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Dollarhyde, investors buy Baja Fresh burrito concept

Dollarhyde, investors buy Baja Fresh burrito concept

Mark Hamstra

WESTLAKE VILLAGE, Calif. — A pair of veteran restaurant operators and a venture-capital firm specializing in emerging restaurant concepts have led the acquisition of one of the country’s fastest-growing burrito chains.

Greg Dollarhyde and Pete Siracusa, both formerly of the Rusty Pelican casual-dining chain, teamed up with Greenwich, Conn.-based Catterton Partners to secure a majority position in Fresh Enterprises Inc., parent of the 48-unit Baja Fresh concept, based here.

The terms of the investment, which is being treated as a recapitalization, were not disclosed.

Dollarhyde, who also spent part of his career at Pizza Hut, and was vice chairman of Kenny Rogers Roasters before his most recent stint as president and chief executive of Country Harvest Buffet, will serve as president and chief executive of Fresh Enterprises, while Siracusa, who founded Rusty Pelican and now lives and works in Hawaii, will be chairman.

Dollarhyde said the chain’s new owners are in no hurry to roll out the concept aggressively.

“We’re still cementing out absolute growth numbers,” he said, noting that he would like to see expansion divided about evenly between franchised and company-owned restaurants. “First we’ve got to make sure we’re growing with the right systems in place. As the saying goes, we have to slow down before we speed up.”

Catterton Partners specializes in restaurant acquisitions and owns a controlling interest in the Wolfgang Puck Food Co., Los Angeles, in addition to investments in the La Madeline French Bakery & Cafe, Dallas, and in P.F. Chang’s China Bistro, Phoenix, the latter of which had an initial public offering just days after the Baja Fresh acquisition was announced.

“They are wonderful partners to have, because they really understand the restaurant business,” Dollarhyde said. “What they want is for us to build the brand steadily.

“We bring the capital Baja has needed,” he added. “We’ll bring an infrastructure and a franchising base to the company.”

He said that an initial public offering for Fresh Enterprises is not likely any time soon.

Minneapolis-based Oak Investment Partners and New York-based Grumman Hill Group also participated in the acquisition.

Jim Magglos, 43, the founder of Baja Fresh, has retained a “significant minority interest” and a seat on the board of directors but stepped aside from day-to-day operations. The former owner of an automobile window-tinting business, he had no restaurant experience when he opened his first Baja Fresh in Newbury Park, Calif, in 1990.

“I just love Mexican food, and I always wanted to be in the restaurant business,” he said.

He gradually expanded the chain, one of several taqueria-style “salsa-bar” concepts to emerge in Southern California within the past decade, before he launched a franchising program in 1993. The chain now has 12 company-owned restaurants and 36 franchised outlets, located throughout Southern California and in the Phoenix, Las Vegas and Denver markets. Two franchised locations opened earlier this year in Fairfax, Va., and Rockville, Md., marking the chain’s first expansion to the East Coast. The chain also has a few outlets in Northern California, where Dollarhyde said he hopes to strengthen its presence.

Another five company-owned units are under construction and will be open by the first quarter of 1999, Magglos said. The concept offers relatively sophisticated Mexican fare in a counter-service format, with prices ranging from $1.55 for tacos to $6.95 for the oversized “Burrito Dos Manos.” The average check is between $6 and $7.

Burritos come filled with grilled steak, chicken or vegetables, and all restaurants offer a self-serve salsa bar. All dishes are prepared to order, and customers often wait several minutes for their order.

Although Dollarhyde declined to reveal sales levels at the chain and other financial details, Magglos earlier this year said the units were averaging more than $1 million in sales per year.

The chain’s emphasis, as its name implies, is on freshness. Signs throughout the restaurants proclaim that there are “no microwaves, no can openers, no freezers, no lard and no M.S.G,” or monosodium glutamate, an artificial flavoring.

Most outlets are located in shopping centers and have both indoor and patio seating, and they feature a bright and airy decor.

Despite the national profusion of fast-growing burrito concepts, ranging from La Salsa, Z-Teca, Rubio’s Baja Grill and Chipotle Mexican Grill in the West to chains like Burritoville and California Burrito in New York, Dollarhyde said he is hesitant to label the segment as being the “next big thing” in foodservice.

“I was around at T.G.I. Friday’s when gourmet burgers were going to be the hottest thing in the world; then rotisserie chicken was going to be the hottest thing in the world,” he said. “People just want quality food at a fair price that’s transportable, and the current fast food that’s out there doesn’t answer the question of what’s for dinner.”

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