FDD Talk: The Salsarita’s Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

In this FDD Talk 2016 post, you’ll learn the following:

• Section I – Background information on the Salsarita’s franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Salsarita’s franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Salsarita’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015 average gross sales, cost of goods sold, payroll, pre-occupancy operating expense, occupancy, operating expense, and operating profit for five of the 11 Salsarita’s Fresh Cantina Restaurants owned and operated by the franchisor’s affiliates

• 2015, 2014, and 2013 average annual gross sales for franchised and affiliate-owned Salsarita’s Fresh Cantina Restaurants at traditional locations that were open and operating for the entire relevant period

• 2015 average annual gross sales for the top third, middle third, and bottom third of franchised and affiliate-owned Salsarita’s Fresh Cantina Restaurants at traditional locations that were open and operating for the entire year

Section I – Background Information

Salsarita’s was founded in Charlotte, North Carolina in 1999. A year later, the company began franchising. Salsarita’s is a fast-casual Mexican chain primarily located in the Eastern half of the United States. The restaurants can be found in strip malls, universities, airports, corporate headquarters, and standalone locations across the country. Today, Salsarita’s has more than 60 locations across 19 states.

Continuing to Grow

Since CEO and owner Phil Friedman took over Salsarita’s in 2011, the company has seen much growth, especially in the last few years. In 2014, Salsarita’s debuted a new restaurant prototype at its Indian Land, South Carolina location and at a new franchise location in South Haven, Mississippi. The new prototype layout was a success and the company plans to continue implementing the new design.

Throughout 2015, Salsarita’s experienced strong growth. The company opened nine new locations, all of which feature the new layout. Going into 2016, Salsarita’s hoped to continue its expansion into other parts of the U.S. Salsarita’s had planned openings throughout Texas, South Carolina, Mississippi, Alabama, Tennessee, and Nebraska for 2016.

To drive its success, the company aims to continue signing new multi-unit franchisees and will continue to focus on its fresh food made-to-order initiative, new menu design, and limited-time offerings.

Handmade Fresh Food

Although Salsarita’s is a fast-casual restaurant, it aims to make as many of its menu components from scratch. Each of its locations makes the company’s signature salsas fresh daily, hand mashes their guacamole, and cooks fresh tortilla chips throughout the day.

Salsarita’s has a similar model to rival fast-casual Mexican chain Chipotle, where customers can customize their food. The restaurant offers burrito bowls, nachos, burritos, tacos, quesoritos, salads, and quesadillas. Several filling options are available including steak, chicken, pork, shrimp, ground beef, and veggie. Some locations have even begun to offer tofu as a filling.

To stand out from the competition, Salsarita’s presents its food in a way that’s different such as offering its salads in taco shell bowls.

Caring Cantina Fundraising

Salsarita’s has a fundraising program called Caring Cantina. The program aims to help fight homelessness in the United States. The Caring Cantina donates time, food, and resources to local not-for-profit organizations, working to help families overcome homelessness.

Schools and non-profit organizations can host Dine to Donate events, where Salsarita’s food is served to raise money. Interested parties can set up one of these fundraising events by contacting their local Salsarita’s. A percentage of all purchases generated by the fundraiser will go directly to a 501c organization or non-profit school.

Various Spots on Entrepreneur’s Franchise 500

Salsarita’s did not rank on Entrepreneur’s Franchise 500 list for 2016. The fast-casual Mexican restaurant has not ranked since 2013, when it placed at No. 460 on Entrepreneur’s list.

When Salsarita’s does rank on Entrepreneur’s list, it tends to rank anywhere from the lower 200s to the upper 400s. The company’s highest rank was at No. 243 in 2007, while its lowest spot was No. 484 in 2012.

Section II – Estimated Costs

• Please click here for detailed estimates of Salsarita’s franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis