Margaritas has East Coast expansion plans



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The Portsmouth-based Margaritas Mexican Restaurant chain is launching a franchising program that the firm hopes will introduce its fajitas and eponymous cocktails across the Eastern Seaboard over the next decade.

The company’s current roster of 19 restaurants in New Hampshire, Maine, Connecticut and Massachusetts are all corporate-owned. But “in times like this, companies that have a strong foundation tend to grow,” said Bob Hoffmeister, Margaritas president and chief operating officer. “Last year, for every restaurant that opened, seven closed — there’s so much opportunity.”

While the restaurant plans to expand from Pennsylvania to beyond the Carolinas and eventually Florida, that doesn’t mean locations will be popping up like Mexican jumping beans.

“We’re opening a location in Lexington (Mass.) on March 23 and another in Medford 2-1/2 months after that. That’s it for this year,” he said. “We’re looking at three to five locations per year.”

According to a press release, Margaritas had $2.3 million in average unit sales last year, with a 45 percent beverage-to-food sales ratio.

Its EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization and Rent Costs), was 21.6 percent (of operating cash flow). Restaurant locations average 5,000 to 7,500 square feet.

Hoffmeister said the company is well aware that the decision to franchise might not be welcome news to some patrons.

“We have a saying that we’re ‘anti-corporate.’ We don’t want to look corporate, act corporate, or even think corporate,” he said. “That’s why at each of our restaurants, while having a similar theme, all the décor is different, all the restaurants are different.”

For example, the Concord, N.H., location was once a jail (the bars “decorate” some booths) and the Nashua restaurant, which previously housed two other eateries, is in a refurbished water pump house on the banks of the Nashua River with a working hydroelectric station on the lowest level.

Real estate conversions support that business model, said Hoffmeister.

“Our best efforts are in conversions,” he said. “There, you’re just remodeling instead of spending millions of dollars to build. And with a conversion, you have a different footprint each time, so the restaurants are unique,” he said.

Company statistics say the restaurant saves up to 40 percent on a conversion over new construction.

And unlike a high-end steakhouse, with a million-dollar location and a similar food and beverage budget to boot, a Mexican restaurant concept is more dinero-friendly for both operators and patrons, said Hoffmeister.

Quality control

Like any company looking to expand, Margaritas is also keeping an eye on its competitors, namely Border Café, with locations in Massachusetts, New Jersey and Delaware, and On the Border, owned by the restaurant management giant Brinker International, with locations all across the United States and Canada, and, to a lesser extent, the Ninety-Nine Restaurants and Chili’s chains.

“We consider anybody with a casual-theme restaurant to be our competitor,” said Hoffmeister.

It’s one thing to be able to control the quality of the food and the dining experience across 19 restaurants, but what about 190 or even 1,900 locations?

“We have an executive chef, Martha Lahey, who has been classically trained and trained under the finest chefs in Mexico. She has the quality tightly under control,” said Hoffmeister.

Margaritas also has been known for its authentic handicrafts, which decorate its restaurants, most of which are made by Mexican artisans.

While Hoffmeister said it’s not easy to do business in a foreign country, often with the smallest of small businesses, the handmade look of the restaurants is integral to the Margaritas concept.

As the restaurant chain expands, Hoffmeister said the company has already taken into account how to make sure these individual artisans or small mom-and-pop craft operations aren’t inundated by orders to outfit new restaurants.

“We have long-standing relationships with artisans and the tile companies in Mexico. We also have a warehouse here,” he said. “As we grow, we will warehouse more product. If we didn’t have decades of vendor relationships, we couldn’t grow.”

Cindy Kibbe can be reached at ckibbe@nhbr.com.


 

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