FRANCHISE INFORMATION REPORT | 1...1992, Pancheros has grown from one location in Iowa City, Iowa,...

FRANCHISE INFORMATION REPORT | 1

CONTENTS

®

WHAT IS A PANCHEROS FRANCHISE?

THE PANCHEROS FRANCHISE STORY

WHAT ARE MY START-UP COSTS?

HOW WILL PANCHEROS SUPPORT ME?

HOW DO WE FIND THE PERFECT LOCATION?

WHAT DO OUR FRANCHISEES HAVE TO SAY?

NEXT STEPS

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WHAT IS A PANCHEROS FRANCHISE?BURRITO FRANCHISE WITH A CULT-LIKE FOLLOWING IS BUILDING FANS AND DEMAND ACROSS THE COUNTRY

Pancheros Mexican Grill is the best-kept secret in the Midwest, where the brand has won millions of devoted fans who crave our fresh-pressed, handmade tortillas, our outstanding burritos that actually stand up on their own, and our ability to deliver a perfect bite each time because of our famous “bob” technique. Since our founding in 1992, Pancheros has grown from one location in Iowa City, Iowa, to over 65 locations in more 13 states. Now, the secret is out and Pancheros is ready to capitalize on

the tremendous demand for Mexican food by rapidly expanding across the United States.

NOW IS THE PERFECT TIME TO OPEN A PANCHEROS FRANCHISE

Market Research reports that the Mexican fast casual/QSR restaurant segment brings in over

$52 billion annually(1), and that boom is poised to continue well into the future.

Franchise Direct reports that the Mexican food sector is outpacing the rest of the industry, and the same publication reports that “Mexican food franchises are outperforming all other types of restaurants or fast food franchises.”(2)

While the market has a few nationally recognized brands, the demand for

Mexican food is skyrocketing. CHD reports that Mexican food is the second most popular menu item(3), and MIC reports that millennials

eat a burrito

at-least once a week(4) –

and as Pancheros has already proven over 25 years in business, this is the area where we excel.

There’s a reason why we’ve been in business for over 25 years. Not only is our food the most exceptional Mexican food in the QSR segment because we offer fresh-pressed tortillas, made fresh for each order and stuffed with the freshest ingredients that are blended together to ensure the perfect bite, but our business model is also as easy to understand as chips and queso. With only five items on our menu and commitment to cross-training staff, Pancheros’ approach to simplicity is beneficial not only to customers but also to franchisees; the entire model has been built to be labor efficient. Pancheros has developed a comprehensive training platform, provides ongoing coaching and marketing support, and has invested in technology to make inventory and daily management more efficient, which helps our franchisees thrive in their businesses.

“We worked to make our concept as simple as possible,” says Rodney Anderson, President and founder of Pancheros. “We have been in business

for over 25 years, and we have franchisees who have been with us for over a decade now. Our concept is consumer-tested, and our franchisees are really thriving in their businesses. We’ve done very well in our original core market of the Midwest, and we have been equally successful in the Northeast. We’re opening new Pancheros locations in new markets across the country, and we’re really looking for the right people to join our franchise family.”

YOU DON’T HAVE TO KNOW HOW TO A ROLL A BURRITO TO THRIVE IN A PANCHEROS FRANCHISE

You don’t even need to know how to make guacamole before franchising. Pancheros has spent over 25 years proving the business model in over 65 locations, and as a result of our efforts, we have developed an immersive, comprehensive training platform that allows new franchise owners to master their businesses – all that we require is that our franchise owners share our passion for Mexican food and want to take a meaningful role in their communities.

All new franchise owners attend an immersive, three-week-long training course at one of our open restaurants, near our headquarters in Iowa City, Iowa. Over three



weeks, you will learn every aspect of your new business, from how to follow our recipes and prepare our food, to how to work on the line, how to lead a team, how to use the POS system to manage inventory, how to market effectively in your community and so much more. After you’ve completed training, you will have acquired all of the skills to open your business and bring the most delicious Mexican food to your community.

