad at Southern Methodist University in Dallas, Texas. They missed döner kebaps, flatbread filled with sliced rotisserie meat and topped with salad and sauce. Introduced to Berlin by Turkish immigrants, kebaps quickly became the city’s de facto street food; their popularity spread across the rest of the country too. Stein and Heyne believed the snack could do just as well across the Atlantic.

However, they wouldn’t offer any old kepap. Theirs would feature fresh vegetables, locally sourced ingredients, and low-calorie options. It would be more “high-end pita” than greasy post-night-out filler, Stein says. The result? VertsKebap, a fast-casual Mediterranean restaurant that opened in 2011. The chain now boasts 26 locations in Texas and has plans to expand to the East Coast this year. They’ve raised a whopping $36 million in investment and expect to have at least 45 restaurants in operation by the end of 2016.

A NEW BUSINESS AND A WORLD RECORD

When the two founders enrolled in a dual-degree MBA program through WHU – Otto Beisheim School of Management and The University of Texas’ McCombs School of Business in 2009, they’d already planned to start a business. “We leveraged the time in university to really explore the market, and we used the resources at the university to dig deeper into different subjects like finance, accounting, marketing, etc.,” Stein says. “While we were studying, we were already planning and researching our startup.”

He ticks off the names of professors who proved instrumental to their business: Leigh McAlister in marketing, Michael Hasler in operations management, James Nolen in small business finance, and James Fredrickson in leadership. Fredrickson is also one the chain’s most loyal customers, Stein says.

Two days after graduating in 2011, the MBAs opened VertsKebap’s first two locations near the The University of Texas’ Austin campus. Stein became CFO, and Heyne took the helm as CEO. They even operated a mobile version of the restaurant from a Smart car, setting a record for the world’s smallest food truck in the process.