Business Profile: Barburrito

By Stefan Chomka

- Last updated on GMT

Related tags: Burrito, Chipotle mexican grill

Morgan Davies, co-founder of Barburrito, believes his business is in a strong position to take London by storm. Photographs: Mat Quake
Morgan Davies, co-founder of Barburrito, believes his business is in a strong position to take London by storm. Photographs: Mat Quake
After starting the UK burrito boom up north, Barburrito co-founder Morgan Davies is targeting London. He told Restaurant magazine's Stefan Chomka why he believes he’s in a strong position to take it by storm.

To the average Londoner, the arrival of another burrito player in the capital, this time at Paddington station, will not have elicited too much amazement.

Purveyors of the Tex-Mex hand-held snack have become an increasingly common sight across the city, led by protagonists such as Tortilla, Benito’s Hat and Chilango, and the arrival of US burrito behemoth Chipotle on these shores last year underlined what people have known for a while now: burritos are going to be big.

Except Barburrito, the latest player to join the fray in London, isn’t just another ‘me-too’, as co-founder Morgan Davies points out. In an email chat we have before we meet at his first London site, he writes: “We are passionate about the fact that we started this great burrito race…and plan to win it!” Fighting talk, if ever we’ve heard it.

_Barburrito_Mat+Quake_Subst
Barburrito started the great burrito race, according to its founders

The reason Londoners may mistake Barburrito for a young buck trying to muscle in on more established players is because, until now, the business has had a focus in north-west England, where eight of its nine sites are based. But the chain has more than just flown the flag for burritos up north; it lays claim to having started the UK burrito revolution in 2005, when it opened its first site in Manchester’s Piccadilly Gardens. Now, with one site in the capital and more in the pipeline, as well as branches in Leeds, Liverpool and Nottingham, it can purport to being the UK’s first quasi-national burrito chain.

Well-placed 

With many of the London Tex-Mex players taking their first tentative steps outside the capital, Barburrito finds itself in the strong position of already having a recognised brand presence across many of England’s big cities. 

The challenge for its rivals, according to Davies, will be to replicate their success in London – where the food scene is more sophisticated and higher prices can be commanded – in more challenging parts of the country. Barburrito’s head-start puts it in pole position – or at least a one/two on the starting grid with the deep-pocketed Chipotle – to become the main player in the burgeoning burrito category.

“The London-based guys, I wouldn’t say they’ve had it easy,” says Davies with a pause, “but I’m looking forward to seeing them outside London. We’ve got our heads round operating across a wider region. But do the others? I think they’ll find it hard. A quiet day in Leeds is very different to a quiet day on Oxford Street. We’re better at marketing and we’ve invested a lot in the brand and understanding what our customers want.

“Some of the guys coming out of London will have to learn those lessons. I’m pretty confident that we’ve got a competitive advantage outside London.”

3Barburrito_Mat+Quake_Subst
In the bag: the group's inaugural London site is trading well

London-based operators also need to avoid the trap of bunching every city outside the capital under one umbrella, he adds. “Liverpool, Manchester and Leeds are so different as cities. The atmosphere in our Liverpool stores is much more fun and lively. They’ve come up with slang for the product, so people talk about going down ‘the bar for a buzza’. Manchester has a good mixed demographic and in Leeds we are so far picking up office workers and students.”

If Davies sounds a little smug it’s not without substance. While many of the burgeoning burrito chains appear now to have the hard yards in front of them in terms of expansion, Barburrito finds itself with the relatively simpler task of moving into a well-established sector in London where there is currently no shortage of customers. By way of proof, its Paddington site is humming with people on a Thursday lunchtime and Davies affirms that sales are already strong. 

“From the first day we opened there has been a natural queue of people at the door. It was almost too busy on day one,” he says. “You can’t argue with the foot traffic we’ve got here.”

A key factor in Barburrito’s future success might not just be the brand recognition it has built up or its multi-city experience, however, but its pricing structure. Having started outside the capital, where Davies acknowledges that disposable income is lower, and having created the category in the first place, Barburrito wasn’t in a position to charge huge amounts for its food. Now in London he is not prepared to raise its prices, which makes the chain highly competitive compared with a number of its rivals.

A Barburrito chicken burrito sells for £5.15; a pork one at £5.35; steak at £5.50 and a vegetable burrito at £4.80, with guacamole an additional 75p. Those prices stack up favourably against Chipotle’s £6.95 for a steak burrito and £6.70 for a chicken – guacamole is an additional £1.40 – and those charged by Benito’s Hat, where a steak burrito costs £7.25 and a pork one £6.75. Closer in price is Tortilla, where small burritos start at £4.95 and go up to £5.45, although an extra £1 is charged if you want a larger one. “One man’s small is another man’s large,” says Davies on this point.

“We decided a long time to ago to have a standardised product, so we could focus on getting consistency – a lot of customers think quality and consistency go together.”

A more direct comparison is that of recently launched Mi Casa Burritos, run by Upper Crust and Caffè Ritazza owner SSP, which occupies a space in another London station, Victoria. 

6Barburrito_Mat+Quake_Subst
Barburrito's pricing is key to its growth strategy

With a steak burrito costing £7.49, and guacamole charged at £1, Mi Casa is around 50 per cent more expensive than Barburrito. Such variances in price are something that won’t be lost on the general public, believes Davies. 

“To make our model work in the north of England we had to work hard on our purchasing and supply chain. That, plus the effort we have put into staff training and effective staff scheduling, means we are now at the point where we can serve food at this price and it stacks up from a GP perspective. If the London guys arrive (outside London) with their higher prices, instant comparisons will be drawn.”

