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Growth Chains: Cafe Rio Mexican Grill

Growth Chains: Cafe Rio Mexican Grill

Fresh cooking, veteran executives help drive 
fast-casual chain’s success

Real cooking is what separates Cafe Rio Mexican Grill from its competition, according to company officials.

Limes are squeezed daily at each restaurant in the 39-unit chain. Cheese is grated fresh. Tortillas are made from scratch throughout the day and served hot off the griddle. And salsas, salad dressings and guacamole are all made in-house.

“People see us in a working kitchen, and there’s an energy,” said Ben Craner, the chief marketing officer of the Salt Lake City-based chain. “It’s not, ‘Cut open a bag and heat.’ It’s food made by cooks.”

That simple point of differentiation in the crowded world of Mexican concepts also makes for more complex operations for a fast-casual concept. But Cafe Rio has an experienced team and said it has carefully crafted the systems necessary to accelerate growth. Officials plan to add another 12 units in 2011.

The Cafe Rio concept was founded in 1997 in St. George, Utah, by Steve Stanley, a chef who designed a menu inspired by the cuisine of the Rio Grande region of northern Mexico, southern Texas and New Mexico.

Stanley grew the chain to six units before selling it in 2004 to quick-service veteran Bob Nilsen, who the same year had resigned as president of Burger King for unspecified reasons. Nilsen also had a long history with Yum! Brands Inc., serving as chief operating officer of Taco Bell and working with sister brands KFC and Pizza Hut.

Nilsen, who is chief executive of Cafe Rio Mexican Grill Inc., was joined in the acquisition by private-equity partners then known as SKM/Apax Partners. The firm is now KarpReilly LLC.

The new owners built a management team of former Yum executives, appointing Bob Baker, a veteran of KFC, as Cafe Rio’s chief financial officer, and Dave Gagnon, formerly of both Taco Bell and Burger King, as chief operations officer.

Baker said the group took the concept and, well, pretty much kept it as is.

“We saw it at the time as one of the most well-put-together concepts in the restaurant space,” Baker said. “We didn’t change a thing.”

What the new ownership group brought to the table, however, was the ability to grow Cafe Rio without losing its original appeal, Baker said. 

“We had the ability to put systems in to scale the growth,” he said. “We put a lot of ground work in and then started to accelerate.”

Currently, Cafe Rio is operating in six states: Utah, Nevada, Idaho, California, Colorado and Arizona. In April the company is scheduled to open unit No. 40 in Olney, Md., in the Washington, D.C., area. It will be the first of three restaurants the company plans to open in that region this year, while continuing to fill in existing western states, Baker said.

Cafe Rio officials plan to open 15 to 18 units per year going forward — all corporate owned. 

Cafe Rio units are typically between 2,800 and 3,500 square feet with about 100 seats. Baker said the average unit volume is about $2.6 million with an average check of about $8 per person.

Cafe Rio patrons customize their orders with the option of four proteins: beef, pork, chicken or salmon. The best-selling category on Cafe Rio’s menu is salads, accounting for about 36 percent of sales. The top seller is the salad served in a flour or whole-wheat tortilla with the concept’s signature sweet pork barbacoa with black beans and a creamy tomatillo dressing, said Baker. 

Burritos make up another 30 percent of sales. Takeout accounts for about 18 percent of sales, of which about 2 percent comes from a nearly two-year-old catering program.

Baker said the company “does not believe in discounting,” and instead builds traffic with a program that offers frequent guests a chance to buy 10 meals and get the 11th free — an event typically marked by boisterous shouts of “free meal” by the kitchen staff.

The result has been the development of a loyal following, with guests happy to share their positive experiences on Cafe Rio’s Facebook page.

“Word of mouth is by far our biggest asset right now,” Craner said. “It’s almost like people feel they’re in on a secret, and they want to spread the word.”

Cafe Rio 
Mexican Grill

OWNERS: Bob Nilsen and KarpReilly LLC


MARKET SEGMENT: fast-casual Mexican



VOLUME: $2.6 million

METHOD OF GROWTH: company owned and funded


COMPETITORS: Baja Fresh Mexican Grill, Chipotle Mexican Grill, La Salsa Fresh Mexican Grill

TARGET MARKETS: the Washington, D.C., area and western states

Contact Lisa Jennings at [email protected].

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