Margaritas to expand through franchises

Monday, January 10, 2011

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

Margaritas' 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).

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.” – CINDY KIBBE/NEW HAMPSHIRE BUSINESS REVIEW

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