Salsa Bar Chain on Hot Streak : Home-Grown Baja Fresh Expands Base, Plans 40 New Locations

Baja Fresh’s new corporate office is virtually a monument to potential. Twice as big as the Westlake Village suite the staff used to occupy, the 7,000-square-foot office offers plenty of room to stretch, and a handy bit of space to grow into.

And the home-grown Ventura County Mexican “salsa bar” chain--which started only a decade ago with one Newbury Park restaurant--expects to do so.

Baja Fresh has its sights set on an aggressive expansion, with plans to grow the company from its current 60 restaurants to about 100 within the next year.

Already popular in Southern California and other parts of the Southwest, the company will further dot Los Angeles and its suburbs with restaurants and is considering Chicago and Columbus, Ohio.

Virtual beacons of efficiency, the shiny, black-and-white checkerboard restaurants pride themselves on serving good, fast, fresh, healthy food--with the accent on fresh. In any conversation with a Baja Fresh executive, the word pops up constantly. Fresh flavor. Fresh look. Fresh feeling.

Analysts say the chain is the leader in a category of restaurants that includes La Salsa and Rubio’s Baja Grill, and praise the company’s approach.

“You can tell fresh is the focus [at Baja Fresh],” said Ed Engoron, president and chief executive of Perspectives / The Consulting Group Inc., an L.A.-based restaurant management firm. “It’s the sounds you hear, the things you see, what you taste.”

But even as analysts look to Baja Fresh as a top contender for consumers of fast, casual Mexican food, they warn that if the company grows too fast and franchises too much, it could lose the very qualities that make it popular. And outside of Southern California and the West, where Mexican food that’s not identified with a talking Chihuahua isn’t a daily indulgence, the company could have a challenge.

Greg Dollarhyde, the company’s president and chief executive, is the first to admit that.

“If you grow too fast, you can’t build a culture of [employees] and assimilate them and really help them get it,” he said. “The industry is littered with concepts that have grown too fast, like Boston Market, which just imploded.”

After a strong beginning for the chain, Boston Market’s parent company filed for bankruptcy last year.

Nevertheless, Baja Fresh is pushing growth. It was less than a year ago that the restaurant’s founder, Jim Magglos, a former window-tinting business owner who took out a third mortgage on his house to open the Newbury Park restaurant, sold controlling interest to a group of investors that included Dollarhyde.

Magglos had gradually expanded the chain before launching a franchising program in 1993 and handing over the reins to Pete Siracusa, of the Rusty Pelican chain, and Dollarhyde, who had years of business experience at restaurants such as Pizza Hut and Country Harvest Buffet.

The changes so far are small. No big advertising campaigns. No radio jingles.

They’ve simply opened a few more restaurants. They’re offering new party platters of tostadas and burritos this week. A new menu trades a litany of “no’s” (“no microwaves, no can openers, no freezers, no lard and no MSG”) for what the company thinks of as a more sophisticated slogan: “It’s about flavor. . . . It’s about fresh. . . . It’s about time.”

But the push is coming, in Southern California and elsewhere.

In the county, the company opened a second Simi Valley store two weeks ago--part of what Dollarhyde considers a beneficial cannibalization. Sure, they lose some customers at the other restaurant, but they also stand to lose some of the long lines and parking problems.

The stores seem to be busy. At a recent lunchtime in Thousand Oaks, the restaurant was a virtual circus of rushing patrons and cars angling for parking spaces. According to Dollarhyde, each store does about $1 million in sales a year. But can they possibly keep up the pace?

“Their challenge is going to be maintaining the integrity of the concept,” said Tarun Kapoor, an industry analyst at Cal Poly Pomona. “Once out of their span of control in California, are you going to get a similar experience?”

Further, a company that did well under an entrepreneur can have growing pains under new management and the change to a culture focused on compromise, not one person’s vision, Kapoor said.

But perhaps the bigger question is: Will it play in Peoria? Or, in this case, Columbus?

Of course, Dollarhyde said. The coast doesn’t have a monopoly on Mexican.

“Chi-Chi’s and El Torito, the sit-down dinner chains, have taught [other parts of the country] about Mexican food,” Dollarhyde said. “Our job is to teach them more. And offer them more.”

*

INTERNET SHOPPING

PrimeLight fashion network selects Westlake Village firm to develop its Internet-based gift certificate program. B4

* MORE BUSINESS NEWS, B4-6