Salsarita's moves past survival to growth

The fast-casual chain is seeing success with recent modernization efforts, including culinary changes

Since acquiring 80-unit fast-casual chain Salsarita’s [3] nearly one year ago, Phil Friedman has been refining the underlying systems the Mexican brand needs to meet its growth goals, and those changes have yielded near-term sales growth.

Friedman, who most recently had been chief executive of McAlister’s Deli, is chief executive of Mississippi Restaurant Group, which closed on the purchase of Charlotte, N.C.-based Salsarita’s last June 16. He sensed a growth opportunity in the Salsarita’s brand and thought its franchisees could expand if they had a plan for modernizing the concept.

“Salsarita’s had been focused on survival mode … and I saw people who needed a lot of help on fundamentals,” Friedman said. “When I left McAlister’s, I was seeking out small chains that were still led by their founders but needed support systems. Salsarita’s had grown with smaller franchisees, but it didn’t have the concept evolution it needed.”

As the brand has shored up operations and tried to evolve the menu, sales have started to turn around, Friedman disclosed. Through the first four months of 2012, same-store sales were up 8.7 percent. At the flagship Salsarita’s in Charlotte, one of two locations he bought from the chain’s founder to serve as company-owned stores, sales were up 30 percent.

“It’s all about traffic — getting frequency, which leads to good word-of-mouth,” he said. “Our first goal is to really increase frequency, and we’re seeing that. We haven’t had price increases, so it’s been all traffic [gains].”

Those gains in guest counts have resulted from the systems Friedman and chief operating officer Larry Reinstein have refined around franchisor-franchisee relations, operations and food preparation, Friedman said. Salsarita’s also has hired a new executive chef and director of training and is close to adding a director of franchise sales, he said.

The brand formed a franchisee advisory council and adopted new tools to communicate more often with franchisees. Culinary processes were also tweaked, such as preparing the chain’s chicken in the three small batches throughout the day to ensure freshness, rather than having one batch made in the morning and held in heating cabinets.

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In April, Salsarita’s launched its first new product under new management, the CasaRito. An update on the chain’s “wet burrito,” the CasaRito is a “knife and fork” burrito covered in one of three sauce options. The Quesarito variety covers a burrito with a creamy cheese sauce, the Rancharito with a ranchero sauce and the Tomarito with a spicy tomatillo salsa. Friedman said the CasaRito now accounts for 20 percent of all burrito sales.

“We took the ‘wet burrito’ and changed the recipe and the plating and presentation, and we could brand it differently as the CasaRito,” he said. “It already played to our skills, but it’s different and certainly something we can build on.”

Sales growth will have to come in a competitive sector. The fast-casual Mexican segment is crowded with large-scale chains like Chipotle and Qdoba, Friedman said, but fortunately for Salsarita’s, the sector does not have the price wars seen in quick service or pizza.

“It’s about the restaurant concepts being better, rather than undercutting somebody else,” he said. “You can try to differentiate with different taste profiles, service touches and limited-time offers.”

To that effect, Salsarita’s opportunity to separate itself from Chipotle and others is in its menu development, Friedman said.

“I see us fitting into a role where we’re still using the same delivery system, but we provide a little more variety and choice and continue building interest in our menu with new-product evolution,” he said. “We’re looking at new ways to deliver quesadillas, two sizes of our burritos, and new equipment for our Mexican pizzas to do specialty pizzas quicker and better.”

The chain also will experiment with staffing and scheduling to put more people on the restaurant floor to pay more attention to guests, refill orders of chips or drinks, and bus tables.

Another “extra little touch” has been the systemwide implementation of digital menu boards, Friedman said. They are very graphic-intensive so that Salsarita’s can communicate their turnover of new products and limited-time offers. Friedman added that franchisees are embracing the digital menu boards even though they must take on the expense themselves.

Salsarita’s also is rolling out the Coca-Cola Freestyle fountain to more locations and is exploring ways to pair soft drinks with food and market those combinations.

Having achieved traction in same-store sales, Salsarita’s is now targeting franchise groups with multiunit experience to grow in the Southeast, Mid-Atlantic and Midwest, Friedman said. The ultimate goal is to reach 400 franchised restaurants in five to six years. The brand has units in about 16 college campus restaurants and two high-volume airports and is exploring further growth in on-site locations.

Salsarita’s currently operates in 19 states.

Contact Mark Brandau at [email protected] [5].
Follow him on Twitter: @Mark_from_NRN [6]