Who Knew: Does Some of Baja Fresh's Food Have More "Integrity" Than Chipotle's?
Over the past decade, Chipotle (CMG) has done such an outstanding job of letting everyone know how fresh, natural and non-fast foody its offerings are that you'd be hard pressed to locate any customers who don't know their pork is produced without antibiotics and their dairy products without rBGH. Baja Fresh, the smaller, California-based Mexican food chain, also has a compelling food quality story to tell.
It's just that for years, no one's been telling it.
That's one of the biggest revelations Baja Fresh's CEO David Kim says he got from his experience going undercover at four Baja restaurants for CBS' Undercover Boss. (Kim will appear on CBS's Undercover Boss this Sunday at 9 p.m. ET/PT.*) Unlike most fast food and fast casual chains, all of Baja Fresh's food is prepared in the stores and from scratch. Nothing sold in the restaurants has ever been frozen, and none of the stores have freezers.
But, as Kim learned, customers don't quite understand this. He told BNET:
One of the things that came up in my interactions with our employees is that we don't really do a great job of explaining to our customers what we are as a company and a brand. We really do make fresh products. One of our staff suggested that we do something in the media emphasizing that we don't have freezers. So we're looking at how do we bring those kinds of messages to our customers in a broader and more effective way.While Chipotle, with its successful "Food With Integrity" campaign, is working on getting 100% of its beef from producers who don't use hormones or antibiotics, Baja Fresh is already there. Kim says that all of the company's beef is not only raised without antibiotics or hormones, but is also grass-fed, a rarity among national chains.
Although many people may assume Chipotle's beef is grass-fed, the reality is that hardly any of it is. The company is still working on getting all of its beef "naturally-raised," which doesn't mean grass-fed. Grass-fed beef isn't easy to come by because it's expensive and in limited supply. And to be fair, Baja Fresh, with its 255 stores to Chipotle's 1,084, can pull this off with much greater ease. (For the record, "grass-fed" means that cows eat nothing but grass and other pasture their entire lives, as opposed to being sent to a feedlot to consume corn and soybeans for their last six months before slaughter.)
Baja Fresh's lack of marketing savvy is one of the reasons the company has gotten lapped by its Mexican food competitors. In 2003, a year after Wendy's (WEN) bought the chain, Baja Fresh pulled in $312 million in sales, making it a close second to Chipotle's $321 million in sales. But since then, Chipotle has added 779 locations and some $1.5 billion in revenue, while Baja has 28 fewer stores today than it did eight years ago and it now trails Qdoba (more than 500 stores) and Moe's Southwest Grill (420 stores).
Since Kim and his M Plus Capital investment firm bought Baja Fresh from Wendy's in 2006 for the bargain price of $31 million, he's focused on turning the business around, adding more stores and building the customer base. Kim says he's just starting to see results:
Wendy's owned the brand and when we came in there were some areas where we had to improve dramatically. It took us some time but we've made all those improvements. We're basically all franchise-owned now and we're getting hundreds of requests every month from people that want to open stores. In the last 18 months, we've opened more than 40 restaurants.*Disclosure: CBS owns BNET.com.
[**UPDATE: This post has been amended to correct errors. Jerry Delucia, Baja Fresh's senior director of marketing, says he misspoke when he told me that the chain's chicken is raised without antibiotics. All that can be said of Baja's chicken is that it is not frozen and contains all white meat. Delucia still maintains that the company's beef is grass-fed, coming from a supplier in Australia, where grass feeding is much more common than it is here.]