Mexican Foodservice Remains on the Move

Americans' growing taste for Mexican-inspired cuisine continues to drive this foodservice segment to new heights, despite a challenging business environment.

Mexican cuisine has become a staple in most parts of the country. Today, one would be hard-pressed to find a state or even a city without a Mexican restaurant.

It would be easy to attribute the increasing popularity of this foodservice segment to the United States' growing Hispanic population. In fact, this demographic will more than double from 12.8 percent of the U.S. population in 2000 to 30.2 percent in 2050, according to the Madison, Wis.-based International Dairy Deli Bakery Association's (IDDBA) 2010 What's in Store report.

The potential in the Mexican foodservice segment, including full-service, limited service and fast-casual operations, extends beyond this emerging subset of the population as a growing number of consumers continue to develop a taste for Mexican-inspired cuisine. The top full-service Mexican restaurant chains posted sales of more than $1.6 billion, according to Restaurants & Institutions magazine's Top 400 Chains 2009 report. Top limited-service Mexican restaurant chains had an even stronger showing, with sales of more than $11 billion.

Within the Top 50 limited-service Mexican restaurant chains, the fast-casual subsegment grew sales by 11.8 percent to $3.7 billion and units by 6.6 percent to a total of 3,348 according to the 2009 Technomic Top 50 Limited-Service Mexican Chains Restaurant Report. In comparison, traditional quick-service chains grew sales 1.8 percent to $7.4 billion and declined in units by 0.4 percent to 7,307 locations.

Still, Technomic reports that nine out of 10 of the fastest-growing Mexican limited-service restaurants in 2008 were fast-casual chains. "Consumer demand for this crossover subsegment is driving its growth," says Darren Tristano, EVP at Technomic. "Consumers are trading down from more costly casual dining restaurants."

Case Study: Olé Mexican Grille, Cambridge, Mass.
A decade ago, chef Erwin Ramon, a native of the Philippines, sought to open a unique restaurant in the Boston area. He soon realized this was no easy task.

After determining that there was a glut in the Italian restaurant segment, Ramon sought the advice of his friends, many of whom were Hispanic. A visit to Mexico and the discovery of its diverse cuisine inspired Ramon's creation of the Olé Mexican Grille.

Despite an extensive background in foodservice, Ramon was unfamiliar with gourmet Mexican fare. "These foods were foreign to me at the time, but I was determined to learn and develop a cuisine with my own touch," he says.

Fast forward 10 years and Olé has made a name for itself in the Boston area. Business has been so good, in fact, that Ramon opened three satellite locations within the last year.

The menu of this 120-seat operation reflects its eclectic neighborhood. Ramon combines ingredients indigenous of Mexico with European and Asian cooking techniques. "Olé's dishes have basic Mexican sauces, but I'm not a purist. My Asian culture comes into play with this menu," Ramon says. "I think Asian and Mexican ingredients pair well together."

Although the restaurant's menu changes every four months, there are mainstay favorites. One popular example is the enchiladas, a signature dish consisting of two flour tortillas filled with shrimp, lobster, beef or chicken. Unlike traditional enchiladas, Olé's version includes a variety of cheeses melted on top.
Another frequently ordered dish, Fish Vera Cruzana, includes a Vera Cruz-style sauce covering a fresh fish. Traditional asada, a steak that is flat and pounded, also is a menu mainstay.

The restaurant's approximately 800-sq.-ft. kitchen is long, narrow and partially open to the dining room. Ramon likens the production method to a conveyor line. The back-of-the house production is compartmentalized like a menu, with staff preparing appetizers, entrees, enchiladas and desserts in separate sections.

To streamline the production process, Olé Mexican Grille updated its equipment package two years ago. "I replaced the 10-burner gas stove with a grill and smaller stove. I also added more salamanders for cheese melting," Ramon says.

Staff use a steamer to prepare many of the menu items, including vegetables and tamales. A European-style convection oven, the workhorse of the kitchen, prepares rice, carnitas and fish. And staff use a flattop to prepare tortillas fresh on site.

"I'm a believer in incorporating new equipment whenever possible. I continuously look at the market to check out the innovations that will make production easier and enhance the quality of our food," Ramon says.

Ramon's batch cooking experience while working for both Marriott and Aramark helped guide him when opening Olé's satellite sites. "We fill pans with product in advance and deliver them. At the end of the day, we take inventory at all of our locations to see what product is left," Ramon says. "We track our product usage every day, so we know how much we sell and when, in addition to what needs to be replenished."

A retrofitted van equipped with removable heated and refrigerated containers is dispatched to these sites twice a day.

Olecito, located across the street from Olé, offers burritos and tortas for $5 and $6 each. "It's taking off like crazy," Ramon says. Because it uses food prepared at Olé, Olecito's 400-sq.-ft. kitchen contains only an oven, steamer, microwave and steam table.

Olé also has satellite locations at the Boston Convention Center and Boston University.

Because Olecita and the Boston University site have no seating, business tends to be busier in the summer.

Ramon, who lives across the street from the restaurant, credits his employees for keeping up the necessary pace to run all four sites. Olé has 50 full- and part-time employees. The restaurant is open from 5:30 to 10 p.m. on weekdays and 5 to 11 p.m. on weekends.

"It took a long time to gain a following. Early on, I would leave free samples on tables for people to taste our food. I also began offering Mexican cooking classes. Eventually, I developed an extensive mailing list of people who love our cuisine," Ramon says.

He admits that putting a unique twist on traditional food can sometimes be a matter of trial and error.

"I'm constantly listening to our customers, creating dishes based on their tastes and recommendations. Like French and Italian cuisine, I predict upscale Mexican food will become better understood in the coming years," Ramon says