LOS ANGELES GrowthPoint Restaurants, an early stage restaurant-investment company created by Cosi Restaurants founder Nick Marsh, has committed $1.2 million to the Mendocino Farms Sandwich Market, the company said this week.
Los Angeles-based Mendocino Farms, which currently has two locations, is the second restaurant start up investment for New York-based GrowthPoint. Marsh is also executive chairman of Chop’t Creative Salad Company, which has 10 locations in the New York and Washington, D.C. area.
Mendocino Farms was founded in 2005 by Mario Del Pero and investor-partner Ellen Chen. The first two locations in downtown Los Angeles are lunch only , open Mondays through Fridays. With the investment, Del Pero said he plans to focus on finding “great locations” for the next two Mendocino Farms units.
Marsh said he was attracted to Mendocino Farms as an investor because of its food.
“The sandwiches are ‘craveable’ and special beyond anything I’d experienced before,” he said.
He was also impressed that customers sometimes stand in lines “30 to 40 [people] deep” at lunch, and that the company’s operational model moved people quickly through the door.
Marsh noted that the initial investment is deliberately on the small side to help the concept focus on slow and careful growth.
“One of the critical strategic things we talk about is ‘don’t grow too fast,’ said Marsh. “It’s important to focus on the customers you have now. For early stage companies, sometimes their eyes can get too wide and a really big bank account can hurt rather than help.”
He noted that his initial investment in Chop’t was $1.5 million in 2006, but the investment since has grown to $12.5 million in total. The fast-casual salad concept is scheduled to open another four locations this year and six next year, with systemwide sales projected to reach $24 million by the end of 2010.
Mendocino Farms is expected to follow a similar growth path.
The sandwich brand first opened a location in 2005, in a difficult-to-find, subterranean, 800-square-foot former Starbucks in downtown Los Angeles. The “eco-artisan” concept’s focus on local produce and quality ingredients — with the help of former fine-dining chef Judy Han — has developed a cult-like following and the unit is now averaging about $1.5 million in sales annually.
Top selling sandwiches include a roast chicken and prosciutto panini with fresh mozzarella, pesto and crushed honey-roasted almonds; and a Vietnamese-style banh mi sandwich made with braised Kurobuta pork belly.
The menu also includes salads and soups and the concept has a strong catering aspect. Del Pero estimates that the unit serves about 250 people per hour at lunch and the average check is about $10.25.
Mendocino Farms opened a second location last October in a more visible downtown Los Angeles location with about 2,000-square-feet. That restaurant is averaging about 20 percent more in sales than the original location, said Del Pero. A third location is scheduled to open this spring in the Los Angeles coastal neighborhood of Marina del Rey, which, unlike the first two, will be open for lunch and dinner seven days a week.
Del Pero is also an investor in Casa restaurant and bar in downtown Los Angeles, and he founded and later licensed the three-unit Skew’s teriyaki concept.
Del Pero said he sought out GrowthPoint’s investment “more for mentorship than money,” adding that he was an early follower of the Cosi brand as one of the first to establish itself as a “gourmet neighborhood sandwich shop.”
Marsh also noted that the “better sandwich” movement, with brands like Mendocino Farms taking the lead, will follow the same growth track as the boom in “better burgers,” which are among the fastest growing brands today.
“So many influences are changing the way people think about food,” said Marsh. “The sandwich segment is going through a transformation.”
Contact Lisa Jennings at [email protected].
