UPDATE: CLICK HERE TO READ THE 2022 MULTI-UNIT REPORT
By Ed Avis
Welcome to the 2015 el Restaurante Mexican Multi-Unit Report, our second annual examination of Mexican multi-unit operators. For this special report we analyzed phone-verified data from restaurantdata.com about the 487 largest multi-unit Mexican restaurant operators (click here to see the chart about the 50 largest chains). We also searched news archives for trends about the largest of these chains, and discussed one of the trends – rebranding – with two experts.
What did we discover? Mexican chains had a pretty good year in 2014. Among those that make financial data available, sales were strong, owing to a recovering U.S. economy and a continued craving for fresh, ethnic fare.
However, perhaps the biggest trend we found this year is rebranding. Several multi-unit operators refreshed their images this past year.
“A healthy brand image is the most important factor in long-term success,” says Sara Monnette, senior director of consumer insights and innovation for foodservice research and consulting firm Technomic. “Brands that stay true to their identity and are viewed as authentic, trustworthy, and delivering on a consistent experience will be able to spend more time engaging with their customers at a deeper level and building that brand loyalty.”
Refreshed Image
Among the 11 largest chains on the el Restaurante list, at least four reported some level of rebranding in 2014 -- Taco John’s, Taco Time, and Baja Fresh Mexican Grill, and Rubio’s Mexican Grill.
Taco John’s, based in Cheyenne, Wyoming, launched a new tagline, advertising campaign, and website urging customers to “Unwrap the Original.”
“We found that for many guests, Taco John’s means nostalgia – it’s the Mexican quick serve place they grew up with. But in new markets, guests don’t have that type of history,” says Jeff Linville, the restaurant’s CEO.
The company surveyed 1,200 customers nationwide and hosted focus groups in existing markets as well as potential new ones. They discovered the brand should draw customer attention to unique menu items that differentiate the chain, such as its Potato Olés and Mexican-inspired wings.
“This insight led to ‘Unwrap the Original,’ our new brand position. ‘Unwrap the Original’ celebrates originality both within the brand and our guests,” says Billie Jo Waara, chief marketing officer for Taco John’s.
Taco John’s updated its packaging, point-of-purchase materials, digital marketing, social media, and TV ads. “Unwrap the Original” will also be seen as the chain rolls out refreshed uniforms and brand standards, a new restaurant design and new menu items in 2015.
Taco Time, based in Scottsdale, Arizona, also updated its image in 2014. According to a company press release, more than 30 percent of the brand’s stores were to be updated with a new color scheme using warm and bold colors. Packaging was also updated.
"Over the course of the year, customers will notice a new interior and exterior design scheme with vibrant colors that make for a happy dining experience," Director of Marketing Chanel McFarlane said in a press release.
Baja Fresh Mexican Grill, headquartered in Irvine, California, reworked many of its recipes to emphasize the fresh flavors and developed a new restaurant design. They also developed new employee uniforms, marketing materials, and a guest ordering process. On a bigger scale, the company is working to grow its nontraditional Baja Fresh Express formats, which target college campuses and airports. The chain currently includes about 22 of the limited-menu Baja Fresh Express locations.
“We’re very excited about the nontraditional opportunity and working with successful players to build out the brand,” said CEO Chuck Rink.
Rubio’s rebranding includes a new name – Rubio’s Coastal Grill – and an ocean-themed décor. (See page 4 for more information on Rubio’s rebranding.)
The drive among these restaurants to refresh their looks is not surprising. In February Technomic released the Family & Casual Dining Consumer Trend Report, which notes that staying fresh is important to competitiveness.
“Consumers’ perception of the menu and overall dining experience are strongly influenced by décor and atmosphere,” the report reads.
(For tips on how you can rebrand your restaurant, see the tips from Linda Duke, a specialist in multi-unit restaurant marketing, click here.)
Fresh Remains Strong
Mexican multi-units that emphasize fresh, healthy food have been growing strongly in the past few years, and that trend continued in 2014.
The Technomic report showed that fresh and ethnic fare – quality Mexican food meets both of those criteria – will continue to bring more customers in the door. “Premium menu items and ingredients can not only satisfy the current customer base, but can also drive traffic,” the report read. “Revamped menus will address these elevated consumer expectations with more fresh and ethnically inspired fare.”
A leader in that area is Chipotle Mexican Grill, which added 192 locations in 2014.
"We continue to make significant progress on our important journey to change the way people think about and eat fast food," said Steve Ells, chairman and co-CEO of Chipotle, in a company press release. "Consumer trends are changing, which we believe is a great result of people becoming more discerning about where their food comes from, how it was raised, and how their meal was prepared.”
Chipotle is far from alone. Among the ten largest multi-unit Mexican operators, five heavily promote their fresh, healthy ingredients – Chipotle, Moe’s Southwest Grill, Rubio’s Fresh Mexican Grill, Qdoba Mexican Grill, and Baja Fresh Mexican Grill.
Consider how Moe’s describes itself: “Moe’s Southwest Grill is a fast-casual restaurant franchise featuring fresh, handmade, customizable southwestern food in a welcoming environment that rocks. Moe’s is committed to serving only the highest quality ingredients 100% of the time at our more than 580 locations in the U.S and abroad. While Moe’s is best known for its burritos packed with a choice of more than 20 fresh, flavorful ingredients, the menu also features kid’s, vegetarian and low-calorie options, all served with free chips and salsa.”
Clearly Mexican restaurants with the words “Grill” or “Fresh” in their names are working to satisfy health-conscious customers, but even brands that don’t emphasize healthy fare have tried to make customers feel better about eating in their restaurants. Del Taco, for example, recently introduced tacos made with turkey meat and three “Fresca Bowls” with less than 530 calories; and Taco Mayo promotes a number of relatively low calorie items on its menu, such as the Insalada Little Big Bowl with 271 calories and the Tamale Combo Little Big Bowl with 475 calories.
Growth Areas: Breakfast and Alcohol
Breakfast and alcohol service – not necessarily at the same time! – are two potential areas of growth in the coming year, according to the Technomic study.
“In a take-share market, breakfast, one of the few growth areas in foodservice, is crucial,” the study says.
The data for this year’s Multi-Unit Report found that only 7 of the 50 largest multi-unit operators serve breakfast, so there’s plenty of opportunity there. Taco Bell, by far the largest Mexican restaurant chain, launched its breakfast service in 2014. The company’s fourth quarter 2014 report to stock holders revealed a 7 percent increase in same store sales over the fourth quarter of 2013, an increase the report attributes to breakfast.
“At Taco Bell, the 2014 launch of breakfast and mobile ordering, combined with even more breakthrough innovation in 2015, gives us confidence as we enter the new year,” said Greg Creed, CEO of Yum Brands, which owns Taco Bell, in the report.
Many more restaurants in the top 50 already serve alcohol – 68 percent serve at least beer, and 30 percent have a full bar. But the Technomic report suggests that innovative alcohol offerings could increase profit.
“Expect more full-service restaurants to utilize beverage programs as a relatively low-risk way to signal quality and innovation. Family-style restaurants will introduce more adult beverages, while casual-dining concepts will upscale their current offerings,” the report reads.
Conclusion
Multi-unit Mexican restaurants continued their growth in 2014, and added to the public’s perception that Mexican food can indeed be healthy. Stay tuned for those trends to continue for the foreseeable future.