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September 2008

Baja's Fresh Approach
By: Janice Cha

Check out the related article "Equipping Baja Fresh"...

When Baja Fresh whipped up a smaller, speedier prototype to power its expansion, the company generated a whole host of additional perks.

One Sunday night in March, the manager of the Baja Fresh Mexican Grill in Simi Valley, Calif., hung up a sign that said "Closed For Remodeling" and then locked the doors to customers. Over the next four days, fast-moving work teams ripped out the serving line and prep island and installed equipment in a more compact configuration.

As soon as the reformatted cookline was back in place, crew members began training. On day four, regulars were invited for free meals so the crew could practice. And on day five, the store reopened for business.

But it wasn't business as usual. It was far better than usual. Day after day, the Simi Valley crew logged new speed-of-service records that were more than twice as fast as typical Baja stores—just one to two minutes per order, down from an average of five minutes. The new layout with its higher throughput led to a sales jump of 6.5% within the first three weeks after reopening, and the Baja Fresh prototype has maintained a 5.5% sales increase since then.

Some Baja Background...
Baja Fresh has been serving freshly made Mexican food in a quick-casual setting since its founding in 1990 by James and Linda Magglos. From the beginning, the Thousand Oaks, Calif., concept, whose motto is "No Microwaves, No Can Openers, No Freezers, No Lard and No M.S.G.," has featured a broad menu that includes chicken breast tenders, steak,carnitas, seafood, top-quality produce and fresh salsas.

By '98, Baja Fresh had grown to 47 units and had been sold to Fresh Enterprises, run by Greg Dollarhyde and Pete Siracusa. In 2002, the chain had more than 150 locations and its owners filed with the Securities and Exchange Commission, intending to go public to finance further expansion.

At that point, Wendy's Int'l. paid $275 million for the company, with plans to more than double the number of stores within five years. But the combination of a slowing economy and an over-saturation of Baja stores in certain markets began to take a toll on the concept's same-store sales. In '06, Wendy's refocused on its core burger business and sold Baja to a consortium of investment firms.

Baja's new owners spent two years solidifying operations, and, as we mentioned earlier, developing the smaller, more nimble and less expensive prototype that's been proving itself daily in Simi Valley. Now Baja Fresh execs are laying the groundwork for store openings in home-state California, followed by locations in Florida, Illinois, and New York City.

In addition, a recent agreement with HMS Host has paved the way for Baja Fresh Express openings in airports and travel plazas, and execs say future agreements with other contract feeders will bring the concept to universities, casinos and food courts.

Proto 101
Let's look at the new design, how it was developed and what makes it work so well.

The Baja Fresh design team included James Walker, chief development officer; Jon Rogan, research and development director; Jim Hicks, operations services director; Tom Bryan, v.p. of West Coast operations; and Jerry Delucia, marketing director.

"We had five goals as we began to design the prototype, all of equal importance," Walker says, "and these goals had to apply to both new units and existing locations."

The objectives, says Walker, were:

  1. To let guests customize their orders.
  2. To bring guests closer to the food.
  3. To increase speed of service.
  4. To improve use of space within the four walls.
  5. To reduce the cost of new locations by eliminating custom-built equipment and reducing square footage.
That last cost-cutting goal offered quite a target for Walker and the design team. "When we took over the chain in 2006, the numbers provided to us by Wendy's for the last 12 openings had an average cost of $838,833 per unit, for the total build-out—that includes FF&E, the plant, equipment, refurbishment, flooring, ceiling, paint, electrical—everything except the cost of the real estate," Walker says. "The new prototype, all-inclusive, is about half that amount at $450,000."

A good chunk of savings comes from the smaller footprint and kitchen. "Average store sizes going forward will be 1,400 sq. ft. to 1,600 sq. ft., compared to the 2,200 sq. ft. to 2,400 sq. ft. of existing locations," Walker said. The equipment package was also reduced to $120,000, down from the $145,000 of earlier stores, in part through a more compact kitchen and some savvy changes in equipment, and by spec'ing standard rather than custom-built equipment.

