After setting the groundwork in 2010, Real Mex Restaurants officials said the 87-unit Chevys Fresh Mex brand will see an overhaul this year with remodeled stores, a new marketing approach and more healthful menu offerings.
Cypress, Calif.-based Real Mex is the parent of Chevys, as well as the El Torito and Acapulco casual-dining chains. The company acquired the then-100-plus-unit Chevys chain out of bankruptcy in 2005 for $78 million.
With the core of its units in economically challenged California, however, Real Mex has struggled with slipping sales across all its brands, including the casual-dining Chevys.
In taking a hard look at Chevys, Lowell Petrie, Real Mex’s chief marketing officer, said the company conducted research in 2010 asking customers about their demographics and what draws them to the concept.
Results of that research are now being turned into an action plan, he said.
On Tuesday, the company said it hired San Francisco-based branding agency Cakewalk Creative, which Petrie said has been tasked with developing a new, more contemporary design for the restaurants, which are based on a lively “border town cantina” theme.
A unit in the San Francisco Bay Area — where Chevys has the strongest brand recognition — will be selected to be reworked as a “next generation” prototype, with new signage, décor package and color scheme likely.
“Chevys is a border cantina with loud signs and lights and neon,” Petrie said. “We don’t want to lose that energy and fun, but we want to make it more contemporary.”
In addition, Real Mex has hired San Francisco-area based Hub Strategy & Communications and public relations firm Duke Marketing LLC to develop a new branding and advertising strategy, which Petrie said would emphasize online and e-mail marketing.
In its third quarter ended Sept. 10, Real Mex reported a narrowed loss of $6.3 million, compared with a loss of $13.4 million in the year-ago third quarter. Revenues declined 4.5 percent to $118.6 million, in part reflecting the closure of seven stores during the quarter, most of them El Torito restaurants outside California.
Same-store sales overall were down 2.4 percent, though average checks were up slightly for the quarter. The company blamed the slow sales on the fact that 151 of Real Mex’s 179 restaurants are in California, where unemployment remains high.
Real Mex does not report sales trends by brand, but Chevys is the company’s largest chain with 64 corporate and 23 franchise locations in 15 states. Real Mex also operates 67 El Torito locations, 30 Acapulco Mexican Restaurants, eight El Torito Grills, two Sinigual Restaurants and the smaller regional concepts Who-Song and Larry’s, Casa Gallardo, and El Paso Cantina, as well as one-off Las Brisas Restaurant in Laguna Beach, Calif.
In June, majority ownership of Real Mex was reclaimed by its previous owner, private-equity firm Sun Capital Partners Inc.
In recent months, Richard Rivera, Real Mex chief executive, has been shifting the company’s brands away from its traditional use of coupons and discounting, instead focusing on promotional events such as happy hours, brunch and three-course meal deals.
Chevys, for example, next week will launch a three-course dinner offer for $11.99 including the choice of soup or salad, a main course from the option of four entrees, and a selection from among two desserts with “nothing shared,” Petrie said.
Over the past year, Chevys has been reworking its menu with the goal of raising the nutritional profile. Petrie said sodium levels, for example, have been reduced between 30 percent to 50 percent in some dishes, and recipes have been revised to lower fat and cholesterol content.
Three locations are testing a smaller menu with upgrades of certain proteins, such as the use of a more premium skirt steak for fajitas.
“We’re going back to our roots with our focus on fresh foods,” said Petrie, noting that Chevys was founded in 1986 as a Mexican concept based on fresh ingredients.
Tortillas and chips are all made in house daily, for example, and Petrie said the chain has changed certain systems to “make that more visible and obvious.” The chain now limits the number of chips that can be made in advance, with batches made hourly to ensure they are fresh and hot.
In April, Chevys began offering a new signature margarita called a Cabo Wabo Rock ‘N Rita, using the Cabo Wabo Blanco Tequila brand of musician Sammy Hagar. The margaritas are made with fresh juices, and mixed and shaken tableside with a selection of salt-rim flavors, such as watermelon, pineapple or lime. “We’ve sold about 100,000 Rock ‘N Ritas since April,” Petrie said.
Similar to El Torito in its demographic focus, Chevys tends to attract a somewhat younger crowd and lots of families with children, he said.
In addition to further menu enhancements, the overhaul will also likely include new staff uniforms, a new menu design and other changes.
Contact Lisa Jennings at [email protected].