GB Foods Moving In on Midwest With Restaurants in Restaurants : Expansion: First venture outside Southland will be five Green Burrito franchises within existing roast-beef eateries.

In its first venture outside Southern California, GB Foods Inc. said Tuesday that it plans to open Green Burrito restaurants within five existing roast-beef sandwich eateries in Ohio and Indiana.

The company said it is selling franchises to five Rax roast-beef restaurants that will set up Green Burrito service areas within their stores. The goal is to emulate the success of a similar experiment in Long Beach, where the addition of a Green Burrito inside a flagging Arby’s roast-beef restaurant has nearly doubled sales.

“We think that Mexican food is being very well accepted in the Midwest,” said Robert Gibson, executive vice president of the 65-restaurant Green Burrito chain. In the Midwest, like Southern California, the Mexican fast-food scene is dominated by Taco Bell. Green Burrito, by contrast, caters to a more upscale market.

While supplying only five stores thousands of miles from the company’s base might appear difficult, Gibson said, GB Foods has already signed a deal with a national distributor, Proficient Foods Co., to keep the Midwest restaurants supplied. Also, he said, most of the ingredients needed for Green Burrito menu items can be stored for 30 days.

By opening Green Burritos inside other restaurants, Gibson said, GB Foods can not only capitalize on good locations for itself, it can revitalize sales for its partner. Conversion costs are only a fraction of what the company would spend to build a restaurant from the ground up, he said, and most of the prime sites for construction are gone in most cities.

In another development, Gibson said that GB Foods will have a line of frozen burritos developed for sale in supermarkets by late summer. Deli International in Omaha has agreed to distribute the beef, chicken, bean and pork burritos through wholesale clubs, convenience stores and other retail outlets nationally, he said.

At least one analyst was unimpressed by Tuesday’s announcements. David Rose, analyst for the brokerage L.H. Friend, Weinress & Frankson in Irvine called them “really a non-event for now.”

“They would be better serving their shareholders if they focused on Southern California,” Rose said of GB Foods. “They’re trying to achieve a national franchise status when they haven’t achieved it locally.” Tuesday’s announcement, the analyst said, “doesn’t mean much to the top or the bottom line.”

Rose said that Green Burrito needs to address some of its fundamental problems, such as establishing itself as a success among Southland restaurants and settling a dispute with some of its franchisees.

The company is facing legal challenges from eight franchisees who have filed lawsuits through a Sacramento lawyer, Steve Talt. The suits allege that the franchisees were not provided with sufficient financial data before investing in their restaurants. Consequently, their franchise fees and costs are so high, they allege, that the businesses are not profitable. GB Foods officials have denied that any of the franchisees were misled.