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The State of the Full-Service Restaurant Industry

THERE ARE NO SHORTAGES OF CHALLENGES AHEAD. BUT YOU’RE NOT IN THIS ALONE.

Running a restaurant is such a personal journey that, often times, operators gloss over one of their greatest resources. If you’re struggling, chances are someone else is, too. Some of the best advice comes from restaurateurs who have been there before. In many cases, they’re going through the same setbacks every day. And they’re not always acing them.

Given the vast and varied challenges, from tech to delivery to marketing, labor, cost analysis, and so forth, it becomes critical to establish benchmarks to measure success. Putting that into perspective can help a restaurant operator create goals and prioritize targets. A great way to do so: learn from the trials and triumphs of peers.

TouchBistro released a report on the state of full-service restaurants in 2019. The point-of-sale company interviewed more than 500 full-serve employees from across the country. Two-thirds of the restaurateurs had five or more years of experience in a senior management role; 95 percent worked at venues with more than 20 seats; and 41 percent were employed at restaurants with 41–80 seats.

By job title, 56 percent identified as a general manager, 34 percent as an owner, and 10 percent as a president/CEO. Eighty percent of respondents ran independently owned restaurants. Twenty percent were chains.

Here’s what surfaced.

The financial picture

The broad stroke was a positive one. Nationwide, full-service units reported an average profit margin of 11 percent. While profit margins typically grow as operators gain experience, margins maxed out at 11 percent after five years, the report said. Although profit margins plateau at this five-year mark, TouchBistro’s research showed that a full-service restaurant’s annual revenue continues to grow as the restaurateur gains more experience.

One in two, or more than half of the respondents, said they used their own savings to open restaurants. Other popular funding sources included banks or small business loans, investors, and family in friends.

Let’s break that down:

  • Own savings: 54 percent
  • Banks/small business loans: 46 percent
  • Investors: 34 percent
  • Family/friends: 31 percent
  • Online lenders: 12 percent
  • Grants: 8 percent
  • Crowdfunding: 8 percent
  • Food incubators: 5 percent

When unexpected costs pop up, most restaurateurs turn to financial institutions and small business loans.

How else do full-service operators tackle surprise expenses?

  • Banks/small business loans: 52 percent
  • Own savings: 43 percent
  • Investors: 28 percent
  • Family/friends: 25 percent
  • Online lenders: 14 percent
  • Grants: 10 percent
  • Crowdfunding: 8 percent
  • Food incubators: 5 percent

PEXELS/HELENA LOPES

Rent is an overhead most restaurants ha

Health check, and the rising price of rent

The real-estate issue never lets up, does it? Unless you own a space outright (that isn’t as easy, or common—by far—as it once was), rent is an unavoidable overhead expense for full-service operators.

Fifty-eight percent of respondents said they spend up to $7,000 every month on rent. Of the major cities surveyed, New York and Miami topped the list as the most expensive for commercial rent in the country. In those cities, one in seven restaurateurs said they spend more than $12,000 per month on rent. Those are pretty staggering figures.

Just 16 percent of the restaurateurs said they don’t have to deal with rent and landlords because they own their space.

How much money are restaurateurs spending on rent per month:

  • 24 percent: $3,000–$5,000
  • 20 percent: $5,001–$7,000
  • 16 percent: Own the space
  • 14 percent: Less than $3,000
  • 11 percent: $7,001–$10,000
  • 8 percent: $10,001–$12,000
  • 7 percent: Over $12,000

As TouchBistro points out, rent prices don’t tell the entire story. You need to measure them against sales. For the majority of restaurants, rent represents about 5–10 percent of monthly sales.

Two-third of restaurateurs said they could handle a rent increase of more than 4 percent, but this depends on the size of the restaurant. Generally, TouchBistro said, the larger the restaurant, the easier it is to cushion an increase in rent. The survey also found that restaurants in Miami and New York—the most expensive markets—were more prepared than restaurants in less expensive cities to handle rent increases of 10 percent or more. What does that suggest? Perhaps that spending more on real estate sometimes pays off. It’s risky to compete in that arena, but it can return dividends. Massive volumes come out of prime outlets, naturally. At the same time, though, miscalculate traffic at those high-priced spots and rent will quickly overwhelm a restaurant.