Because we recognize that owning a restaurant that doesn’t cut corners on the quality of its food and prepares everything it serves in-house might seem overwhelming, Pancheros has developed simple recipes that are easy to follow. We give you the tools to cross-train all of your employees, so that everyone on your team can perform any job in the restaurant with excellence. We also make inventory extremely simple with our state-of-the-art POS system.

“Simplicity is the core belief within Pancheros,” says Ryan Murrin, VP of Marketing and Franchise Development with Pancheros. “We only have five entrees on our menu, and our recipes are never more than a page long. They are easily understood, easily trained and easily replicated to ensure that we deliver delicious and consistent food. We make sure that all employees are cross-trained, which allows us to be more fluid, and keeps our labor model very, very lean and very efficient. We’re very good at managing relationships with our partners to ensure that we’re getting the best products at the best price, which helps keep that investment level low. It’s easy for our customers to understand, it’s easy for our employees to understand, and easier for our franchisees to execute on a daily basis.”

1. Franchise Direct, “Trends and Facts about Mexican Food Franchises,” (paragraph 3),www.franchisedirect.com

2. Franchise Direct, “Trends and Facts about Mexican Food Franchises,” (paragraph 1),www.franchisedirect.com

3. CHD, “CHD Expert Evaluates the Mexican Restaurant Industry, the Second Most Popular Menu Type in the USA,”www.chd-expert.com

4. MIC, “Millennials Can’t Go a Week without Eating a Burrito, Survey Finds,”www.mic.com


THE PANCHEROS FRANCHISE STORYHOW A BRAND ROSE FROM HUMBLE BEGINNINGS IN A COLLEGE TOWN TO ONE OF THE MOST BELOVED MEXICAN FAST CASUAL BRANDS IN THE COUNTRY

When Rodney Anderson opened the doors to the first Pancheros restaurant in Iowa City, he knew that the location was perfect. Positioned directly across the street from the University of Iowa, where more than 33,000 students are enrolled, and located right next door to several popular bars where students go to unwind and have fun. This was in 1992, and Mexican food was far from the mainstream staple it is today. Rodney was betting everything that when the students tasted his Chicago-style burritos, his business would become a hit.

“We founded Pancheros in 1992, right across the street from the University of Iowa, serving a lot of a college kids,” says Rodney Anderson, President and founder of Pancheros. “We started by serving Chicago-style burritos because that is what my friends and I grew up with. We would go

to Chicago and experience these really authentic taquerias that we didn’t have here in Iowa at the time. We found that this food was extremely popular with young people and we wanted to bring the experience back to Iowa. We secured our first location, a beautiful brick building from the 18th century, and it’s still there today. I’m very proud to say that the business is just as popular now as it was when we started. It’s become something of a tradition for the students to eat at Pancheros.”

PANCHEROS GRADUATES FROM A BUSINESS SERVING COLLEGE KIDS TO AN INNOVATIVE MEXICAN FAST CASUAL RESTAURANT

After the first Pancheros became a hit, Anderson recognized that the concept was strong enough to begin expanding beyond the college market. Soon, Pancheros was in multiple cities and towns in Iowa, Illinois and Michigan – and as this was happening, Mexican food was rising in popularity across the country. Anderson didn’t have to explain what burritos were to his customers any longer, nor did he have to explain that the ingredients were high-quality and that everything was made fresh in-house.


The customers came because the food was delicious and so Anderson set about the task of taking the concept to the next level.

In 1998, Pancheros introduced the tortilla press to its restaurants. This remains a key differentiator between Pancheros and the rest of the Mexican fast-casual chains. Customers watch as homemade dough-balls transform into perfectly pressed tortillas for their burritos in seconds. The freshness of the product of the finished product is apparent just as much from taste as it is from touch, as Pancheros’ burritos are so structurally sound that they stand up on their own. Ten years later, Pancheros introduced the “Bob” tool, which perfectly blends the ingredients together before the burrito is rolled up, ensuring that the customer gets a perfect bite every-time.