White Boards And Duct Tape
So how was a prototype that met all those goals—and then some—created? An oversized white board with sketches of floorplans, ideas and notes located in Walker's office served as the starting point. As the team refined the design by studying their own operations and visiting competitors' restaurants in various segments, the white-board sketches continued to evolve.

Study tours included visits to quick-casual Mexican concepts Chipotle and Qdoba, where designers found menus that are relatively small and thus not comparable to the Baja menu. Team Baja then went on to find inspiration from " successful, high-volume, single-unit operators that execute their menus at a high level," Walker says.

The next step was a mockup at Baja's support center in Anaheim, Calif. "We brought in equipment, taped off the outline of the four walls on the floor and built a makeshift store," Walker says. "Then we did a lot of role-playing on how people would move throughout the space, focusing especially on operations and food delivery."

The team modified and refined the mockup for about four months, always making sure that the "proto delivered on all five goals while continuing to turn out top quality food," Walker says.

The more the team worked with the proto, the more they realized how intuitive it was on the training front. "If you brought in someone with very little restaurant experience and put them behind the line, they'd find that everything flowed in logical order, from the browning of the tortillas to rice and beans to proteins and salsas, because people were, essentially, building their own product as they moved down the line," Walker says. "The old model, by contrast, required about two weeks of hands-on training."

Old Baja vs. New Baja
At a typical Baja Fresh store, you place your order at the counter, get your beverage cup, then step aside to wait for your name to be called. Cooks prepare your food in the semi-open kitchen, in which the grill is tucked back out of sight behind a central island prep area.

In the Baja Fresh prototype, that view-blocking island prep area is history. Instead, there's a one-shot production line with the cookline (fryer, holding cabinet, charbroiler and grill) on full display against the back wall. The front of the line is where orders are assembled to order from a series of hot and cold wells, with refrigerated storage underneath.

As a customer, you follow your order's progress and can customize ingredients at each step (meeting Goals 1 and 2). Workers get to interact with people, while at the same time, order accuracy skyrockets since customers "direct" their own food production. The cash registers and beverage station wait at the end of the line instead of the beginning.

Not only is the Baja Fresh proto more accurate in building orders, it takes less than half the time to make them compared to the old model (Goal 3). Now orders take about one to two minutes to produce, compared to the previous average of five minutes in existing layouts. "The main holdup [now] is customer indecision," Walker says wryly.

A good chunk of time savings comes from an equipment upgrade on the tortilla front. In the old cookline, tortillas would take about two minutes to heat on the flattop grill. By contrast, the prototype relies on a split-top clamshell grill that gets the job done in 20 seconds. Not only does the countertop grill unit give better consistency to burritos, it also allowed the team to save space by spec'ing a smaller flattop grill—36" instead of the old 48" (meeting Goals 4 and 5).

Another key change on the equipment front was switching from pricey custom-built units (i.e. the triangular prep island), to less expensive, off-the-shelf hot- and cold-holding units arrayed in a line. In addition, the prototype eliminates the customized refrigeration units of the old design that require rooftop condensers, which add some $11,000 to $12,000 to the construction price tag.

The straight-line array also lets "guests see immediately that they have a broad choice of ingredients for burritos, salads or tacos," Walker adds. "The whole idea was to increase throughput by cooks, and perceived freshness by customers, thanks to the interaction between the two."

With the prep island gone, the production area shrank, which meant that the line could now operate with two fewer employees. Labor costs and scheduling challenges have been significantly reduced as a result.

With its tighter assembly-line footprint and equipment package, faster speed, greater order accuracy and customer satisfaction, you could say that the Baja proto has turned into a win-win-win-win-win situation.

Looking Ahead
The Simi Valley prototype will be Baja's model for all new restaurant cooklines. The next big design makeover will be to the front of house, which will see a change to warm earth tones instead of the current high-energy palate of black and white tiles with red and green accents.

Baja Fresh execs are spending the remainder of this year building up to 10 new stores and lining up area development agreements for growth next year.

As for revamping the existing stores, "We still have a lot of work to do, and need to take the requisite time to read the results. I would think we'd start making those decisions in Q2 of '09," Walker says.

Check out the related article "Equipping Baja Fresh"...

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