Staffing, staffing, staffing

We’re beating a very worn-out drum talking about the tightened labor market and what that entails. To put it simply, it’s tough to find help right now. You just can’t pay somebody money anymore and expect that to be enough (although it’s still the most important factor). Incentives. Work culture. Benefits. There are all playing a larger role than ever. And then there’s the issue of retaining quality employees; what it costs to lose them; what that means for your customer service. And on we go.

How restaurants find employees:

  • Referrals/networking: 51 percent
  • Job sites: 50 percent
  • Social media: 46 percent
  • In-store advertising: 45 percent
  • Company website: 37 percent
  • Job fairs: 23 percent
  • Headhunter/recruiter: 20 percent

Restaurants are pulling out all the stops to win with talent. Two-third of restaurants use higher wages to attract employees. Benefits, like professional development opportunities, are secondary to competitive wages in the battle for the best employees.

Seven in 10 restaurants said they experience regular labor shortages at some point. A third said they struggle with server shortages, while a quarter lack dishwashing staff most of the time. Full-serves that make more than $2 million in annual revenue also struggle to retain chefs, line and prep cooks, and bartenders.

One in three full-service restaurants experience an annual turnover rate of more than 20 percent, the study said.

Annual employee turnover rate:

  • 35 percent: Less than 10 percent
  • 27 percent: 11–20 percent
  • 14 percent: 21–30 percent
  • 11 percent: 31–40 percent
  • 12 percent: Over 40 percent

The most important traits

  • Hard work
  • Trustworthy
  • Positive attitude

Important traits

  • Professional
  • Punctual
  • Multi-tasker

Somewhat important traits

  • Goes above and beyond
  • Communicative
  • Has integrity
  • Quick thinker
  • Hospitable

Least important traits

  • Authentic
  • Humble
  • Collaborative

Getting detailed

Ever met a restaurateur who said training wasn’t important? But how much training is needed to be successful exactly? That’s a more nuanced debate.

TouchBistro found that training time varied greatly among full-service restaurants, and ranged anywhere from one hour to more than 12 per employee. Larger restaurants, however, tended to offer more training, as about half of them train their staff members for more than 12 hours each. Resources play a role.

The amount of training front-of-the-house staff receive:

  • 26 percent: 4–7 hours
  • 25 percent: 1–3 hours
  • 24 percent: More than 12 hours
  • 21 percent: 8–11 hours
  • 3 percent: Less than one hour (not many people would admit this).

Training BOH staff receive:

  • 28 percent: More than 12 hours
  • 26 percent: 4–7 hours
  • 23 percent: 1–3 hours
  • 18 percent: 8–11 hours
  • 5 percent: Less than 1 hour

The cost: 55 percent of full-service operators said they spend less than $2,000 per employee on training, but this depended on the restaurant’s annual revenue. Venues that generated less than $1 million in annual revenue tended to fork up less than $2,000 per employee, while restaurants that made more than $1 million annually spent more.

A third of restaurateurs also said they use employee-scheduling software, while a quarter stick to spreadsheets. The rest use old-school tactics like pen and paper, or a combination of tech and traditional methods.

How restaurants create staff schedules:

  • 33 percent: Scheduling software only
  • 26 percent: Spreadsheets only
  • 13 percent: Pen and paper only
  • 12 percent: Spreadsheets and software
  • 6 percent: Pen/paper and spreadsheets
  • 5 percent: Pen/paper and software
  • 5 percent: All three

Additionally, 23 percent of restaurateurs said employee schedules take them three hours or more per week. Half of the operators said they reduce labor costs by increasing productivity, and four in 10 have done so by cross-training staff and using POS data to predicting scheduling needs.

PEXELS/MAT BROWN

Don’t rush into your POS choice.

The payment game

When it comes to picking a POS system, the respondents tapped affordability, ease of use, and system reliability as the most critical factors. The majority of operators said they own their hardware. Eighteen percent said they lease it.

Also, two-thirds of restaurateurs said they use a payment solution that integrates with their POS. Larger restaurants especially prefer POS-integrated payment solutions. Smaller venues were split evenly between choosing standalone payment processors and integrated solutions.