At the same time that Pancheros was finding new ways to heighten the food experience, Anderson and his team were working on simplifying the concept so that the brand could expand by franchising the concept.

“We spent several years proving the business model, and sought to find ways to simplify the concept so that franchisees could successfully implement the model and then replicate it, in order to help them scale up to multi-unit ownership,” Anderson says. “We developed great

systems, built a great training platform, created exceptional marketing support and real-estate support teams and we really have outstanding unit economics. This is a simple business, and our franchisees thrive with us because all they have to do is follow the model that we’ve proven over 25 years in business.”

THE FUTURE OF PANCHEROS IS

BRIGHTER THAN EVER BEFORE

After 25 years in business, Pancheros is ready to expand our cult-following on the national scene and continue our ability to grow smart and effectively. The strategies that Anderson and the Pancheros executive team established to simplify the business model has created opportunities for entrepreneurs to realize their dreams of owning a Mexican restaurant in their communities. Today, Pancheros has over 65 locations in 13 states – and while that growth is impressive, the majority of it has been organic. Entrepreneurs would come to Pancheros, try the food, and would leave ready to open Pancheros in the markets where they live.

“One of the things that is different about our brand is that we grew from Iowa,” Anderson says. “We grew from smaller markets and out into the rest of country. We didn’t have the opportunity to not be efficient, to not offer an exceptional product, simply because there weren’t’ a lot of people around. We had to get everything right and build our reputation one person at a time. As a franchisor, it makes me feel enormously proud that we have helped so many entrepreneurs realize their dreams and that our model allows them to thrive in business. As we continue to grow, we’re looking forward to welcoming more entrepreneurs into the Pancheros family. This is an exceptional brand and the potential to do well is enormous.”


WHAT ARE MY START-UP COSTS?A BREAKDOWN OF THE COSTS AND FEES ASSOCIATED WITH INVESTING IN A PANCHEROS FRANCHISE

Pancheros is poised to become a dominant brand in the $52 billion Mexican restaurant industry. Founded in 1992 by President Rodney Anderson, whose first location in Iowa City, Iowa is still thriving today, Pancheros has won an enormous following by serving the perfect burrito and homemade Mexican food. Over 25 years and more than 65 locations later, Pancheros has launched dozens of entrepreneurs into successful business ownership. With the demand for fresh, fast and delicious Mexican food skyrocketing, Pancheros is rapidly expanding across the United States and is actively seeking passionate entrepreneurs to capitalize on the growing demand for Pancheros in their communities.

“Now is a great time to invest in Pancheros because we’ve developed a brand that is vibrant and energetic, and we have food that really resonates with our customers,” says Ryan Murrin, VP of Marketing and Franchise Development with Pancheros. “We’ve worked really hard to make Pancheros an affordable investment, and more than anything we have a strong team of people who work collaboratively with our franchisees to help them thrive in their businesses. As the demand for Mexican food continues to increase, the fact that we offer a simple business model, that leverages a lean labor model and state-of-the-art technology really positions us as a brand with strong growth-potential going forward.”

WHAT DO I GET FOR MY FRANCHISE FEE?

As a Pancheros franchisee, you will have the support of an established, rapidly growing brand behind you. We focus on helping entrepreneurs thrive in business, and our franchise owners


have access to an immersive initial training platform, ongoing personalized training, extensive marketing support and more to help their businesses grow and prosper.

WHAT MARKETS ARE AVAILABLE?

Pancheros has prime territory available in markets across the United States, with a strong focus on the Midwest and Northeast.

WHAT IS OUR BUSINESS MODEL?

Pancheros excels in serving exceptional, homemade Mexican food. Everything from our famous tortillas, to our queso, guacamole and beyond, is prepared fresh, in-house every single day. Pancheros food is so fresh that we do not even have a freezer in our restaurants, and this level of quality is something that our customers can taste. While the level of preparation is higher in Pancheros than in other Mexican concepts

who bring a lot of their food in pre-cooked and bagged, our menu is simple and our recipes are easy to master. Our restaurants are placed in corner locations in highly visible retail shopping centers and require up to 3,000 sq. ft. Pancheros has a real-estate team to help new franchise secure properties, negotiate fair leases and oversee build-out and construction. Our team will help you run a thriving business that becomes a part of the dynamic fabric of your community.

