Sept. 8 (Bloomberg BusinessWeek) -- Try as she might, Dorsa Parsi could not abide the scene at kid-oriented pizza chain Chuck E. Cheese’s. The Los Angeles mother thought it was too loud and grubby, and every time her daughter fell to the floor, the self-described “cleaning Nazi” shuddered. Then there was the lackluster pizza, the bête noir of health-conscious parents everywhere. What was a Generation X parent to do when hankering for a decent dinner out? Leave them at home with a sitter? Never.
On Valentine’s Day 2007, a date that has become pivotal to the professional narrative of Dorsa and her husband Joey, that question took on added import. The family got a table at a Houston’s steakhouse at Century City mall, near Beverly Hills. It was to be their first dinner out since the birth of their second child six months earlier. It did not go well. Their daughter Yasmine, then three years old, collided with a neighbor’s table, knocking over a glass of water. The middle-aged male victim glared at Joey. Mortified, the Parsis devoured dinner, fled the restaurant, and settled into the car for what would be a revelatory five-minute ride home. As they were driving, Dorsa turned to Joey and said, “I wish there was a restaurant with really good, healthy food for parents as well as kids and with an area where kids can run around and just be kids.” Or, as Joey put it, in classic Gen X fashion, “Shame on us for taking kids to a restaurant where we have to turn to our three-year-old and say, ‘Be something other than a child.’ ”
Thus was born the modern parent’s multigrain alternative to Chuck E. Cheese’s. They called it Giggles N’ Hugs, taking inspiration from an Australian children’s band, The Wiggles. With more than $700,000 in startup money, the vast majority of it his own, Joey created a 4,500-square-foot restaurant in February 2008 in the upscale Los Angeles neighborhood of Brentwood. Though it debuted at the height of the recession, Giggles flourished. In 2010, Parsi raised $2 million to add two restaurants. This year he relocated to a space three times as large in the Century City mall and began raising $12 million more to build the concept into a kid-friendly chain. By the end of September, Parsi says, the company will be publicly traded on the Nasdaq Bulletin Board under the symbol GIGL. Today the restaurant averages 3,500 patrons a month and sees $120,000 in monthly revenue, about half of it from birthday parties. “Jack Black had his party here for his son a few weeks ago and he paid thousands,” boasts Joey.
Australian shopping mall giant Westfield, which owns Century City, has latched onto the concept. The next location will be at a Westfield mall in Valencia, Calif., says Parsi. “We’re also negotiating on the Topanga mall, La Jolla mall, San Diego mall [all owned by Westfield], and eventually we will consider San Francisco, Seattle, Vancouver, and … the East Coast,” he says. By 2020, Parsi dreams of 150 restaurants nationwide, including franchises.
It’s a bold vision. How practical it is remains to be seen. And will they really stick with that name? The Parsis say yes. (“What do all children need?” Joey asks. “Giggles and hugs.”) Westfield spokeswoman Catharine C. Dickey declined to discuss ongoing lease negotiations, but she did extol the restaurant’s virtues for Westfield’s 124 shopping centers around the globe. “The malls are providing an environment for families to shop together, be entertained together, dine together,” she says. “And so the kids-and-family offer is very important.”
Parsi’s business model is rooted in two undeniable truths: First, toddlers can be notoriously unpleasant dinner companions. Second, today’s parents are willing to lavish vast sums on products for their children, like the $1,000 Stokke Xplory stroller, whose taller bassinet “optimizes eye contacts and bonding between parent and baby.” So surely they’ll pay a premium for ginger-glazed, wild-caught salmon ($15.95) while their children play on a wooden pirate ship that’s cleaned three times daily using a solution made from a white vinegar base. “The beautiful thing about having children is it really joins classes of people, socioeconomically and geographically,” says Dorsa. “You see people who make $25,000 annual salary with the same $1,000 stroller as the celebrity who makes $50 million a year.”
The Giggles N’ Hugs menu reads like something that Gwyneth Paltrow and Jessica Seinfeld might have cooked up during a supermom coffee klatch on New York’s Upper East Side. There are fish sticks made from fresh Tilapia fillets for $7.49. Chicken Littles chicken fingers ($6.95) are cooked in trans fat-free canola oil and for an extra $1.49 can be coated in flax seed meal. Mom’s Tricky Treat Sauce sneaks a puree of spinach inside the bolognese. There is an assortment of pizzas—available, of course, on a low-carb “whole wheat lavash” crust in addition to the ultra-thin, white-flour version. The adult menu includes wine and beer; parents chauffeuring their precious cargo, the Parsis note, rarely balk at the two-drink maximum.
If organic-when-possible, relatively healthy food is half of the Giggles N’ Hugs equation, the other half is the wholesome play. The Parsis have outfitted their Century City location with the pirate’s ship, a parent-propelled merry-go-round, and a custom-built princess’s castle. Every evening, Giggles features entertainment from puppet shows and face painting to disco. For $60, parents with children three years and up can drop off their little ones for a few hours of shopping. Adult aides are always on the scene, ready to break up scuffles and facilitate play.
Parsi never envisioned a future as a children’s entertainment impresario. The voluble 41-year-old was six when his family left Iran for what they thought was a vacation visiting family in Nevada. While there, the Shah was overthrown, the family’s assets were frozen, and they found themselves marooned in the States. After graduating high school, Parsi enrolled in Santa Monica College, but dropped out after a year to work in finance. Parsi went on to become an investment banker, marry, have kids, and undergo his Giggles N’ Hugs revelation.
Joey and Dorsa, who trained as a corporate lawyer before becoming a stay-at-home mom, now have big plans for Giggles N’ Hugs, and they don’t just involve restaurants. Like Gymboree, a play space that spawned a children’s apparel empire, the Giggles N’ Hugs brand could be attached to shirts, shoes, books, and video games, Joey Parsi says. The possibilities are endless. “We’re now branching out into a kids’ clothing line, into a kids’ frozen foods line,” says Parsi, whose wife is now pregnant with their third child. “Best-case scenario, this thing will become the next Chuck E. Cheese.”