The main point: Given how many tasks a POS system can factor in the day-to-day—sales tracking, labor forecasting, inventory management—it’s essential to pick a good fit. Don’t rush in.

The money conversation

We’ve learned in recent years that restaurants can’t move too fast on the payment subject. People who say cash is dead have never tried to serve someone who’s afraid their identity will be stolen every time they pull out a credit card. Even Shake Shack found the cashless route to be more trouble than it was worth.

Now, are there benefits to being a cashless operation? Yes, no question. It reduces shrinkage. Employee theft basically vanishes. It’s cleaner. Restaurants can collect data. But is the consumer ready for it? That really depends on your restaurant and customer base. Some brands, like Sweetgreen, see more pros than cons and can ditch the paper. If your target is broad, however, it might not work.

As for mobile payments, like Apple Pay, Google Pay, and Samsung Pay, 18 percent of restaurateurs said they are set up to accept all three. Payment through loyalty points, TouchBistro said, has the most potential for growth—only one in seven restaurants currently use points as a payment method.

While most restaurants accept a variety of payment methods, four in five restaurateurs are frustrated with their payment processors, the survey found. Their top issues: a lack of pricing transparency and the need for manual data entry.

The concerns:

  • 21 percent: Lack of transparency on pricing
  • 20 percent: No frustrations
  • 18 percent: Manually entering batches into accounting software
  • Dealing with multiple vendors and terminals: 16 percent
  • Manually entering transaction amounts in terminals: 15 percent
  • Dealing with small vendors/resellers that don’t inspire trust: 9 percent

RAWPIXEL.COM

First it’s about collecting information. Next, it’s finding ways to turn that data into tangible and actionable results.

Collect the data

The data gleaned from POS systems can help make business decisions. Restaurants can access their profit margins, see labor trends, opportunities for savings, and more.

About seven in 10 operators said they completely understand the information presented to them in their POS reports. That’s a pretty interesting stat. It means close to 30 percent of restaurateurs are receiving data and aren’t sure how to leverage it. Three-quarters of respondents said they use POS reports to help make decisions about menu pricing, while half also use the reports to inform scheduling and menu design decisions.

What this amounts to is significant whitespace in the big-data realm. First it’s collecting information. Next, it’s finding ways to turn that data into tangible and actionable results.

The business decisions that POS reports influence:

  • Menu pricing: 74 percent
  • Scheduling: 50 percent
  • Menu design: 4 percent
  • Online ordering apps: 40 percent
  • Hiring needs: 39 percent
  • Staff promotions/evaluations: 34 percent

And while bookkeeping might not be the sexiest part of running a restaurant, keeping track of expenses is a necessary evil. The majority of operators surveyed said they spend 2–4 hours each week on bookkeeping, and a quarter of them enter POS data manually.

What are the key data points?

Six in 10 restaurateurs said they regularly review their labor cost ratio. Smart scheduling is increasingly freeing up restaurateurs from having to manually create employee schedules.

Half of the respondents said they regularly check their average cover, table turnover, and time it takes for a table to flip. The power of efficiency.

Taking stock

Pretty much every restaurateur can agree controlling food costs is an essential part of maintaining and growing profit margins. Full-serves tend to accomplish this by managing their inventory and menu. Restaurants with lower profit margins manage food costs by controlling portion sizes. TouchBistro found that only four in 10 restaurants negotiate with vendors to keep food costs down.

The same amount take manual inventory of supplies on a weekly basis, if not more often.

How restaurants control food costs:

  • Inventory management: 64 percent
  • Regular menu management: 62 percent
  • Portion control: 49 percent (this ups to 61 percent for restaurants with a lower profit margin)
  • Vendor negotiation: 37 percent

Why are restaurants comping meals?

  • Server error: 32 percent
  • Kitchen error: 32 percent
  • Customer dissatisfaction: 21 percent
  • Customer error: 20 percent

What this tells us is that the majority of comps are related to internal issues, not external ones. Even if it’s an external problem, like customer error, it’s probably safer, typically speaking, to pretend it was internal. Nobody paying for a meal likes to be told they messed up.

Some other stats:

Two-third of full-service restaurants look into the future (like predictive forecasting tools) to prepare inventory orders. Generally, the larger the restaurant, the more likely it is to use analytics to inform its inventory orders, the study said.