The investment and expenditures required ofactual franchisees may vary dependingon many factors, including geographical area,the amount of space leased, and the businesscapabilities of any particular management andservice team.

Unless specified otherwise, you will incur expenses in establishing your Restaurant. Except for the real estate lease and utility deposits, which are imposed and collected by third parties, which may be refundable if permitted by the third party, no expenditures are refundable. The costs may vary substantially if you choose to construct a building for your Franchised Restaurant. However, you are not required to construct a building.


HOW WILL PANCHEROS SUPPORT ME?PANCHEROS OFFERS AN INDUSTRY-LEADING TRAINING PLATFORM THAT HELPS FRANCHISEES THRIVE

Franchising with Pancheros means you’ll never be in business alone. Over its 25 years in business, Pancheros has developed one of the most comprehensive training and ongoing support platforms in the entire industry. In that time, we have helped dozens of entrepreneurs realize their dreams of owning a thriving Mexican Fast Casual restaurant that becomes a dynamic part of their community.

Founded in 1992, Pancheros has made the path to ownership as simple as possible for new franchisees. Starting with our investment costs, which are some of the lowest in the entire Mexican Fast Casual industry, we greatly reduce

the barrier to entry and make ownership more accessible to entrepreneurs. Our executive team has worked significantly to simplify our business model, and the results have been outstanding.

“We worked hard to make sure that our business model is as simple as possible for our franchisees to implement and execute on a daily basis,” says Ryan Murrin, VP of Marketing and Franchise Development of Pancheros. “When I think of our franchise support, it’s best to describe it in three buckets:


We help our franchisees through the process of site selection, design and construction, getting that restaurant up off the ground and ready to open.

Our franchise training at our support center, which helps our franchisees master our business model, understand what we do, how we do it and why we do it.

Then we have ongoing support. We’re very operationally focused, so we are in our franchisees’ restaurants on a regular basis, and we reach out to our franchisees on a weekly basis to ensure that their businesses are thriving. On the back end, we’re always working with our vendors to keep costs down and to help our franchisees maximize their profit potential.”

HERE IS HOW WE HELP OUR FRANCHISEES THRIVE IN THEIR BUSINESSES:

OUR IMMERSIVE TRAINING PLATFORM WILL HELP YOU MASTER OUR BUSINESS MODEL

Because we know that the most experience our franchisees may have had serving Mexican food might be limited to making guacamole for their Super Bowl parties, we have developed an immersive training platform. Over the span of three weeks, all new franchise owners will work in an open Pancheros restaurant. While there, you will work in every role in the restaurant. You will learn how to follow our simple recipes to prepare everything on our menu, you will learn how to use our tortilla press, how to roll up a burrito, make our queso, salsas, and more. You will learn how to use our state-of-the-art POS system to manage inventory and keep track of your sales. You will learn how to run

the line and perform exceptional customer service. Most importantly, you will experience firsthand how our cross-training strategy allows everyone on your staff to perform all the jobs in the restaurant, which will help you manage your ongoing labor costs.

By the end of this training course, you will be prepared with the skills you need to open your restaurant with confidence.

FINDING THE PERFECT LOCATION

We realize that many of our franchise owners are entrepreneurs — not real estate agents who know how to find the perfect location for a new restaurant. Pancheros has an experienced team to help you find a location with the best potential for long-term success in your area. The ideal Pancheros restaurant is located on an end-cap lot of a highly-visible shopping center that gets heavy traffic at lunch and dinner times. We look for a mix of business and residential populations to ensure that your new business has the customer base to support your business over the long-term. We also help you through the process of negotiating a fair lease with your landlord and assist with the build-out of your new restaurant.

