Mexican's Big Bang
Operators see unlimited growth potential as the cuisine’s popularity continues to soar
By Allison Perlik, Senior Editor -- Restaurants & Institutions, October 1, 2004
The market for Mexican-themed chains is not built on burritos alone, but the ubiquitous super-size staple is no doubt a foundation of the $10-billion-plus segment. Combined with a lineup of traditional favorites as well as creative complements, this menu mainstay helps shape one of the industry’s most competitive niches.
Bringing food to the forefront—often literally via open kitchens—is part of Mexican’s still-growing popularity. Playing up flavors and freshness is a key strategy for the category’s latest round of growth chains, from fast-casual brands such as Rockville, Md.-based California Tortilla to casual-dining concepts, including San Diego’s Rockin’ Baja Lobster.
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| Buckets of lobster, crab, shrimp, steak, chicken or calamari—all cooked “Baja-style”—are signatures at Rockin’ Baja Lobster. |
“We’ve all been to Mexican restaurants, but it hasn’t been at the same level,” says Bruce Willette, president and CEO of 12-unit Salsarita’s Fresh Cantina, based in Charlotte, N.C. Today’s preparation styles “bring an upgrade to product and to perception, and that allows the category to capitalize,” he says.
Adding to the potential is the absence of a dominant midscale brand. Despite a growing number of competitors, the field is wide open for players.
Keeping It Simple
Most young concepts in the Mexican segment fall into two menu categories. Both start with a foundation of traditional items, but one group sticks to standard proteins, fillings and toppings while the other expands into more-unusual and often global-themed flavors. A third, smaller segment branches beyond typical tacos and burritos and lends more modern, creative twists to the cuisine.
Chains such as category leaders Chipotle, Baja Fresh and Qdoba Mexican Grill (owned by McDonald’s Corp., Wendy’s International and Jack in the Box Inc., respectively) generally keep offerings simple. Chicken and beef highlight protein offerings, with pork and vegetarian options common as well.
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$9.5 billion 2004 sales garnered by Mexican concepts in R&I’s annual ranking of the Top 400 restaurant chains, accounting for 4.4% of total Top 400 sales. |
Fast-casual Salsarita’s is one concept that adheres to this formula, though shrimp joins the menu as a point of differentiation. For Willette, the philosophy is about not straying too far from a business model that stresses simplicity and efficiency for customers and franchisees.
Other brands, especially those with Western roots, maintain this simplicity but add regional flair. These chains—among them Denver-based Illegal Pete’s and Seattle’s Taco Del Mar—craft menus around California fare.
“I lived in California and when I came back to Seattle there weren’t [mission-style] burritos like in San Francisco or fish tacos like in San Diego. I said, ‘Let’s combine the two,’” says Taco Del Mar Co-founder and CEO James Schmidt.
Illegal Pete’s, a three-unit chain that targets college locales with vibrant downtown populations, offers its own Southwestern staple: green chili, available atop burritos or in bowls served with tortillas. To draw the area’s vegetarian population, Founder and President Pete Turner created the Primavera Burrito (zucchini, yellow squash, red bell peppers and green onion) and The Big Potato (fried sliced potatoes with rice, beans and vegetables with salsa, cheese and sour cream).
Burritos by Any Other Name
Peppers, onions, lettuce and tomatoes are regulars in most Mexican settings, but varied vegetable selections such as Turner’s are just a starting point for chains with global flavor profiles. At eight-unit East Coast chain California Tortilla, the blackened-chicken Caesar burrito ranks No. 1 among customers, with other favorites including Greek, honey-lime and Thai chicken options. Monthly specials feature tastes such as peach-salsa-and-chicken burritos, Cajun burritos with andouille sausage, and Chinese burritos with hot mustard and crunchy noodles.
“When we opened we only had one specialty burrito, and that was so hugely popular we realized people wanted more choices,” says Partner and Co-founder Pam Felix. “Traditional burritos do well, but specialty burritos outsell them by far.”
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| Taco Del Mar combines the Mexican cooking styles of Northern and Southern California. |
Offering more than 20 different burrito fillings including lamb, prawns and smoked tofu sets Concord, Calif.-based 360º Gourmet Burritos apart from competitors. Among the chain’s selections are Curry Chicken (with raisins, red onions, bell pepper, carrots and curry sauce with jasmine rice, salsa and romaine lettuce) and the Steak & Lobster (with red onion, bell peppers, lemon-garlic sauce, Spanish rice, black beans, salsa and romaine lettuce). Tortillas add to the choices, with spinach, tomato, whole-wheat, low-carb and low-fat options available.
