Article

Costa Vida CEO predicts 900% growth by 2016

CEO Sean Collins chatted with FastCasual.com about why he bought the chain, how he and his team have succeeded in growing it and his plans to have 500 units open by 2016.

March 8, 2013 by Cherryh Cansler — Editor, FastCasual.com

Editor's note: This is just one story in a recurring series that features interviews with top-level execs in the fast casual industry. If you would like us to feature a specific exec, please make your request in an email to Cherryh Butler at cherryhb@fastcasual.com.

After becoming the first Costa Vida franchisees in 2004, Sean Collins and Dave Rutter decided to go one step further in 2009 and acquire the Utah-based, fresh-Mex restaurant chain.

After taking over, Collins, now CEO of Costa Vida, and Rutter, president, quickly assembled a team of franchise veterans with more than 150 years of combined experience to help grow the business. The strategy seems to be working. Since 2010, the chain has grown from 23 locations to 49, and total net sales are up, too. In 2010, sales were about $22 million, but they hit above $30 million in 2011, and surpassed $38 million last year. Same-store sales growth has also increased the past three years: They were 2.8 percent in 2010, but increased to 7.54 percent in 2011, and 9.65 in 2012.

Sean Collins

Collins chatted with FastCasual.com about why he bought the chain, how he and his team have succeeded in growing it and his plans to have 500 units open by 2016.

Q: Why did you decide to buy Costa Vida?
Collins: My business partner Dave Rutter and I had become the first franchisees of Costa Vida back in 2004, and over a four year span, opened 13 franchise locations. In our time as franchisees, we witnessed the overwhelming customer satisfaction and excitement for the food we were serving and realized that this was here to stay. Ultimately, it was a situation where we knew we could use our past experience within the food industry and as entrepreneurs to grow Costa Vida into a much larger brand.

Q: Why do you think you have increased sales each year even in this economy?
Collins: I think a lot of it is our customers being receptive to the freshly made-from-scratch Baja-inspired food we serve every single day and passing the word onto others. We do not cut corners when it comes to the food we serve and have always strived to prepare everything with high-quality ingredients. I think our customers appreciate the fact that they can come in and feel good about what's in the food they're eating.

Q: What is your growth plan?
Collins: Our plan is to continue growing the Costa Vida brand through new multiunit franchisees, as well as corporate growth, while maintaining our dedication to fresh food with only the highest-quality ingredients. We will always retain corporate ownership of at least 10 percent of the restaurants in operation to give us an eye-level perspective of what our franchisees are experiencing and give us further credibility with existing and prospective franchisees.

The ultimate goal is to have 500 locations by 2016. We currently have 49 Costa Vida restaurants open and 217 in the pipeline. Additionally, we have recently opened our first location in Alberta, Canada, which is the beginning of our international growth.

Q: What is your ideal franchisee like?
Collins: We're looking to grow with franchisees and franchise groups that have experience in the space and are seasoned in the industry. We currently have a three-store-minimum franchise agreement but have signed deals as large as 42 locations.

Q:You have a calorie calculator on your website; why did you think this was an important feature to provide?
Collins: We've never wanted to feel like we're hiding anything from our customers. Part of being proud of the quality of the food we serve is being transparent about what's in it and that includes calorie content. Having an interactive nutrition calculator allows our customers to pick the healthiest options and be aware of the nutrition content of each meal.

We also have a Costa Vida Executive Chef on staff, whose job it is to be the face of the Costa Vida menu and continually maintain the quality of what we serve our customers.

Read more about operations management.

About Cherryh Cansler

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Cherryh Cansler is VP of Events for Networld Media Group and publisher of FastCasual.com. She has been covering the restaurant industry since 2012. Her byline has appeared in Forbes, The Kansas City Star and American Fitness magazine, among many others.

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