Overall inflation and price increases are forcing consumers and producers alike to change the way they live and operate. The Margaritas Mexican Restaurant chain knows this experience all too well. Inflation, rising costs and supply chain issues, in addition to the upcoming recession, led Margaritas chief operating officer Bob Ray to change the Margaritas business model.

With 25 locations throughout the Northeast, Margaritas has been around for 35 years. By shifting the Margaritas business model, the restaurant chain has been able to survive and even thrive despite ongoing economic pressures.

To adjust to the pandemic, Margaritas eliminated lunch hours as well as Mondays. These changes led to direct benefits for Margaritas. Despite ongoing hurdles for the industry, based on Q2, Margaritas announced that they managed to have 89% overall customer satisfaction ratings and a 90% food quality satisfaction rating.

To meet consumer-driven flavor trends, Ray discussed how Margaritas focuses more on a broad palate than new trends. Ray also spoke about how consumer demand is currently a great fit for the Margaritas business model.

“We have significantly grown dinner and bar sales," Ray said. "We are handling the growth in off premise/ takeout sales well while having our talented teams super focused on executing the Margaritas experience each evening.”

Though Margaritas has been able to grow in some areas, the company still feels the impact of ongoing industry issues. Ray said that supply chain and inflation issues led Margaritas to explore more value-added protein products for menu development.

“Although major menu development was put on hold until 2023, we have had to navigate discontinuation of a long-term tortilla encrusted fish product that was very successful for us — and work with a new partner to develop a replacement," Ray said. "We are also exploring steak and chicken products with different levels of value-add to impact consistency and allow us to repurpose some labor. Most of our activity has been reactive to the environment and not forward looking or innovative since 2022. We are looking forward to getting back to that.”

For foodservice meat products, Ray said that prepared products can help with labor challenges for operators, but prepared products will not be as big of a help for Margaritas specifically.

“We are cautiously exploring how to create efficiency for our teams, but our commitment to product quality which we drive through daily preparation limits our ability to outsource," Ray said. "For others it might be a bigger opportunity.”

Though price increases in meat and other proteins have inevitably affected their company, Margaritas is committed to consistency for their customers. Food price inflation did not negatively affect portioning for the Margaritas menu items.

“We continue to work to offset the pressure on our margins with attention to planned purchasing and management of waste in operations," Ray said. "We are a scratch kitchen and very focused on freshness and consistency — so it has been key that we have retained so much of our leadership and kitchen talent in this environment.”

Despite the ongoing issues that consumers and producers are facing, Margaritas looks forward to its future growth.

“We will open in Brunswick, Maine, next year, and will be looking for a great next opportunity beyond that,” Ray said. “We are excited to grow in New England, and also find new franchise partners to expand our footprint down the east coast.”

Ray is confident that Margaritas’ commitment to quality service and products will allow them to stay competitive with their meat and protein products, even while taking price increases into account.

“We simply work every day to keep quality ingredients coming to our restaurants, and have some great vendor partners helping us navigate this uncertain time. We do believe that our approach – staying true to our quality standards and delivering value for our guests will serve us well in the future.”

Margaritas does not have any specific plans to further change its business model.