SOUP NUTSY CHAIN WILL BE SOLD TO BOSTON CHICKEN DEVELOPER

ROSEANNE HARPER

NEWTON, Mass. -- George Naddaff, Boston Chicken's developer and former chairman, will acquire Soup Nutsy, a gourmet soup concept that has made a name for itself in New York and is currently being tested in a metropolitan area supermarket.

Nadaff's company, Food Trends Development here, and the owners of Soup Nutsy agreed in principle to the sale May 8. The transaction will be completed by the end of the month, Nadaff said. He declined to name the amount paid for the business, but said it is mostly a cash transaction.

The original owners of the single-unit Soup Nutsy will retain a minority share in a newly formed company, and will play major roles on the management team, Naddaff said. Soup Nutsy's well-recognized name, as well as product quality and profitability, was a factor attractive to Naddaff, he said.

The name, too, spurred Food Emporium, a division of A&P, Montvale, N.J., to launch Soup Nutsy's products at its recently opened prototype store in Fort Lee, N.J.

In addition to testing customers' acceptance of the high-end, fresh soups, Food Emporium expects the Soup Nutsy name itself -- displayed on colorful signs in two places in the store -- to enhance the restaurant-quality image the division is projecting in its prepared-food department, said Food Emporium officials.

Based on sales of Soup Nutsy soups in its coffee shop and from its refrigerated, fresh-food case, the 35-unit division may or may not roll out the products to other units. It's too early to make that decision, said Food Emporium officials. Naddaff, on the other hand, is looking to expand the number of Soup Nutsy freestanding stores rapidly.

"Our infusion of cash will be used to develop and grow the company. We expect to open 20 more Soup Nutsys in New York before the end of this year and we'll have 40 in the metropolitan area in the next 24 to 36 months," Naddaff said. After that, he will put Soup Nutsy operations via franchises into other parts of the United States.

"It won't play in the Sun Belt, but the Northeast would be good. So would other parts of the country that have a cool climate," Naddaff said.

For the reason that people in warm climates are not used to eating soup, Soup Nutsy will probably not become "the next Boston Chicken" because it won't have a presence nationwide, Naddaff said.

Although Naddaff bought the first, tiny Boston Chicken store here in Newton from its original owners in the late 80s, he is considered the founder of Golden, Colo.-based Boston Chicken, which now operates Boston Markets across the United States. It was he who developed the chain nationwide and thus lit the fire under "home-meal replacement." He subsequently sold the chain to a group of former executives of Blockbuster Entertainment, but remains a major stockholder in the company.

Meanwhile, Soup Nutsy, a takeout-only, fresh soup restaurant with just 400 square feet of selling space on East 46th in Manhattan, was launched by three entrepreneurs last summer. They aimed to capture the huge volume of lunch traffic that Manhattan office buildings generate and have done so, according to Naddaff.

He also stressed that the business' name recognition was a key element in making Soup Nutsy attractive to him and his business partner, David Scully, a former president of Heinz USA.

"We won't have to drive hard to get the brand known," he said.

Soup Nutsy became known to New Yorkers, and by now, to others outside the metro New York area over the past year, in a most unusual way. Fame came thanks to another New York City takeout soup concept -- Soup Kitchen International on West 55th Street -- and to NBC television's popular "Seinfeld" show.

The owner of Soup Kitchen International -- who is known for his brusque manner and his insistence that customers adhere to his strict rules on keeping lines moving and having their money ready when their soup is -- was the inspiration for a character, "The Soup Nazi," on a Seinfeld episode in the fall of 1995.

In what has turned out to be an ironic turn of events, Soup Nutsy's founders decided to launch their own takeoff on the Seinfeld takeoff. As a result, many consumers think the man ladeling out soup at Soup Nutsy is the man caricatured on Seinfeld.

But Soup Nutsy's founders did not set out to emulate Seinfeld's "Soup Nazi," according to Paq Melwani, one of the original owners. He and co-owners Kumar Hathiramani and Surinder Aggarwal just concentrate on producing a big variety of top quality, fresh, chef-made soups, he said.

The menu includes such specialties as New Orleans seafood gumbo, California sweet potato, spicy Tuscan bean and Budapest beef goulash as well as the more familiar such as Yankee chicken vegetable and cream of asparagus. Prices range from $6.50 for 8 ounces up to $17 for a 32-ounce container of some of the seafood varieties.

"Quality is the operative word," Naddaff said, pointing out that consumers have exhibited no price resistance "because people want quality and they'll pay for it." Naddar's favorite on the menu is lobster bisque, he said.

Since his Boston Chicken venture, Naddaff reportedly has been looking for "the next Boston Chicken," and has invested heavily in other restaurant companies which include Silver Diner Development, Rockville, Md.; Tony Maroni's Famous Gourmet Pizza, Seattle and Ranch I, a grilled chicken restaurant chain held by Franchise Concepts, New York.

Metro New York Soup Nutsy locations will be freestanding, possibly linked up with bagel shops or coffee shops, Naddaff said.

All soups will be made fresh each day as they are now and, at least for the present, production will be on the premises at each location. That's until he can locate a site for a central commissary, he said.

Asked if linkups with supermarkets are on the drawing board, Naddaff said it wouldn't be practical to install a whole Soup Nutsy operation inside a supermarket because the volume isn't concentrated enough within one time period. He said, however, that in chilled form the product could have application in supermarkets' fresh, prepared-foods departments.