BurritoBar Takes Long-Term Approach to U.S. Expansion Via Master Deals

Toronto-based BarBurrito, which goes by BurritoBar in the U.S. to avoid a potential trademark infringement with a similarly named restaurant, has more than 300 locations in Canada and four in U.S.  

BarBurrito Chief Development Officer Jeff Young called his company’s ambitious United States expansion plans “more of a marathon than a sprint.” 

The Canada-based Tex-Mex brand wants to maintain a gradual and steady pace for getting new restaurants up and running, said Young. Sister brand BurritoBar has a handful of franchise development agreements signed to open more than 500 locations in the U.S over the next 20 years. To date, the company signed master agreements for the states of Michigan, Florida, Tennessee, Iowa and Nebraska, along with northern Texas. 

The company signed a pair of master agreements with Surinder Sandhu, a longtime Subway operator, to open 149 BurritoBars in Virginia and Maryland over the next two decades. 

“This is a long-term growth strategy we’re undertaking. Realistically, I’d like to see us open five to 10 new restaurants a year,” Young said about the company’s U.S. development efforts, “but it’s going to be based on the availability of quality real estate and so many other factors associated with that.” 

BarBurrito, which named its U.S. operations BurritoBar USA to avoid potential trademark infringement, has four restaurants in the U.S. Three of them are in Michigan, with another restaurant in Delaware. Young said the brand signed leases in Hawaii and Tennessee, and anticipates openings there within the next six months. 

The Toronto-based company has 300-plus BarBurritos open in Canada and opened 65 new restaurants in its home country last year, Young said. The development strategy in the U.S. is focused exclusively on signing master and area development agreements with experienced restaurateurs and hospitality operators, he said. 

The initial investment for a BurritoBar master franchise location ranges from $128,750 to $1,119,000, according to the company’s franchise disclosure document. This includes a development fee ranging from $75,000 to $500,000. Its Item 19 does not report average unit volume. 

Sandhu, the owner of Sandhu Restaurant Group of Virginia and Sandhu Restaurant Group of Maryland, fits the profile of the franchisor’s ideal developer. He has been a Subway operator for more than 25 years and still owns seven Subways in Maryland. At one point, his group owned nearly 30 Subways before either closing or selling its under-performing units. 

“I’ve been a franchisee for a long time and I always wanted to get into development. When I found out about BurritoBar and realized that there are not much decent Mexican restaurants in my market, it was an easy decision for me to make to go with the brand,” said Sandhu. 

“The challenge for me is going to finding good real estate locations. The company is helping me find those now,” he noted. 

Young and BarBurrito founder and CEO Alex Shtein spend much of their time traveling throughout the U.S. markets where the company has agreements signed. They are arranging meetings with local real estate brokers who can best assist them “to identify, negotiate and secure high quality” locations. 

“Once we assign a broker, we develop a list of potential sites and then we come back and visit the sites with our developers and then help them with lease negotiation,” Young said. “It’s a collaborative approach and process we take very serious because we want to make sure we make the best decisions on the locations of our restaurants.” 

He said the typical BurritoBar is 1,000 to 1,500 square feet and the ideal location is in or near popular shopping centers. 

“We’re a little different from some brands in that we’d rather focus on those suburban residential communities in secondary and peripheral markets before we look at downtown urban settings,” Young said. 

 “The key to developing a territory or a state,” Young said, “whether it be 50 or 75 or 100 or 200 stores, is opening up one successful store at a time, and that’s our plan.” 

Source: FranchiseTimes 

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