About half of the restaurants surveyed said they struggle with ordering too much inventory—a quarter don’t order enough, and the rest struggle with both.

This issue doesn’t improve with time or experience, either. Restaurateurs with less than three years experience in the industry tend to over order or under order at about the same rate as those who have spent more than 15 years in the business. So don’t feel bad if you’re just starting out and having this issue. Everybody has it.

JAKUB KAPUSNAK | UNSPLASH

Off-premises has been all the rage—for better or worse—this past year.

The vendor question

When a vendor raises their prices it’s always a struggle. Typically, it’s one full-serves just absorb and solider through. The operators surveyed said the majority of vendors increase their prices semi-yearly or more often.

  • 34 percent: Semi-yearly
  • 20 percent: Yearly
  • 18 percent: Monthly
  • 14 percent: Semi-monthly
  • 13 percent: Not yet

Delivery dives in

Off-premises has been all the rage—for better or worse—this past year. Here’s how full-serves said they were embracing the channel.

Almost four in five operators said they use an online ordering platform. Two-thirds use between one and three platforms.

  • 27 percent: Just one
  • Two: 21 percent
  • Three: 15 percent
  • Four: 12 percent
  • Five or more: 4 percent

Adoption rates of online ordering sites by full-service restaurants across the country:

  • Grubhub: 41 percent
  • UberEats: 39 percent
  • DoorDash: 32 percent
  • A restaurant’s website: 31 percent
  • Postmates: 20 percent
  • Eat24: 13 percent
  • Others: 2 percent

What’s been the impact?

More than half of restaurants said they conduct 6–20 percent of their business through online ordering platforms.

Full-serves said they’ve seen an 11–20 percent increase in overall sales volume.

The majority of restaurants said customers spend up to 20 percent more on online orders, due to both more add-ons and more menu items per check.

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The Restaurant Real Estate Deal Maker: Suzanne Boyd People of Palm Beach Podcast: Audio Link

 

“After a spring break trip to Fort Lauderdale during his college years, Tom Prakas knew what he wanted to do: own nightclubs. He spent years running highly successful clubs and restaurants in Ohio, Georgia, and south Florida before the father of seven decided it was time for a change. He founded Prakas and Company in 1999, specializing in real estate deals for the hospitality industry. His company has brokered more than 450 sales and leases for some of the top restaurants in the hottest areas in south Florida–Atlantic Avenue, Las Olas, and Clematis. In this episode of The People of Palm Beach, the Delray Beach resident reveals why it seems some restaurant locations are jinxed, the new deals he’s working on, and his favorite restaurant in Palm Beach County that you’ve probably never heard of. Listen to why Tom Prakas is one of the most successful People of Palm Beach…  

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Boca district snares two hot restaurants, more on the way

Chief executive and founding partner David Tornek skipped over southern Palm Beach County when he expanded Meat Market Steakhouse five years ago, choosing a spot on Palm Beach for the sexy Miami Beach restaurant’s first foray north.

Now, with the passage of time and the growth in the population, Meat Market is taking a bite of Palm Beach County: the modern steakhouse restaurant will open a location next year in Boca Raton, near the Town Center mall off of Glades Road, just west of Interstate 95.

Word of Meat Market’s plans to enter the Boca Raton market comes as a long-awaited restaurant taking the former Uncle Tai’s space at Boca Center readies for an opening. Look for Copperfish Kitchen, a seafood restaurant, to open in the summer.

The Meat Market will take space in the Renaissance Hotel, which will undergo something of its own renaissance in the coming year.

Plans are afoot to upgrade the entire hotel and its exterior at 2000 NW 19th St., giving the property a fresh look as it brings in the Meat Market to complement the changes. That’s according to Tom Prakas, a Boca Raton restaurant broker who brought Meat Market to the property after more than a year of negotiation.

Also planned is a redo of the outdoor pool and bar, which will be serviced by the Meat Market and add to the eatery’s vibrant, Miami Beach-y vibe.

Of course, Boca Raton is not Miami Beach, and Tornek said each restaurant has its own style. But the pool is a cool addition, and Tornek is excited about it. “I like the aspect of adding the pool to what we’re doing. It’s a new direction for us, which I think will be interesting,” said Tornek.

