Salsarita’s Fresh Cantina President and Chief Executive Officer Paul Mangiamele, above, says the chain’s deal with J.T. Patel and H.P. Patel for approximately 10 stores in Knoxville, Tenn., is exactly the kind of multi-unit agreement the company desires. Photo courtesy of Salsarita’s Fresh Cantina

KNOXVILLE, Tenn. – From his past retail experiences H.P. Patel knows that if you are hawking a product that isn’t in high demand things are going to go south quick. This is why, once he saw the customer response to Salsarita’s Fresh Cantina, he quickly jumped on board with the chain and launched a string of restaurants.

Focusing on the Knoxville region, the 33-year-old Patel, along with his wife Shelley, brother J.T. and sister-in-law Anju, opened five Salsarita’s from October 2004 to November 2007. A sixth location is set to open in the early part of this year. The following year, the plan is to open several more stores, with aspirations to have a total of 10 by 2010, according to Patel.

The partners formed Laxmi Ventures to oversee their Salsarita’s restaurants.

“We really like the people, the product, the ambience and the overall potential of the segment,” Patel said.

Founded in 2000, the Charlotte, N.C.-based Salsarita’s is a fast-casual Mexican restaurant chain. Customers create a made-to-order meal from a menu that offers burritos, tacos, quesadillas, nachos, tortilla-crust pizzas, enchiladas, soups and salads. Meats include beef, chicken, grilled steak, shredded beef or pork and grilled shrimp.

Shortly after the success of the original location, Salsarita’s began franchising. The chain currently has approximately 85 restaurants in 18 states; it is predicting 200 restaurants by 2010. Roughly 90 percent of all locations are franchised. Growth is expected to come from a combination of single-unit franchisees, multi-unit developers and area representatives, especially existing multi-unit franchisees of other brands looking to diversify their portfolio in their current markets, according to the company. In 2007 Salsarita’s was ranked No. 1 on Restaurant Business’ list of The Future 50, which lists the fastest-growing restaurant chains in America.

The chain is also targeting international expansion because of a deal with HMS Host and Compass Group North America, companies that operate thousands of facilities at airports, colleges, universities and institutions around the world. Salsarita’s recently partnered with HMS Host to open its first two airport locations at Charlotte Douglas International Airport, the ninth-busiest airport in the United States.

When Patel first encountered Salsarita’s in 2004, the concept was still a fledging franchise chain. In fact, Patel and his partners were the brand’s seventh franchisees. But it didn’t take them long to be sold on the concept.

“We were a franchisee in less than three weeks,” he said. “We really believed in the fresh-Mex concept and once we saw Salsarita’s in operation in Charlotte we knew this was the one.”

A 1998 graduate of the University of Tennessee with a bachelor’s degree in retail management, Patel moved to Charlotte after graduation and started a home furnishing business that imported goods from other countries. This business struggled and eventually failed in the post-Sept. 11 environment. Patel admits he learned some valuable lessons about retail and product demand from this venture and turned to a more reliable concept for his next venture: The UPS Store. He ran this business from 2002 to 2004 before selling and turning to Salsarita’s.

J.T. Patel, left, and H.P. Patel, right, have opened five Salsarita’s Fresh Cantina restaurants in Knoxville, Tenn. A sixth location is set to open very shortly and the pair have plans to open four more by 2010, for a total of 10 restaurants. Photo courtesy of Salsarita’s Fresh Cantina

According to Patel, part of the move was driven by a desire to return to Knoxville. Patel, a native of Gujarat, came to the United States and Knoxville in 1991 when he was 15. His father opened a hotel there that he still runs today. Patel looked into opening The UPS Store in Knoxville, but this strategy did not work out and he said once this was off the board, the restaurants business was an immediate option.

“When we were looking to get into business the idea came to get into the food-service business,” he said. “We thought if we are going to do something it has to be not recession proof, but recession resistant.”

To him, Salsarita’s and the restaurant business was just the thing. “If you’ve got to eat, you’ve got to eat,” he said.

“Our concept is in the middle. When recession hits people are going to cut out the fine dine and the wine and come and eat with us,” he added.

Harkening back to his days running his startup home furnishing business, he also felt that the restaurant business had a much broader appeal and wider customer base and that he wanted this mass appeal. “Food is what you sell to the masses. People have to eat,” he added.

Patel sees similarities between The UPS Store, but admits that the restaurant business is its own animal. “The only common thing is service. In both you have to be service oriented,” he said.

“The restaurant business is very exhausting business. You have to be on your feet 10, 12, 13 hours a day,” he added. “When someone says, ‘Have a nice weekend,’ we say: ‘We don’t have weekends.’”

Patel and his partners originally signed a two-store deal with Salsarita’s, but then expanded this deal to five stores, and now have a 10-year agreement for more exclusive rights in the market. Patel credits hard work for the success. “You can’t get into a business and let it run on its own. You’ve got to drive it. And we feel like we did a good job driving it and staying focused.”

He also admits that good timing played a big part. “It was the right opportunistic time for us. Knoxville was just starting to grow and we got into great real estate,” he said. “The whole fresh-Mex phase was also really hitting the East Coast.”

Now he believes they have gotten a leg up on any other fresh-Mex concept that moves to Knoxville. “This is actually a great time for us because we have firmly cemented ourselves in the area and we have our foot on the competition’s neck,” he said.

Though Patel is not surprised by their success, he admits that the original approach was more cautionary: They would open a few stores and see how things went, opening more only if business was good. “The whole idea was for us to decide our success,” he said.

Now, though, spirits are much more ambitious. “This is the ground floor for us. If we can find a way to continue to grow we will do it,” Patel said.

Paul M. Mangiamele, president and chief executive officer of Salsarita’s, said that the deal with Patel and his partners, to add as many as 10 stores in Knoxville, is exactly what the chain is looking for.

“We want to have a franchise more like a strategic partner than a franchisee,” he said. “We are very happy to have H.P. and his brother J.T. as part of our franchise community.”

“I’m looking for passion for food service and H.P. has that,” he added. “He is a fabulous fit.”

Mangiamele is as ambitious about Salsarita’s future as Patel is and, like him, sees the economic downturn as an opportunity. He said the chain is actually gaining customers and seeing customers return frequently.

“You are still getting the experience and the fun of a great atmosphere … but you are saving money and time,” he said. “We are picking up more new customers, which is always the goal of any restaurant company.”