More relevant, maybe, are the price comparisons with other fast-food sectors. With a burrito coming in at just over £5, Barburrito’s pricing doesn’t put it much higher than that of Burger King – a Whopper in Victoria station is £3.99, with bacon and cheese £4.79 – but is significantly lower than most restaurant brands. 

This is a similar position to where Danny Meyer’s Shake Shack will find itself when it opens in Covent Garden this summer.

“If you look at our price-point, there’s not much at our level at Trafford Centre, for example. There are typical fast-food joints, which we’re not, and then you tend to go straight into restaurants. Even
Yo! Sushi or Nando’s is more expensive. We believe we’re right in the sweet spot of true fast-casual, which is where the growth is.”

Power of pricing

Price may not yet be the deciding factor in who comes out the victor in the burrito battle, but the signs are it is having an impact. Chipotle recently reported sluggish sales across its six London sites, blaming lack of awareness of its brand, and Mexican food in general, but others pointed to its higher prices. A few years ago Chilango was forced to pull out of its sites at Meadowhall in Sheffield and also at Bluewater in Kent, leading to murmurs that the chain was finding it difficult to charge London prices outside the capital.

Davies might be happy to hear about his rivals’ problems, but he insists that, at the moment, competition in the market is healthy. “Some (of the burrito players) see it as a head-to-head fight, but I don’t. It
will be a long time before burrito operators in the UK are losing sales from each other on the same high street. In the meantime we’ve got a job to do, which is to build this category.

2Barburrito_Mat+Quake_Subst
Davies believes there is still room for growth in the burrito market

"Yes, I would be frustrated if someone opened 50 yards from my shop but you only need to look at what happened in London with Pret, EAT and Starbucks to see that a lot of people shop within two blocks of their office or house, which means there’s plenty of room for people.

“I see the arrival of Chipotle as a positive – it’s actually investing the space and advertising and people are becoming more aware of the product. A lot of people still come into our restaurants and say ‘what the hell’s that?’ With more activity longer term it will be easier to open burrito bars.”

That’s as maybe, but the more players in the market, the bigger the frenzy for sites. Surely his life would be easier if there were fewer players now that Barburrito has its eye on the capital? “The challenge in London is finding sites,” Davies admits. “All this talk about the recession meant a lot of operators made the conscious decision to retreat to London because it was working there.

“As a result, competition for sites is higher than ever. It means we need to work harder. But the market will consolidate. It’s not going to be a 10-horse race in five years’ time. Our investors will be looking to grow Barburrito exponentially and some of that will happen through acquisition.”

Expansion trail

Growth is certainly on the cards for the chain. Turnover is £6m, but “we are looking to double that fairly quickly”, says Davies. The short-term plan is to go from six sites to 18 in the next three years, putting it at the forefront of the burrito market. With Paddington open and Nottingham on line from the start of this month, that leaves 10 to go.

Two or three additional sites are planned for this year, with at least one in London, and then a further push into the capital will begin in 2014. As Davies says: “We are building a team in London to run an area, not just one store.”

Expansion has been aided by cash from the Business Growth Fund (BGF), which invested £3.25m in the business last April. The BGF owns what Davies describes as a 'significant' stake in the company and could increase its share in the future. “It has already expressed an interest in investing further. It’s a long-term relationship, there’s no fixed view about exit strategy or next-level investment.”

Expansion might be brisk at present but it’s something that Davies and co-founder Paul  Kilpatrick have been used to in the past. After the opening of their first site in 2005 in Piccadilly Gardens the pair quickly took on investment to open in the Trafford Centre, which was followed by launches in Liverpool and Leeds. 

“We went from one to three and then three to six sites very quickly,” says Davies. They then took their foot off the gas to concentrate on getting the foundations for expansion right but are now pressing forward again, thanks to the BGF deal. 

4Barburrito_Mat+Quake_Subst
Barburrito might focus more on sites in transport hubs

“A lot of people ask, ‘are you guys part of the great burrito race?’ and we say, ‘we started the great burrito race’. But we see it as a marathon not a sprint. We’re relaxed about the way we’re doing it.”

High-footfall locations are a must for the business – Nottingham was chosen for its strong student population – as is sensible site selection. “A lease is for life,” says Davies. “We’ve got to get every
site right. I won’t mention names but there are two or three fast-casual brands struggling on the back of expanding too quickly and taking the wrong site. Take two or three bad sites and you find yourself losing hundreds of thousands of pounds.”

This approach might manifest itself in an increased focus on transport hubs. Davies says he has made a huge effort with Network Rail to explain to them why his business is different and says the relationship is a good one. With Network Rail looking to raise the bar with its portfolio of operators and move beyond its Burger King and Upper Crust style of offer, it’s likely that Paddington won’t be Barburrito’s sole station stop.

“We are willing to invest in the right sites. The difference in London is site availability and people are having to pay premiums to get good ones, which changes the model as you have to include that in your return on capital. But then ultimately you’re paying for footfall. We are looking at other transport hubs. We like the model, it works well.”

It’s not just burrito chains but other fast-casual operators that must watch Barburrito’s progress. It fired the starting pistol in the race and could yet break the winners’ tape at the other end.

This article first appeared in the June 2013 edition of Restaurant​ magazine. View the digital edition here.

Photographs: Mat Quake

Related news

Show more

Spotlight

Follow us

Hospitality Guides

View more

Featured Suppliers

All suppliers