Challenges and Growth Opportunities

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When Bert Mueller first visited India in 2010 he never could have anticipated that he’d spend the next decade of his life building a business there. Today he runs a profitable 50+ location QSR chain called California Burrito - they did ₹110 crore in FY22. Bert Mueller started California Burrito with two American co-founders, Dharam Khalsa and Gaelan Draper. They each put in $15,000, and were able to raise an additional $250,000 from family and friends using a Tumblr blog which documented their startup’s journey. Initially they thought they’d launch their inaugural restaurant in Gurugram, but chose Bengaluru instead because real estate was more affordable there. Their first choice was Orion Mall, but after that deal fell through, they settled on Embassy GolfLinks Tech Park. This first location was a huge success. Located opposite of Goldman Sachs, the restaurant was doing 150 bills per hour in their first three months with no marketing. Bert and Gaelan Draper spent the first six months behind the counter serving burritos himself. Bert Mueller and an employee did ingredient procurement themselves. They bought a Maruti Omni and would fill it up with veggies from a local market twice a month. Seeing how much each vegetable cost was a key factor in the company’s strong unit economics. Apart from their dine-in business California Burrito also dabbled in catering; they made burritos for Zynga and a few other companies. Then, after opening two more restaurants in Bengaluru, they raised $750,000 in a round led by entrepreneur and angel Adhvith Dhuddu in 2013. Using these funds, California Burrito was able to expand their footprint to 15 locations using a COCO (Company Owned Company Operated) model. Bert Mueller believes that the franchising approach only works in countries where legal recourse is easily achieved, e.g. the United States. Despite the business’s success, Gaelan Draper stepped away from California Burrito to get married and return to the United States in 2014, leaving Bert and Dharam Khalsa to build the business on their own. By 2020 California Burrito’s business was thriving: they had their best month in February, bringing in ₹4 crore in revenue across 37 stores. However, because they were largely reliant upon tech parks and malls for customers, their business was devastated by the pandemic. Overnight, ₹4 crore dropped to ₹25 lakh monthly revenue, and while they did have ₹1.5 crore in the bank, Bert decided to raise a small round in May 2020 to keep the business afloat. With these funds, California Burrito finally began investing in marketing to increase sales. Also in May of 2020, Bert’s remaining co-founder, Dharam Khalsa, returned to the United States and built a startup called Mirador in California, leaving Bert to build California Burrito in India on his own as a solopreneur. By October of 2021, California Burrito achieved pre-pandemic sales with fewer stores. They did this by only opening stores that were located 8 kilometres apart, thereby optimising delivery efficiency. Today delivery makes up 60% of their business, up from 30% pre-pandemic. They also improved their outlet economics, setting an internal benchmark of ₹30 lakh revenue per store, up from their previous standard of ₹12 lakh. Other changes include product innovations like tacos, and new ingredients such as Mexican tomatillos and hass avocados. California Burrito celebrated their most successful location launch ever in May of 2023 when they expanded to Chennai. They now have a presence in Bengaluru, NCR, Hyderabad, and Chennai. Bert is aiming for California Burrito to have 100 stores by March 2025.