The Caterer Interview – Brandon Stephens

Brandon Stephens came up with the concept for Tortilla as an MBA student in 2007 and has grown it into the UK's largest Mexican fast casual restuarant business. He tells Neil Gerrard what the future has in store.

How did you end up founding Tortilla, given that you had no background in hospitality?

The business launched in 2007. How did you finance the first opening? When I graduated from business school, I had a huge amount of debt. I won't say how much, but it was in the hundreds of thousands and so I didn't have any money to put in. So I raised from everybody. I didn't have a wide network in London - my friends were other business school grads who also had tonnes of debt - and obviously, I wasn't a restaurateur. I didn't have a restaurant background and I didn't understand the property world, so it wasn't about connecting with mates with lots of money. 
I raised £5,000, £10,000, £25,000 from an enormous number of investors, just to get the first one up and running.

And now, just a few years later, you have 
12 sites and claim to be the biggest fast casual Mexican restaurant operator in the UK? Yes, we have been looking and we think - we are not sure, but we think - we might be the largest Mexican fast casual restaurant operator outside North America.

What else is in the pipeline over the next 
year or two? We have three more restaurants we hope to launch between now and the end of the year, which will be challenging, but the team is geared up for it. We have got Brighton, which is in construction right now, Camden, which we are about to start construction on, and 
Watford. Then in Q1 next year we have got Clapham High Street and Richmond, and we have also signed in Birmingham Grand 
Central. That will launch in early 2015.
In general for next year, what we are hoping to do is seven to nine restaurants - that is the business plan, and we will see. We were hoping to do six to eight this year and we fell a little bit short, so even though we are expanding at a good pace, we are still eager to improve that pace just a little.

What is the ambition? I always kind of relate it to how our investors view this, seeing as they are the ones with 
the capital and driving a lot of the growth. The backers Quilvest, who own YO! Sushi, see this as a Mexican version of that. Paul Campbell is another investor who comes from Clapham House, which owned GBK, and he sees this as a Mexican version of GBK. Both these chains are in the 60-70 units range. The investors would certainly like to see growth like that; certainly, we would like to get north of 40 at least.

How long do you think that will take? I don't know - it really depends on site availability, and that actually depends on how the economy is doing, because when the economy is doing well, you get more developments. Where you are relying on churn within the high street, and a limited number of very good sites with high premiums, it is challenging to acquire those sites.
I am fairly confident we can do six to 
10 stores a year for several years. What I feel confident about is that we now have the team to be able to follow that pace. And, to a degree, it is also about getting outside of London. Part of the impetus for getting into Leeds and going south to Brighton is to establish a footprint 
in those areas, which allows us to expand. Then you are not just focused on London and trying to battle it out in what is a very challenging property market.

What else drew you to go to Leeds? And why do you think Leeds specifically has become such
a hotbed for operators outside of the capital? The main reason for going into any of these properties is because it is a good opportunity and it makes financial sense, so we were 
convinced by Land Securities it was going to be a good venture. But what they managed to pull off was better than any of us [the operators] would have assumed or envisioned.
The launch marketing was fantastic, the design is outstanding, and it is just a cool place. It wasn't so much the fact that we wanted to go into Leeds specifically, but the fact that it was Leeds was fantastic, and now we have a base from which to drive additional locations within the market.

What is the demographic like in Leeds? I don't know about demographics specifically, but what we have seen is huge foot traffic throughout Leeds in general. When Trinity opened, a lot of it was drawn towards that, which was very encouraging, and since the restaurants opened we have heard about 
fantastic performance numbers - everyone is trading over forecast.
What everyone was concerned about at the time was whether they were going to be able to fill seven stores doing 300-400 meals a day as well as an extra 2,500-3,000 meals just from the Trinity Kitchen area [which opened later than the main shopping centre]. But the 
marketing they did to drive awareness was so superb that they flooded the place with people. We did in our first four days what we expected to do at maturity in a year's time.

Your price point for your burritos is lower than some of your competitors. How have you managed to achieve that and what sort of thinking went into that? We were previously pricing burritos at £4.95 and £5.95, and we were doing that because 
we wanted to show a low price point. There was a sense that in pricing that low it looked almost like we were pricing at a discount, 
or we were a lower value, lower quality kind
of operation. By pricing at £5 and £6 we now have a nice round number, which helps with our operational throughput.
It doesn't seem like we are trying to play mind games. The menu is very simple and easy to understand, so where a lot of the operators have expanded their menu and offered lots and lots of things at various price points, we have simplified it down to three products with two prices, and a bit extra for beef and a bit extra for guacamole. Our sales since then, coupled with a lot of other initiatives, have resulted in really strong like-for-like growth. Because we have got to a decent scale, we have been able to negotiate better prices. A lot of the guys have focused on marketing, but we focused on expansion, operations and growth. In getting growth, we built awareness and scale.

Since launching in 2007, what is the biggest lesson you have learned? You have a range of stakeholders that are 
associated with this company - employees, investors, suppliers, landlords, lots of different people - and it is so imperative to treat them, not just with respect, but to have good dealings and relationships with them. I don't know if it was necessarily a lesson, but the underlying theme we have relentlessly tried to focus on is integrity and being corporate citizens.

You have done Leeds now, you are doing Birmingham. Which other cities appeal to you? Manchester would obviously be great - it 
is a fantastic city and very busy. Liverpool, 
Nottingham and Cardiff all spring to mind as locations, not only because I think they would be good in theory, but because we have looked at specific opportunities where we think there is a great balance and footfall and population density and where people are ready and keen for this type of offer.

How much of a challenge has it been to educate UK consumers about Mexican food? Have we got it now? I think in the beginning there were so many concerns among the investors and others that people wouldn't understand this and they wouldn't get the taste and so forth. Everyone underestimated the wherewithal of the 
consumer and the propensity to want to try new products. Or there was just a pent-up demand for this because people have gone travelling and they knew what good Mexican food tastes like and they want burritos.
I was surprised that the level of awareness and the demand for good quality was as high as it was. I think some operators underestimate how discerning the population can be about good quality burritos and tacos. When
I first came over here I tried some guacamole from a supermarket that was in a jar, and it was made using peas as a filler and the third ingredient was mayonnaise. They no longer sell it. But I think there are still some operators who try to water down the taste and put in some fillers. We are not taking that approach. We are doing as close to Mission-style burritos - and by Mission, I mean the Mission district in 
San Francisco - as we can.