The Mexican subsegment is the second largest among fast casual restaurants, but it’s among the fastest growing. Mexican concepts included in Technomic’s Top 150 Fast-Casual Restaurant Chains saw their sales rise to $5 billion, a 13.5 percent increase over 2010’s $4.3 billion in sales. The sales jump can largely be attributed to category leader Chipotle Mexican Grill, which saw its sales increase by 23.4 percent to almost $2.3 billion.
Number-two-ranked Qdoba Mexican Grill lagged far behind in sales, with $531 million and 597 units (compared to Chipotle’s 1,225 units). Two fast-casual restaurants on this year’s ranking, Hot Head Burritos and Fuzzy’s Taco Shop, had especially impressive sales gains. Hot Head Burritos saw sales increase 70.4 percent in 2011 to $17 million, while Fuzzy’s Taco Shop reported a 70 percent sales increase to $59.5 million.
The majority of the Top 150 fast-casual Mexican chains increased their unit counts in 2011, suggesting that expansion was a top priority for many of these brands last year. Hot Head Burritos had the highest unit growth of all (at 100 percent).
In 2011, a number of the top fast casuals in the Mexican cluster marketed their green programs. Chipotle Mexican Grill was one of the leaders promoting its eco-friendly practices. The chain underlined its commitment to sustainable farming and eco-friendly initiatives by rolling out a short animated film on the issue in movie theaters nationwide, and also announced plans to double its use of locally sourced produce. Continuing the trend in 2012, Chipotle gave incentives for customers to go green by handing out a free burrito, bowl, salad or order of tacos to customers who purchased a repurposed bag from the chain’s online store. Moe’s Southwest Grill’s unit in Williston, VT, received LEED silver certification, for its eco-friendly design, making it the first restaurant in the chain, as well as the first restaurant in the state, to earn the honor.
Introducing or testing healthier options was another nationwide trend in the Mexican cluster. At the end of 2011, Chipotle added brown rice as an ingredient option. Likewise, Qdoba Mexican Grill began testing whole-wheat tortillas at all of its greater Seattle and Portland, OR-area locations. Moe’s not only rolled out healthier options to its menu, but also added a “food mission wheel” to its revamped menu boards. The new menu board, designed to steer customers to select healthy options, highlights gluten-free, vegetarian and low-calorie items as well as organic tofu and hormone-free chicken and beef.
Source: Technomic Top 150 Fast-Casual Chain Restaurants Report
Concept to Watch: Hot Head Burritos
Hot Head Burritos is a fast-casual Mexican chain with a relaxed, neighborhood atmosphere. The concept sets itself apart from other fast-casual Mexican chains by offering far more menu choices. The chain allows customers to order smaller portion sizes, and its menu features toppings and sauces not commonly found on other menus. Hot Head Burritos is a privately held company.
The Kettering, OH-based chain grew its systemwides sales by 70 percent—to $17 million—in 2011 over the prior year. At the same time its unit count doubled to 22 locations from 11.
Hot Head Burritos stores are recognizable from the exterior by flame-inspired signage with yellow-and-red lettering, as well as the chain’s mascot—a flaming smiley face set against a black background. Inside, restaurants feature a large, exhibition-style kitchen, black-and-white-checkered wall borders and booth seating.
Raymond and Cynthia Wiley opened the first Hot Head Burritos in Dayton, OH, in 2007. The couple had been Subway franchisees for more than 19 years when they decided to create their own fast-casual concept. The company began franchising in 2010. The chain currently has locations in Ohio, Kentucky and Pennsylvania and plans to enter the Indiana and Tennessee markets by the end of the year. With plans to have 50 corporate and franchised locations by the end of 2012, Hot Head is hoping to eventually expand into Alabama, Florida, Michigan, North Carolina and Texas.
Click here for a one-page profile of Hot Head Burritos including sales and unit data, competitive set, growth plans and more.