Mendocino Farms (“Mendo”) is a gourmet fast casual restaurant chain that sells sandwiches, salads, drinks and sides at 12 Southern California locations.[i]
With an average price of $9.90 ($10.85 for salads),[ii] Mendo’s offerings are about 20% pricier than those of archetypal fast casual competitor Panera, where sandwiches average $8.19 at its Santa Monica, CA locations.[iii]
However, Mendo can compete successfully with cheaper rivals by offering gourmet, locally-sourced food, superior customer service, and a fun, communal atmosphere. According to its founder, Mendo’s target customer shops at Whole Foods and is willing to pay a “slight up-charge” for higher quality.[iv] To satisfy this core customer, the company has designed its operations to spotlight the quality of its food, build a community vibe, and deliver exceptional customer service.
Mendocino Farms, co-founded by husband and wife Mario Del Pero and Ellen Chen, launched in downtown Los Angeles in 2005.[v] It received an investment from Catterton Partners, a private equity firm, in 2012[vi] and opened its 12th and newest store last month in Santa Monica.[vii]
Mendo serves healthy, offbeat sandwiches and salads with creative ingredients. According to the employee handbook, company chefs take “traditional and fine dining entrees and convert them to sandwich form.” The current menu includes sandwiches inspired by southern-fried chicken and Indian dosa wraps, in addition to more traditional fare like tuna melts and club sandwiches.[viii] (Mendocino Farms Menu Fall 2015)
Mendo prioritizes local ingredients and promotes local providers by mentioning their names on their menu.[ix] Dishes are labeled if they are vegetarian, vegan or gluten free. Most menu items include pre-cooked ingredients, and the only ovens in the kitchen are a toaster and a panini press. [x]
According to its employee handbook, Mendo aspires to be a “neighborhood gathering place where we sell happy!”[xi] Every restaurant contains a foosball table or an indoor beanbag toss[xii] and has a custom design to suit its neighborhood.
Arriving customers are greeted by wait staff who explain the menu and submit orders using computer touchscreens.[xiii] Customers then move into a payment line which first passes through a side dish station offering free samples. After they pay for their meals at the register, customers receive a GPS locator to direct servers to their table.[xiv]
Managers wearing casual “farmer attire” (plaid shirts and blue jeans) mill about, attending to customers and refilling drinks.[xv]
Employees must pass a test to demonstrate familiarity with the menu,[xvi] and leaders attend 5.5 hour “coaching happy” workshops to ensure that Mendo’s culture of positivity is passed down the hierarchy.[xvii]
Mendo’s promotion of local ingredients on its menu woos customers who are willing to spend more for a healthy, farm-to-table experience. Its broad menu and friendliness to special diets also attracts customers that mainstream competitors ignore, a sizeable segment given that 17% of Americans avoid gluten.[xviii]
Requiring no stoves or ovens enables food to be prepared with less variability in throughput time across different orders. This prevents bottlenecks and allows gourmet dishes to be served at fast-food speeds.
Having staff take orders at the entrance makes customers feel instantly welcome and helps them navigate the quirky menu. Furthermore, immediately sending orders to the kitchen reduces the throughput time from arrival to eating. The GPS trackers also help increase labor efficiency and further reduce customer wait times by helping servers deliver meals more quickly.
Mendo’s practice of serving free side samples to customers also communicates hospitality. It makes waiting in line more fun and hides the time the kitchen spends preparing orders. The samples keep hungry customers “happy” while they wait and provide an opportunity to upsell and advertise catering offerings.
Finally, with its genial and attentive employees and the feel of a neighborhood hangout,[xix] Mendo earns loyalty that allows it to sustain its business with repeat customers.
Mendo has had double-digit same-store sales growth for the past three years.[xx] According to Investopedia, many locations have a 4.5 out of 5 Yelp rating, with reviewers citing a “pleasant interior” and customer service that justifies “not cheap” sandwiches.[xxi] It will open a new store next year in Brea, California[xxii] and was recently selected by Whole Foods Market, Inc. to run a restaurant inside one of its grocery stores.[xxiii]
Few outside of Southern California know of Mendocino Farms today. But if the company continues tightly aligning its operating model with its core business, it will soon be “selling happy” on a much larger scale.
[i] Source: Employee interview
[ii] http://mendocinofarms.com/menu. I took every entree on their menu (accessed 12/5/15) and averaged the prices.
[viii] Source: Mendocino Farms employee handbook
[x] Source: Employee interview
[xi] Source: Mendocino Farms employee handbook
[xiv] Source: Author. I visited four different Mendocino farms locations over a period from 2009 to 2015.
[xv] Source: Employee interview