Industry News | January 27, 2017 | QSR Exclusive Brief

Reenergizing a 20-Year-Old Burrito Chain

In 1995, Greg Schulson unveiled the first Burrito Beach in Chicago. Burrito Beach
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Two decades is an eternity in fast casual. For many of today’s concepts, achieving a quarter of that longevity would grant them veteran status. Consider that if you step back 23 years, Steve Ells was just borrowing $85,000 from his father to open a Chipotle Mexican Grill near the University of Denver.

In 1995, Greg Schulson unveiled the first Burrito Beach in Chicago. And, just recently, the brand is starting to make up for lost time. When Burrito Beach opened a unit in Northwestern Memorial Hospital in December, it marked the company’s first new opening in 10 years. Despite how it might appear, this time gap had nothing to do with the concept’s appeal or performance. Although, Schulson says, you could credit those same metrics with its sudden Windy City resurgence.

Burrito Beach’s sales increased 12 percent in 2014, 12 percent again in 2015, and 14 percent in 2016. Schulson, who is the president and CEO of his family business, the Lunan Corporation—a sizable Arby’s franchisee in Chicago and Las Vegas with 41 restaurants—started Burrito Beach as a passion side project.

“I looked back and said, ‘Boy, this Burrito Beach concept is doing nicely,’” he says. “I spent some more energy thinking about it, looking at it, and wanting to upgrade it. I really thought it could connect with the consumer even more if we gave it some additional attention.”

The recent unit gives Burrito Beach six Chicago locations, including one at O'Hare Airport. In addition to more stores popping up in the future, the current face of the brand is changing. As Schulson mentioned, Burrito Beach is tweaking everything, from the menu boards to the flavor profiles. “Everything we’ve been doing has allowed us to create a building block to really grow the business to a significant level,” he says.

Burrito Beach redid its branding, something that “hadn’t been done in quite some time,” and updated the design.

This resulted in a new logo, which makes use of a brighter, more contemporary color palette. Inside, the restaurant features lighter wood grains and white tiles. The website also reflects the transformation.

“We’ve blended the vibe and feel and the attitude of the beach with Mexican influences,” he says. “We’re not a, quote on quote, literal beach. Some of the concepts out there that have beach-like themes really go for the traditional, literal graphics. That’s not really the way we sell our food. We sell the whole package of the environments. Between the two, we think we have a nice, compelling offer for the customer.”

On the culinary side, Burrito Beach has advanced what it was doing before, bringing the concept up to date with consumer demand for elevated options in the limited-service arena. Schulson says they improved the marinades and now butcher steak in-house. The salsa recipe is also more nuanced, using grilled instead of plain tomatoes. The menu has been contemporized and broadened. That includes grass-fed barbacoa-style brisket and a Beach Body menu with lower-calorie offerings. There’s even a nutritional calculator on the website to craft the perfect meal.

One thing that has stayed the same, however, is the overall pricing approach. Burrito Beach’s most expensive base item is $7.79.

“We’ve always been very price-value driven. That doesn’t mean we’re inexpensive, but it does mean we’re less expensive that our competitors generally,” he says. “But we believe by putting in the extra effort for the fresh ingredients, making things to order, using the larger portion philosophy, we’ve been able to drive good, strong price value, and increase transactions because of that.”

These ideas are a reflection of Burrito Beach’s customer. Over the past three years or so, Schulson says the brand has analyzed its offerings by running specials, testing different strategies, and seeing what stuck and what needed to be tossed. Often overlooked details, like menu board interaction, were studied. Burrito Beach built out its catering business, which helped spread name recognition to new markets.

All of this has Burrito Beach positioned for the future. Not only are the current units in prime form and growing, but also Schulson has Burrito Beach’s compass pointed due expansion. He believes Mexican cuisine, with its bold flavors, is ideally suited for the millennial consumer.

And as for the growth itself, Schulson, who is no stranger to the franchising model, says the door is open to all possibilities. “We are exploring that right now, whether it’s through private equity institutional style capital or through private placement that we run ourselves,” he says. “We are trying to find the best strategy. But there’s no doubt in mind, no matter which way we decide to go, that it’s going to work. It just depends on what the marketplace looks like and if we find a really great partner to work with on this. I think that would be terrific for the brand and to help us grow. And if we don’t find a great partner, we have access to capital and can grow it on our own, too. Either way, this is great. We’re having a lot of fun.”

By Danny Klein