Beyond-Border Menus
Taco Milagro partners Lonnie Schiller and Robert Del Grande approach fast-casual Mexican fare with a fine-dining background. Founders of the Houston-based Schiller Del Grande Restaurant Group, their portfolio includes upscale Southwestern spot Cafe Annie, fine-dining “cowboy cuisine” restaurant Rio Ranch and fast-casual chain Cafe Express.
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| Schiller Del Grande Restaurant Group brings its upscale experience to the fast-casual Taco Milagro concept. |
Although dishes such as fajitas, quesadillas and tamales make up the bulk of Taco Milagro’s sales at its flagship unit (funds have been raised to open nine more), the restaurant menus more unusual options to elevate the concept a step above expectations: pork barbacoa slow-smoked in banana leaves and hoja santa; and chiles rellenos stuffed with Chihuahua cheese, pecans and dried fruit.
“Unusual items are there for a certain draw. We’re careful not to get too refined,” Schiller says, noting that recipes must stay in line with the concept’s $9.50 check average, which is slightly above the category norm, and must be executable in kitchens without chefs.
While Taco Milagro adds polish to fresh-Mexican fast casual, San Diego-based casual-dining chain Rockin’ Baja Lobster is all about fun and relaxation. The concept puts dining in customers’ hands—literally—with its signature buckets. Filled with lobster, crab, shrimp, steak, chicken and calamari cooked “Baja-style” (the seafood is flash-fried and seasoned with Mexican spices; steak and chicken are marinated and grilled), the buckets account for more than half of sales at the six-unit concept.
Other menu items include an appetizer of tequila-and-lime prawns and the Burrito Del Mar, featuring shrimp, scallops, lobster and capers with a chipotle pepper-cream sauce in a cilantro tortilla. All orders come with Caesar salad, rice and beans, and fresh tortillas and salsa.
“We want you to leave full and happy, and probably take a doggie bag with you,” says Founder and President Rick DiRienzo.
| Chain, Headquarters | Units | Seats | Check Average | AUV | Growth Plans | |
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360º Gourmet Burritos, Concord, Calif. | 9 | 20-30 | $8.00 | $937,500 | 6 more in 2004; 25 in 2005 |
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California Tortilla, Rockville, Md. | 8 | 60-70 plus patio | $7.50 | $1.2 million | 4 more in 2004; 17 in 2005 |
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Rockin’ Baja Lobster,San Diego | 6 | 110-300 | $22.00 | $1.9 million | 1-2 more in 2004; plus 8 planned in 2005 |
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Salsarita’s Fresh Cantina, Charlotte, N.C. | 12 | 60-90 | $6.40 | $700,000 | 10 more in 2004; 35 in 2005 |
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Taco Del Mar, Seattle | 100 | 6-50 plus patio | $6.75 | $425,000 | 37 more in 2004; 130-160 in 2005 |
Where Are They Now?
R&I checked on three brands identified in the Aug. 15, 2003, issue as fresh Mexican up-and-comers to see how they’re measuring up.
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El Taco Tote: From 10 stores last summer, this El Paso, Texas-based fast-casual concept has grown to 13 units, with five more to open by the year’s end. A total 49 restaurants currently are under development.
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Freebirds World Burrito: Also hailing from Texas, this College Station-based chain will have 12 operations by the end of 2004, up from six last summer. President Alan Hixon says growth will continue at the same clip, with six more next year and at least that many more in 2006.
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Moe’s Southwest Grill: The leader of last summer’s pack with 57 stores, this Atlanta chain now has 150 locations. Through the end of the year, openings will average three to four per week.
Bottoms Up
Casual-dining chains are no strangers to booming beverage sales—they make up 25% to 30% at
Rockin’ Baja Lobster
—but for fast-casual concepts, alcohol more often is relegated to incremental sales status. Not so in the Mexican segment, where beer, margaritas and other tequila-based drinks make a perfect match to often-festive atmospheres and sometimes-spicy cuisine.
Salsarita’s offers franchisees the option of including a 12- to 15-seat margarita bar. Margaritas and tropical drinks are most popular, but a full bar is available. Beverages typically account for 8% to 12% of sales but can run as high as 18% on weekends.
Tequila bars offering 40 to 50 brands of the Mexican liquor set the scene apart at Taco Milagro , where margaritas and polomas (made with tequila, grapefruit-flavored soda, lime juice and salt) are customer favorites. New locations are expected to do 20% to 30% of sales in beverages.
Offering a full bar sets Illegal Pete’s apart from a plethora of Mexican competitors in Colorado, but it also encourages diners to linger and introduces new customers to the brand, says Founder Pete Turner. Beverages account for 35% of sales, a figure likely boosted by the chain’s late-night hours: Stores are open until 1:30 a.m. or 2:30 a.m. every night.
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