The Burrito Bar restructure delivers network growth

By Nick Hall | 11 Nov 2019 View comments

It’s been an interesting few years for Queensland-based Mexican chain The Burrito Bar, but it seems growth is back on the menu.

The 31-strong franchise network was once at the forefront of the Mexican-inspired Quick Service Restaurant (QSR) space, however increased competition and shrinking fast-food landscape threatened to stifle expansion.

Shaun Butcher, The Burrito Bar general manager revealed that in 2017, despite an impressive East-coast representation, external factors had hit the chain hard.

“A rapidly changing market, including a substantial increase in competition and the growth of third party aggregators such as Uber caught Burrito Bar off-guard and by the end of 2017, the network was struggling,” Butcher said.

It’s a familiar story in the fast-food space. The introduction of delivery platforms such as UberEats and Deliveroo has greatly impacted operator profitability, increasing tension within the sector. However, The Burrito Bar was quick to respond.

The Burrito Bar restructure

Butcher revealed that by mid-2018, the franchise had undergone a full-network restructure, with the goal of improving franchisee conditions and profitability.

“The brand restructured its support systems to provide a much higher quality of support to franchise partners,” Butcher said.

“This included a temporary halt on further expansion, a relentless focus on franchise partner sales and profitability, streamlining and restructuring supplier relationships and an overhaul of POS and technology systems.”

While the restructure delivered a fresh take on the operating structure for franchisees, the aggregator issue remained front and centre. In response, The Burrito Bar introduced a dramatically altered marketing strategy, accentuating the key points of difference, while simultaneously rolling out a new menu.

Butcher said it was critical that The Burrito Bar developed a strategy that allowed franchisees to embrace third party aggregators, rather than complain about them.

“Our biggest strength in such a competitive market is that we have full kitchens in all our restaurants,” he said. “It enables us to create a large and diverse menu, cook to order and really enhance the flavour profiles of our products.”

Restructure results

According to the general manager, the focus on franchise partner sales and profitability paid off, delivering strong in-store results.

“Burrito Bar franchise partners are in the best position they have ever been in and now breaking records on an almost weekly basis,” Butcher said.

“Even now as the brand is well into its second year of massive sales growth, same restaurant year-on-year growth continues to average over 40 per cent.”

The Burrito Bar story is an example of industry innovation, which Butcher said is not a ‘set and forget’ model. The chain is introducing a series of new strategic developments over the next 12 months, culminating in the chain’s first new stores since 2018.

“Having spent time focusing on the sales and profitability of our existing franchise partners, along with optimising our model, support structure, systems and processes, we are confident that 2020 is the year to start growing restaurant numbers again,” he said.

However, the general manager revealed that The Burrito Bar will be taking a measured approach to expansion this time around, starting first with corporately owned restaurants.

“The Burrito Bar was in many ways unprepared for its own success in the early years and possibly expanded too quickly,” he said.

“This put substantial pressure on the brand support structure, systems and process as they tried to keep up, but Burrito Bar believe we now have one of the most effective support structures in franchising.”

Along with The Burrito Bar’s first new restaurants,  2020 will also deliver a new app ordering process, drive-through formats and a focus on regional areas. Intrigue is already swelling in NSW and Victoria, with Butcher revealing that international markets such as New Zealand, India, Dubai and the Middle East are all showing interest.

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