Burrito kings

How did Poncho 8 come about?

I was working at Goldman Sachs banking firm for two years from 2007,  and I hated it. But one perk of the job was travelling to New York, which I used to do regularly, and it was here where I got to see how well they produced and sold their burritos. I knew I wanted to take this concept back to the UK and by the time I got back there, I had already done my research, business plan and funding for what is now, Poncho 8.

So I quit my job in Jan 2009 and opened our first site in September that year. Nick Birkett, my business partner, came on board with me. Nick was an investment manager at Black Rock at the time, and he quit his job a year after me.

What is Nick’s involvement in the business?

We are both operationally lead, although Nick is technically the commercial director, so he looks after the marketing, PR, stunts, magazines and then I head up operations with the operations director. But as I said, we are both ops lead.

How did you come up with the concept?

The first principle was to offer people a decent offering for lunch. We used to go out for lunch every day during our time at the banks, yet there would only be two choices for lunch. This would be sushi or a sandwich from Pret or Eat, for example. There just wasn’t enough out there. And the coffee chains at the time weren’t pushing their food offering. So that’s what we set out to do.

We took the production line set up and the food inspiration all from America, but wanted the branding to be more abstract and a bit more approachable. We also wanted to serve in a friendly environment.

We want our customers to walk into our stores and feel Mexican and Poncho, friendly – vibrant, colourful and distinct. When you walk past, you know it is a Poncho.

Why 8? You don’t have eight stores?

My dad is Chinese, and eight is my lucky number – there’s nothing more to it. What we originally wanted was a name that was half English, half Spanish or Mexican, but the Poncho is a recognised enough name that people have heard and will remember.

What was the hardest bit about setting up the business?

The hardest thing was convincing suppliers that we are the real thing and that we were going to pay our bills, and get a property.

Why do you think the whole Mexican trend is growing?

It has become a real trend. Why? I don’t know. I think people’s palates are more developed and they are more interested and excited about things that aren’t the status quo. A lot of the ingredients go together in a burrito. You can make a really bad tasting sandwich if you put chutney, marmite and ham altogether, however from the ingredients on most Mexican menus, it’s hard to get a really bad tasting burrito. The rice goes with the beans, with the meat and with the toppings. That, in general, helps.

We saw it two generations ago with Italian food. My parents and their parents never got a takeaway pizza on a Saturday evening, whereas this generation we do and our kids will and I will when I am 50. We are hoping Mexican will become as engrained in the culture as that.

Identify the opportunities and challenges for Poncho 8?

The opportunities are to become a market leader and product leader. The difficulty is finding good sites. The difference between a good and bad site is worth hundreds of pounds.

How do you find the good sites?

We have a property guy who has been doing this kind of thing for years. But ultimately, it’s all got to do with gut feel. Is it a nice shop, would you want to walk in, could you make it work? A lot of it is driven by operations.

What’s the staff turnover like?

We run at 72% staff turnover. Last year was 138% so we have pretty much halved, which we are happy about. Our target for next year is 50%.

What are your expansion plans?

There are six stores in total, with the seventh opening in July/August in Regents Place, Warren Street station. By the end of 2015 we would like 18 shops, which is do-able. We have our work cut out but we will see how we go.

How do you maintain standards?

This is tricky, which is why we appointed ‘head of fun’(WHO IS THIS) and an operations director. We also have seven other people in the office to help drive the business forward rather than maintain. Do we get it right all of the time? No, but we are making fewer mistakes and learning from our mistakes each time.

How do you stand out from your competition?

I would say we are healthier. We have wholewheat tortillas which nobody else has, we have brown rice, which again, most people don’t have. We don’t compromise on our ingredients. What we have added recently is a more ‘all day’ offering, so we have a breakfast, coffee and a grab and go range which is selling really well.

Identify your direct competitors

Benito’s Hat, Barburrito, Tortilla….

Is your pricing competitive?

Yes, we are in line with our competition. We are offering medium burritos for a fiver, and a large for £6. They do top out at £7.50 when you add guacamole.

The thorn in our side is that we have VAT to pay. So of a £6 burrito we only get £5 of it. That really is difficult.

Who is your core target audience?

75% of our customers are 25-35 males, however that 25% of females is growing in this shop (St Paul’s). The Paddington shop, our newest, is up to 50% females. It works better to be a balanced brand.

Why is this?   

I don’t know, maybe females see burritos as more masculine. I think maybe word has also got around that we are now offering healthier options, which probably appeals to more females.

Does Poncho offer a delivery service?

Poncho 8 already offers a free delivery service for breakfast and burritos to the entire Square Mile (from Holborn to Old Street, Whitechapel to London Bridge). Only 45 minutes warning is required and only a £15 minimum spend. This range will be extended to include Paddington, Maida Vale and Notting Hill.

What are the most popular items on the menu?

The chicken burrito is by far the most popular item on the menu. 46% of all of the money we took last year was from that one product.

Our ‘stand out’ products are the slow cooked products pork tortas (Mexican sandwiches) with crunchy coleslaw, Mexican cheese and salad. They are a lot more Mexican and flavoursome.

What’s your favourite?

The pork – amazing!

Poncho 8 recently launched a grab & go Mexican food range. Tell me about it

We have salads, wraps, fruit pots, but all with a Mexican twist. The chicken chorizo wraps with Poncho 8’s smoked tomato salsa, chipotle mayonnaise, sliced roast red peppers and salad, go down well with our customers.

Outside of Poncho 8 where else do you eat at lunchtime?

I eat all over the place. I’ll eat at Itsu, Pod, Vital Ingredients and so on. I am always looking out for our competition. I never really switch off. I also eat at my dad’s restaurant, The Jade restaurant in Salisbury, which is where I used to work from the age of four. This is a completely different set up to Poncho 8 but the food is as good.

Are all of your sites just grab & go?

Our Paddington site has the most seats and our next store will have even more than this. We are finding that the lingering time of customers increases the average spend. We are also less hit by bad weather as more people can queue inside. We find all of these things improve with a larger site.

What is the biggest trend going forward?

In grab and go, health is a growing area. We are seeing more of our salad ranges being sold and we are seeing more of our specifics, for example, a low calorie meal, being served up. More people are asking about nutritional content.

What's your proudest achievement?

This is a tough one. It's happened a few times when employees (team members, managers etc.) are truly grateful for their involvement in Poncho. They get emotional and thank us for improving their lives. That's what makes it worth while and makes us very proud.

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