In short, we want to help you focus on opening your new business and marketing in your community, so we help to make the real estate process as easy as possible for you.

GRAND OPENING SUPPORT AND BEYOND

Launching your new business is the first step of your new journey as a Pancheros franchise owner, and we will work with you to help you make sure that you have all the tools you need to make your business a hit right out of the gate. We provide marketing support, including community marketing tools such as

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our sampling strategy using Burrito Boxes®, which allows your community to try our food, to Queso for a Cause®, a community fundraiser that allows you to give back. We also provide a fully integrated six-month marketing plan leveraging social, digital and loyalty support as you open your restaurant, as well as national marketing support to connect with your customer base and drive business to your restaurants. As a new franchisee, you will also get access to our loyalty program, which currently has more than 300,000 members and is growing every day.

We don’t stop there. To help your new restaurant get off to a great start, we send a field representative to help you in your business during the grand opening. Your field representative will visit your business on an ongoing basis to ensure that your business is thriving and to continue to provide mentorship, advice and additional assistance going forward. Our executive team will provide coaching and consultation on a regular basis and are a phone call away incase issues arise.


HOW DO WE FIND THE PERFECT LOCATION?PANCHEROS SUPPORTS NEW FRANCHISEES THROUGH THE ENTIRE PROCESS OF FINDING THE IDEAL LOCATION IN THEIR COMMUNITIES

Pancheros is one of the most exciting franchise opportunities in the fast-casual dining industry. Since our founding in 1992, Pancheros has built a loyal following of millions of fans. How, you ask? It’s simple. In fact, simplicity is at the core of everything we do, from pressing each tortilla as it’s ordered from scratch-made dough, to high-quality, fresh ingredients mixed for the perfect bite. Our menu, operations, in-store and digital experiences are designed to focus on simplicity.

That laser focus on simplicity has allowed Pancheros to grow from our humble beginnings as a college favorite in Iowa City to over 65

restaurants in more than 13 states. And we’ve brought our Burritos Better Built® to more locations this year, including the East Coast and into the Dallas, TX, market, our first venture into the Lone Star State.

One of the reasons why Pancheros continues to enter new markets with ease is because we have site selection down to a science. We know exactly what to look for in a location in order for a restaurant to thrive over the long-term.

“We work to make the entire process as easy as possible for our franchisees,” says Shannon Krauss, Director of Design and Construction with Pancheros. “We know that our franchisees signed on to operate restaurants, not construct and develop them, and then we support the franchisees as they work with contractors to build out the restaurant. The entire buildout process is about 10-12 weeks, which goes by very quickly. We make it easy on our franchisees so that they can feel the excitement about their new restaurant and not the stress.”


HERE ARE THE REQUIREMENTS FOR NEW PANCHEROS RESTAURANTS

SITE REQUIREMENTS

2200–2400 square feet

High visibility end-cap and freestanding locations

30 feet minimum frontage

Maximum signage allowed by local code

Patio seating

35 parking spaces

Power retail centers

DEMOGRAPHIC REQUIREMENTS

20,000 daytime population in 2 mile radius

$65,000 median household income

70%+ population with some college education

UTILITY REQUIREMENTS

400 amp, 208 volt three-phase electrical service pulled to two (2) panels

One (1) ton HVAC per 150 square feet with economizers

Sprinkler heads turned up at 15′ 0′ above the finished floor

Gas: 950,000 BTU’s in addition to any requirements for rooftop units

4′ sanitary sewer line

2′ water line for 67.5 gallon/minute @ 45 psi

Grease trap (if required by code to be exterior)

High-speed, digital commercial data communications


WHAT DO OUR FRANCHISEES HAVE TO SAY?PANCHEROS FRANCHISE OWNERS OPEN UP ABOUT WHAT THEY LOVE ABOUT THEIR BUSINESSES

A franchise concept doesn’t grow to over 65 locations in 13 states without getting more than a few things right. Since our founding in 1992, Pancheros has won millions of fans who crave our homemade take on Mexican food. While our customers may not know that all of their favorite items on our menu, from our fresh-pressed tortillas, to our queso, to our salsa, marinated steaks, guacamole and more, are prepared in-house, every single day – they most certainly can taste it.

