Baja fresh/16″/dp1st/mike2nd By SHELLY GARCIA Staff Reporter Greg Dollarhyde is betting you’re hungry for healthy fast food. No french fries or secret sauce. Nothing that comes in a bun or a bucket. Just good low-fat food served with lots of fresh veggies. Dollarhyde and his partners, who recently bought the popular Baja Fresh chain, are among the growing number of fast-food purveyors trying to cash in on the hunger for all things healthy. They believe more and more consumers will favor healthy offerings over simple convenience when choosing a restaurant. “This is a part of the restaurant business that’s going to continue to grow rapidly,” said Dollarhyde, president and chief executive of Westlake Village-based Baja Fresh. “People want better food than just fast food.” Baja Fresh, with 49 restaurants and more than $50 million in annual sales, fits into a category known as upscale or adult fast food. In contrast to traditional fast-food restaurants, where food is pre-cooked and customers can only select from a fixed menu, chains like Baja Fresh cook some of their food to order and allow customers to substitute items on the menu. For instance, diners can order a burrito usually sold with rice, beans, onions, cilantro and salsa without some of those ingredients or with additional ingredients such as sour cream or cheese. There’s also a fresh salsa bar to top off your entree. “They offer value and large portions. And, above all, the thing that differentiates them is the perception that they serve fresh food,” said Ed Engoron, president and chief executive of Perspectives/The Consulting Group Inc., a Los Angeles firm that specializes in restaurant management. “Fresh food is driving the category today.” Dollarhyde said it takes 25 percent to 50 percent more staff hours to run a restaurant like Baja Fresh than a traditional fast-food outlet because of the food preparation that takes place on site. Workers’ pay also tends to be higher about $1 an hour more than traditional fast-food restaurant wages, which start at about minimum wage. For all its promise, the growth potential for restaurants like Baja Fresh is somewhat limited when compared with traditional venues. Unlike burgers, Mexican food is not widely accepted outside major metropolitan areas. And the pricing at these fresh-food restaurants, where an average meal runs $6 to $7 per person compared to under $5 for traditional fast food, also limits mass-market appeal. “This is not something that’s going to work in Wichita or Fargo,” said Engoron. He points out that El Pollo Loco, which operates in the same fresh-food category as Baja Fresh, attempted a national expansion and then pulled back to its regional roots. Rather than follow the far-flung strategy of McDonald’s Corp., the new owners of Baja Fresh want to capitalize on markets where the restaurant has already made inroads. The chain currently operates restaurants in Northern and Southern California, Nevada and Arizona, and has franchise-owned eateries in Colorado and Washington, D.C. “You’re much better off building 100 restaurants in a few cities than building a few restaurants in a lot of cities,” Dollarhyde said. By concentrating expansion in areas where the restaurant is already known, he believes brand awareness can be enhanced. “You get better word-of-mouth,” Dollarhyde said. “Baja Fresh doesn’t advertise, but if you’re good, word-of-mouth will carry your business.” Along with increasing the number of company-owned stores, Baja Fresh plans to expand its network of franchise-owned restaurants, which now total 35, during the next 18 to 20 months. The partnership that bought the chain includes Catterton Partners, a Greenwich, Conn., investment company; Oak Investment, a Minneapolis-based investment fund that specializes in retail enterprises; and Grumman Hill Group in New York. The partnership acquired a controlling interest in Baja Fresh in a cash transaction. Selling that controlling stake was Jim Magglos, who founded Baja Fresh in 1990.