Web Exclusive | June 2011 | By Jordan Melnick
Salsarita's New Growth Strategy
A week after the announcement that he’d acquired Salsarita’s Fresh Cantina, former McAlister’s Deli CEO Phil Friedman says his plan for the fast casual is to saturate its existing markets.
Friedman says his strategy is to “exploit” Salsarita’s presence in the Southeastern U.S., where the majority of the chain’s 80 stores are located.
“We want to create even greater brand awareness and brand commitment in our existing markets,” says Friedman, who purchased Salsarita’s from founder Bruce Willette for an undisclosed amount.
An industry veteran, Friedman has a reputation for big brand expansion, having grown McAlister’s from 27 to 300 restaurants during his tenure. After leaving McAlister’s in 2010, Friedman formed an acquisition company and began searching for opportunities in the fast-casual sector.
“I started to get the word out that I was looking for small franchise chains, preferably with the founder in place, that needed a sense of professional experience and leadership skills to take what had been developed and really exploit it,” he says.
In Salsarita’s, Friedman says he found his “prototype acquisition”—a young franchise company that was established in several markets but seemed to need the guidance of experience to reach its potential.
Despite the high level of competition it faces from other fast-casual Mexican chains like Chipotle and Moe’s Southwest Grill, Friedman says Salsarita’s category, brand, and clientele all made it an appealing acquisition.
“I liked the orientation of the brand, which is fresh, made-every-day food, and the variety of the menu,” he says. “I also liked traveling around and seeing the clientele. It’s a great young-professional demographic, very similar to McAlister’s.”
Friedman says he also saw “significant potential” at Salsarita’s to apply his skills to taking the company to the next level. One aspect he intends to focus on is Salsarita’s franchise support system.
“I very much believe in and rely on franchise relationships,” says Friedman, who visited eight franchisees in five different markets in his first week of ownership.
“I think [the franchisees] pretty well know there’s going to be a big change. That change is we’re committed to their success. We, the owners, only win if the franchisees win.”
In addition to Friedman, former CEO and president of Fresh Concepts Larry Reinstein, another fast-casual veteran, will join Salarita’s executive team as president and COO. In step with Friedman’s expansion goals, Reinstein says there is “tremendous opportunity” for Salsarita’s to grow in its existing markets.
“We believe it is always easier, more efficient, and smarter to grow in the markets where the consumer already knows you and to deepen the opportunities that are there,” he says. “We see ourselves ultimately continuing to grow everywhere in the United States. But we believe our best approach for right now is to get our [existing] franchisees to grow with us.”
Salsarita’s will open new corporate and franchise locations, Reinstein says, but will also make a big push to open nontraditional locations across the Southeast.
“Of our 78 franchise locations, 20-plus are in nontraditional locations, in universities, in businesses, and in airports,” Reinstein says. “We see continual growth going on in that category, as well as in the traditional franchise locations.”
The emphasis on nontraditional locations—particularly college campuses—is a smart way to earn brand loyalty among young consumers, says Todd Semrau, owner of Atlanta-based Urban Eats Consulting Group.
“To keep a brand alive today, you have to win over the Gen Y market by keeping it fresh and edgy,” Semrau says. “Gen Y is all about fresh, sustainable food [and] they want to eat communal, ethnic food like Mexican food. But if you keep opening in strip malls, the concept starts to get watered down. Opening in nontraditional locations may give [Salsarita’s] an edge.”
Semrau also thinks Friedman and Reinstein’s stay-at-home expansion strategy makes sense.
“It’s a smart move to stay where they are at,” he says. “It’s not like they are only in a few states. They already cover a lot of states.”
Even though Salsarita’s is still a small fish in a big pond of Mexican fast casuals, Reinstein is confident that the concept’s menu will help to strengthen the brand’s position as it steps up its growth efforts.
“Clearly there are a lot of competitors in our category,” Reinstein says. “I see the challenge as an opportunity. Our goal is to be the best.”
Food & Beverage