In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Pancheros Mexican Grill franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Pancheros Mexican Grill franchise, based on Item 7 of the company’s 2019 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Pancheros Mexican Grill franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Pancheros Mexican Grill outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Pancheros Mexican Grill’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average, median, high, and low gross sales for all 51 Pancheros Mexican Grill restaurants (28 franchised restaurants and 23 affiliate-owned restaurants that Pancheros operated under a license agreement and management agreement) in operation for the entire three calendar years 2016 to 2018
- 2018 average, median, high, and low gross sales for the 28 franchised Pancheros Mexican Grill restaurants in operation for the entire three calendar years 2016 to 2018
- 2018 average, median, high, and low gross sales for the 23 affiliate-owned Pancheros Mexican Grill restaurants in operation for the entire three calendar years 2016 to 2018
- 2018 average, median, high, and low food costs and paper costs for the 26 affiliate-owned Pancheros Mexican Grill restaurants that were in operation for the full 12 months of 2018
Section I – Background Information
18 Things You Need to Know About the Pancheros Mexican Grill Franchise
Rolls Out New Brand Campaign
1. At the beginning of April 2019, Pancheros Mexican Grill announced the launch of a new brand campaign focusing on its fundamental differences from other fast-casual Mexican concepts: its fresh-pressed tortillas, perfectly-mixed burritos, and fan-favorite queso.
2. Ryan Murrin, vice president of marketing and franchise development for Pancheros, said, “This campaign is the first truly integrated campaign we’ve produced that really focuses on what makes the brand different. For someone that’s never tried Pancheros, it highlights the fresh-pressed tortilla, mixing the perfect bite and our amazing queso. For our fans, it’s a great reminder of why they love Pancheros. The campaign concept is a fresh new take on the brand personality and was designed to be social and digital first, where our fans are.”
3. Created by Planet Propaganda, a Madison, Wisconsin-based design and advertising agency, in conjunction with Pancheros’ in-house marketing team, the campaign embraces Pancheros’ “IT” factors, leaning into its key differentiators through a series of content tailored for TV, video, social media, digital marketing, and audio channels.
4. According to Ben Hirby, partner and digital creative director of Planet Propaganda, “We’ve loved collaborating with Pancheros for the past seven years to create effective, brand-forward creative work. We think this new campaign’s energetic, unique approach will drive awareness to bring new fans into the fold.”
5. Launched in April, the brand campaign ran through the end of 2019, solidifying Pancheros as the burrito brand leader in the fast-casual market. The campaign is part of a robust marketing strategy revamp, as the brand continues to scale its marketing efforts for widescale growth in 2019.
Launches Delivery Service
6. In mid-May 2019, Pancheros Mexican Grill launched a new delivery service to bring burritos directly to the doors of its loyal customers. As online ordering and delivery reshape the restaurant industry, Pancheros is launching delivery on the Pancheros App with online food ordering solution, Olo.
7. Utilizing Olo’s Dispatch service, Pancheros will offer delivery at scale with leading delivery service providers, such as DoorDash and Postmates. Customers can order on the Pancheros App, selecting delivery rather than pick-up at the end of the ordering process. Orders will then be picked-up in store by third-party delivery service providers before reaching Pancheros customers.
8. According to Rodney Anderson, founder and CEO of Pancheros, “Being accessible to the greatest amount of people has always been one of our top priorities. With our new delivery capabilities, we are getting our product to guests for a new occasion. Expanding our delivery efforts is a natural next step to remain relevant in the restaurant industry. After seeing such positive results in our initial tests, we’re confident this will be a big win for our restaurants, franchisees, and guests.”
9. Pancheros launched the delivery capability through a partnership with Olo, an on-demand interface platform that simplifies online ordering for restaurant operations and guests. Olo is helping the restaurant industry embrace digital hospitality while building on their existing systems. The systemwide delivery service launch includes all Pancheros locations within markets currently supported by the ordering platform.
10. Noah Glass, founder and CEO of Olo, said, “We’re thrilled to work with the Pancheros team as they expand their digital footprint to serve more on-demand guests. Delivery is a fast-growing segment in the restaurant industry and we are proud to play a role in helping Pancheros operationalize this burgeoning channel.”