Do not expect the dark woods and heavy furnishings typical at other Boca Raton steakhouses, however. “We’re called feminine-friendly,” Tornek said. “It’s not an old men’s atmosphere but a chef-driven menu with a pretty wide variety, including seafood.”

The coyly named restaurant also hints at the property’s happening bar scene, which features craft cocktails and presumably, a lot of the Beautiful People. (After all, Condé Nast Traveler has called the Meat Market on Miami Beach’s Lincoln Road one of “Miami’s Buzziest Restaurants.” )

Lunch will be served in Boca Raton and at a Meat Market opening in Tampa this summer.

In the five years since Meat Market opened at the site of the old Palm Beach Steakhouse at 191 Bradley Place on the island, business has been strong. But Tornek said he was attracted to Boca Raton due to its continued growth, including the population bounce the area has seen from changes in the tax law that are driving more residents south from high-tax states in the Northeast.

“Palm Beach County is changing. It’s not like it was five years ago,” Tornek said. In fact, he said he’s been searching for a Boca Raton location for two years, finally settling on the Renaissance Hotel.

The moves come as central Boca Raton becomes an increasingly lively center with new eateries coming up soon, as developers work on long-term plans to add more homes and shops.

In the near term, look for fresh offerings at old centers, such as the Boca Center on 5151 Town Center Circle, down the street from the Renaissance Hotel. Boca Center is owned by Boca Raton-based Crocker Partners, which built the property years ago, sold it, and then bought it back.

At Boca Center, George Anagnostou is bringing Copperfish Kitchen to the former Uncle Tai’s restaurant space, a longtime landmark that closed last year when the owner decided to retire.

Prakas, of Prakas & Co., brought this deal to the Boca Center and is working to bring new restaurants to other Crocker properties, including a planned “Restaurant Row” on land Crocker owns nearby at Town Center Road and Butts Road.

Anagnostou, whose background is in both restaurants and seafood importing, pledges the space will feature only fish that is traceable and sustainable. The species will be authentic, he said, unlike a lot of fish that is labeled one thing at restaurants but really is another.

Copperfish is under construction now, but when finished, the restaurant will feature copper along the walls and atop the bar, according to renderings. The contemporary vibe will be modern but comfortable, with accents of blue above the space and creatively crafted lighting throughout.

The exterior walls of the restaurant are being opened to allow indoor-outdoor dining. There will be a lively bar in front and quiet seating in back, plus a private dining room.

Anagnostou said there will be nothing like it in the area: “I think people are going to be in for a huge surprise.” Lunch and brunch will be offered, as well as dinner. Expect an early summertime opening.

In 2020, also expect to see more destination eateries flourishing in this central part of Boca Raton.

Angelo Bianco, principal of Crocker Partners, said permits have been submitted to the city to build Restaurant Row, a 22,500-square foot dining mecca on the corner of Butts Road and Town Center Road.

Crocker is close to nailing down deals with Mexican, Italian, American and sushi restaurants, plus a coffee/dessert eatery. If all goes well, the building’s shell will be built by early 2020, at which point the restaurant operators will start their build-outs, with expected opening dates for the eateries by the fall of 2020, Bianco said.

Crocker Partners has greater ambitions for its holdings in central Boca Raton. But thus far, it has not won city zoning approval to make changes.

In January 2018, several landowners, Crocker included, asked city officials to allow up to 2,500 apartment units in high-rise buildings in this central Boca Raton commercial district along Military Trail, known as Midtown.

The city council instead called for a “small-area plan” to assess the request, which sparked a litany of lawsuits that claim the study was a tactic to stall or stymie development. Crocker just filed its third lawsuit against the city.

The battles with the city may have slowed the progress of redeveloping Midtown, but Prakas is optimistic that growth will continue in Palm Beach County for the foreseeable future, attracting businesses from across the state and the country that want a piece of the action. “It’s the most vibrant market for restaurants I’ve ever seen,” Prakas said.

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Florida Real Estate Market Trends of 2019: What to Expect

FLORIDA’s Strong Commercial Real Estate Market

The strong commercial real estate market is one that Florida parades with pride. The market indicates a positive growth in 2019 for CRE, and here is why:

  • Business growth in the area

  • Retail growth

  • No personal income tax making it the 4th best tax climate in the US

Related: Why Switching to Commercial Real Estate Investing Is Smart

In any case, the Florida real estate market has a strong commercial real estate presence. This will continue growing in 2019 and 2020 if the political climate and foreign trade relations continue as is.

