Mendocino Farms

Upscale sandwich concept eyes growth 
in Los Angeles market

MARKET SEGMENT: fast-fine sandwiches
MENU: farm-to-table focus featuring local and seasonal ingredients
SYSTEMWIDE SALES: $6 million in 2010
METHOD OF GROWTH: internal cash
LEADERSHIP: Mario Del Pero, founder; Judy Han, corporate executive chef and partner; Ellen Chen, director of growth and partner

Mario Del Pero wants his Mendocino Farms concept in Los Angeles to be “that neighborhood sandwich place.”

But when one of the top-selling sandwiches is a caramelized Kurobuta pork belly banh mi with house-picked daikon and carrots, and chili aïoli, it’s clear Mendocino Farms isn’t a typical sandwich joint.

The concept that Del Pero created with fine-dining chef Judy Han and director of growth Ellen Chen as partners has carved out a more-gourmet niche within the growing sandwich segment.

Mendocino Farms has a farm-to-table philosophy of using local ingredients in season. Han, who describes herself as from the
Alice Waters school, said the concept isn’t competing with the $5 Footlongs of Subway. 

Instead, Mendocino Farms is stealing foodies that are trading down from higher-end full-service restaurants for a sandwich that evokes a fine-dining meal in a fast-casual setting.

“We’re creating healthful food for the masses,” said Han.

The first Mendocino Farms opened in 2005 in an 800-square-foot failed Starbucks site in a subterranean office complex. The original location, which is only open for weekday lunches, still attracts lines out the door and does about 500 covers each day, said Del Pero.

A second location, which also is only open for weekday lunches, opened not far away in downtown Los Angeles with a 2,400-square-foot footprint. 

Last year Del Pero opened the third location in the Los Angeles neighborhood of Marina del Rey, which he refers to as the chain’s first “suburban location.” That store is open seven days a week for both lunch and dinner.

In its first year the unit exceeded expectations, with sales north of $3 million in about 2,400 square feet, he said.

Now, Del Pero is cautiously ramping up growth. A fourth location is scheduled to open in October in the West Hollywood area of Los Angeles. The fifth, scheduled to open next spring, will be a slightly larger flagship location at 2,500 square feet, across from the city’s historic Farmers Market. A sixth location is planned for the end of 2012 in the Los Angeles suburb of Westlake Village. 

Del Pero said he would like to move outside Los Angeles in 2013, but he has not selected a target market.

So far, Mendocino Farms has been growing on its own cash flow, he said. Last year, New York investment firm GrowthPoint Restaurants committed $1.2 million to the chain’s development. GrowthPoint was founded by Così Restaurants founder Nick Marsh.

“Once we brought GrowthPoint in, it was no longer a money issue,” said Del Pero. “Now, it’s a people issue. It’s about finding great store managers.”

Mendocino Farms has a simplified scalable commissary format that makes it easy to grow while maintaining the integrity of a chef-driven menu, he said.

The chain recently hired a new commissary chef, Harold Mendoza, who comes from the macrobiotic M Café concept in Los Angeles.

Han said Mendoza brings a strong knowledge of vegetarian and vegan cuisine to the table, which will help bring non-meat-eaters and those who are eating meat less often to the chain.

The vegetarian and vegan audience is small, Del Pero said, “but it’s a very loyal one. And we see a lot of meat eaters eating vegetarian for health reasons.”

Still, Mendocino Farms won’t be moving away from upscale meats any time soon, especially in top-sellers like the steak BLT or sandwiches made with duck confit or braised lamb, he said.

“You can’t get that at your typical corner sandwich shop,” he noted.

The average check at Mendocino Farms is about $10.25, but Del Pero said the crew is trying to bring that down with economies of scale and menu tweaks.

The chain replaced its boutique bottled-soda line, for example, which tended to drive up the average check, with boutique fountain sodas, and the menu includes more sandwiches in the $7 range.

“What we’ve found is you’re fighting the stigma of being the $10 sandwich place,” said Del Pero. “We’re trying to stay within about $2 of Panera Bread, following on the ground they forged.

“We want the guest to have the sense that this upscale sandwich is very cheap at $10,” he added, “and that this is the hippest place around.” 

Contact Lisa Jennings at [email protected] [4].