In fact, the majority of our franchisees were fans of our brand before they joined the Pancheros franchise family – and the reason why our brand has grown so fast and has won so many fans is directly the result of our franchisees. While the majority of our franchisees did not have restaurant experience before they joined us, our straightforward business model and industry-leading training platform has given them the tools to thrive in their businesses.

THIS IS WHAT OUR FRANCHISEES HAVE TO SAY ABOUT WHY THEY LOVE OWNING A PANCHEROS FRANCHISE:

“It was really

unbelievable going to Pancheros for the first time. We had never experienced

Mexican food in the segment that tasted so fresh – and the hand pressed tortillas, there’s nothing that compares. By the time my brother and I left, it was a done deal – we knew we wanted to become owners. We started in Bismarck, North Dakota in 2007 and had an enormous success from day-one. The customers really responded to having food that was clearly different than what other brands offer. That made it really easy for us to expand into the second location and the third location. Our success is also because we’re really active owners – I signed on when I was 23, and I’m 35 now, and so I’ve been following the Pancheros business model for 12 years. This brand has been around for as long as it has for a reason – if you commit to the brand, commit to the business model – you will be happy with the results.”

STEVEN MAJKRZAKCO-OWNER OF THREE PANCHEROS FRANCHISE

RESTAURANTS IN MINNESOTA AND NORTH DAKOTA

“I’ve owned two Pancheros

locations in Iowa for about 15 years now. The reason why we’ve been successful

for the last 15 years is because as owners, we’re actively involved in our restaurants. I pay

attention to the details – we have great food, we follow the recipes, we follow the business model, and

we provide great service in a clean environment – if you do, you’re going to be successful. Because we have

food that is so much better than our competitors, we take our food to one business a week in our community to allow them to try it – because we never assume that everyone has tried our food and that has been enormously successful for us. Because myself and my partner are in the restaurants all the time, people in our community know that we’re the owners, and that goes a long way to build a customer base. Pancheros is a good investment – and people always want to talk about how much money you can make – I’ve been in business for 15 years, we’re

successful. If you put the time in and work in, and Pancheros will teach you, and if you follow the model,

you will be successful.”

DAN SACCOCO-OWNER OF TWO PANCHEROS FRANCHISE

RESTAURANTS IN IOWA

“My dad was the original owner – and he had

been successful for 14 years – and when the time came for him to retire, I decided that

I wanted to keep the business in our family. I run the restaurants with my husband, and it allows us to

keep each other balanced and use our different skill-sets to benefit our business. It also allows us to have a

great quality of life. We have young children, and so if we need to be with them, or attend a school function, we can. Pancheros is a great brand to invest in – it says a lot that founder of the company is the president of the company after 25 years. The support from corporate is absolutely terrific – they’re very responsive, and if we have questions, they always get answered. We have friends that are

franchisees of different brands and they do not have the same experience.”

SHELLY ROBINSON


FRANCHISE RESTAURANTSIN IOWA

CO-OWNER OF TWO PANCHEROS

NEXT STEPSREADY TO BECOME A PART OF A NATIONALLY EXPANDING, FAST-GROWING MEXICAN FAST CASUAL FRANCHISE?

A member of our franchising staff will reach out to you by phone. The first call usually lasts just a few minutes and gives us a chance to introduce ourselves to one another and address initial questions.

We are looking forward to hearing from you and are excited that you’re interested in bringing Pancheros to your community as we continue to rapidly expand across the United States.

Thank you for your interest in becoming a Pancheros franchise owner!

FRANCHISE INFORMATION REPORT | 1...1992, Pancheros has grown from one location in Iowa City, Iowa,...

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Transcript of FRANCHISE INFORMATION REPORT | 1...1992, Pancheros has grown from one location in Iowa City, Iowa,...