 

 

 

 
Foreign Real Estate Investors

Florida has been an attraction for international homebuyers for years. With Florida’s real estate market becoming more of an international destination for real estate, Florida is becoming a hub for foreign money as they view real estate investing in South Florida as lucrative and strong just as much as its counterparts in Los Angeles and New York State. Accordingly, the major selling point for this real estate market with foreign investors is its affordability when compared to other internationally-dominant US real estate markets.

With South Florida real estate, Canadian real estate investors are taking a large chunk of international investment in the area. This can be mainly attributed to the many Canadian companies opening branches in the Tri-county area in South Florida.

According to data from the National Association of Realtors, foreign investments in residential real estate properties in South Florida is made up of 46% of Latin American and Caribbean real estate investors.

As for the housing market predictions 2019 in Florida, foreign investors and their impact on the market may shift if President Trump imposes taxes on Canadian companies in the United States. Additionally, the fact that foreign investors’ interest in any city is strictly financial as they look at the return on investment of everything is an alarming trend. These foreign investors can just as easily shift to another state.

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Scout & Molly’s Boutique Opens At The Shops At Boca Center

An afternoon in your best friend’s closet,” is how Boca Raton resident Lisa Kaufman describes Scout & Molly’s, the retail franchise she created.

The brand has more than 50 locations in 24 states and Scout & Molly’s newest location will be at the Shops at Boca Center, set to open on Sept. 8.

The boutique features expertly curated selections of women’s apparel and accessories, and boasts friendly stylists who are always willing to help shoppers pick out the best options for their body types and personal styles.

Sale represented by Steve Mossini with Prakas & Company.

Brands offered at Scout & Molly’s include AG, Analili, Atina Christina, BB Dakota, Gretchen Scott, Tolani and more. The store also carries evening and cocktail dresses.

To find out more information, visit scoutandmollys.com/boca.

5050 Town Center Circle, Boca Raton; 561.430.3462;

Photos courtesy of Scout & Molly’s

Want to be in the know about all the best events, restaurant openings and more in Boca Raton and Delray Beach? Sign up for our Boca Agenda, a biweekly newsletter that lists things to do in the area.

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DON CHEPO’S TACO SHOP OPENING OCT. 15 IN BOCA RATON

Boca Raton’s newest taco spot will open Oct. 15 when the team behind the popular Wellington taco eatery, Don Chepo’s Taco Shop, opens in the Boardwalk at Boca Raton shopping and dining center.

http://www.donchepos.com  Sale of the fromer Blue Moon Mexican Cafe BROKERED BY: Prakas & Company.

The 4,200 square-foot restaurant will feature lakeside outdoor seating, festive painted walls and an expansive bar.

Chef/Owner Dustin Parfitt and Owner Juan Gando will serve house-made, street-style tacos – with options for meat lovers, vegetarians/vegans, even those with gluten allergies – quesadillas, burritos and hand-selected chef’s platters.

“We take great pride in the foods we are serving,” Parfitt said. “Our corn tortillas are made fresh in-house every morning, our vegetables from local farms, and we match our cocktails with the dishes we serve.”

Don Chepo’s initially will be open for dinner, followed soon by launch daily specials and a weekend brunch.

“Smoking the pork for our Tacos al Pastor has to be my favorite thing to do at the moment,” Parfitt said. “The pork is marinated in our own special blend of chilies and spices and smoked over hickory for eight hours. When you come to Don Chepo’s and smell the aroma, you will see – and taste – why it’s my favorite.”

Gourmet street tacos ($7-12 and served two per order) will be the restaurant’s specialty, but Don Chepo’s menu also will include dishes such as Tamal al Pastor – served in an open corn husk, topped with a thick, savory sauce, plenty of crumbled cotija cheese and chopped green onions. The Chicken Quesadilla is large, toasted and stuffed to the brim with Poblano-marinated chicken and three kinds of cheese. The Bean Burrito is packed with refried beans, Chihuahua cheese, Mexican rice, black beans and Pico.