Launches First-Ever 12 Days of Pancheros Holiday Promotion
11. In early December 2019, Pancheros Mexican Grill rolled out a 12-day systemwide holiday campaign to reward customers with daily freebies, prizes, and rewards. The 12 Days of Pancheros campaign, which ran December 9 to 20, featured a different offer on the brand’s loyalty app, social media channels, or in-store promotion each day that included tasty freebies, awesome rewards, or festive prizes in celebration of the holiday spirit.
12. Ryan Murrin, vice president of marketing and franchise development for Pancheros Mexican Grill, said, “The holidays are always a time to reflect on the past 12 months and show appreciation to those who made it a successful year. The 12 Days of Pancheros is a fun way to celebrate the holidays with our loyal fans and to say thank you. With prizes like free delivery, free queso and even the opportunity to win burritos for a year, I think our fans will really enjoy the promotion.”
13. Starting December 9, the daily promotions for the 12 Days of Pancheros were:
- Free queso on any entree (Pancheros app offer);
- Buy one, get one free burrito deal (in-store offer);
- Reward points for sharing friends (Pancheros app offer);
- Instagram prizes (social media offer);
- Five times the reward points (Pancheros app offer);
- Delivery fees waived (Pancheros app offer);
- Free soft drink (Pancheros app offer);
- Gift cards for re-gifting (in-store offer);
- Queso caption contest (social media offer);
- Surprise rewards (Pancheros app offer);
- Free chips and queso (in-store offer);
- 12 months of free burritos (social media offer).
14. Pancheros Mexican Grill was founded in 1992 by Rodney Anderson in Iowa City near the University of Iowa. Anderson had just graduated with an MBA from the University of Chicago and used the money he made from the stock market to open Pancheros. Anderson was confident that his Chicago-style burritos would be a hit with students and his prediction was right.
15. According to Anderson, “We started by serving Chicago-style burritos because that is what my friends and I grew up with. We would go to Chicago and experience these really authentic taquerias that we didn’t have here in Iowa at the time. We found that this food was extremely popular with young people and we wanted to bring the experience back to Iowa.”
16. Anderson started opening additional Pancheros Mexican Grill restaurants in Midwestern college towns. After a while, Anderson recognized that the concept was strong enough to begin expanding beyond the college market. More Pancheros restaurants opened and in 1998, the brand added tortilla presses to its locations so that each restaurant could make fresh tortillas daily.
17. In 2003, Pancheros Mexican Grill began franchising and opened its first non-corporate store. The brand’s growth has remained slow yet steady. There are now Pancheros Mexican Grill restaurants across 13 states.
Entrepreneur’s Franchise 500
18. Pancheros Mexican Grill did not rank on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Pancheros Mexican Grill franchise costs, based on Item 7 of the company’s 2019 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Pancheros Mexican Grill’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 41
- Outlets at the End of the Year: 42
- Net Change: +1
- Outlets at the Start of the Year: 42
- Outlets at the End of the Year: 43
- Net Change: +1
- Outlets at the Start of the Year: 43
- Outlets at the End of the Year: 39
- Net Change: -4
- Outlets at the Start of the Year: 26
- Outlets at the End of the Year: 26
- Net Change: 0
- Outlets at the Start of the Year: 26
- Outlets at the End of the Year: 27
- Net Change: +1
- Outlets at the Start of the Year: 27
- Outlets at the End of the Year: 28
- Net Change: +1
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
Part 1 – 2018 Gross Sales for All 51 Pancheros Restaurants Operating 2016-2018
- As of December 31, 2018, there were 51 Pancheros restaurants (28 franchised restaurants and 23 affiliate-owned restaurants that Pancheros operated under a license agreement and management agreement) in operation for the entire three calendar years 2016 to 2018.
- The following chart reflects the 2018 gross sales of all 51 restaurants (franchised and affiliate-owned) that were in operation the full three-year period 2016 to 2018.
All 51 Restaurants