Cafe Rio suit targets
After more than seven years in the Mexican food business, owners of a popular restaurant chain are feeling like their burritos have been breached.
Cafe Rio Inc. filed suit this past week against Costa Azul Holdings, LLC, which includes Costa Vida, a competing yet similar- type restaurant chain that opened nearly two years ago.
Nate Gibby, director of marketing for Costa Azul, was surprised by the complaint.
"We have heard nothing of these allegations since we opened for business," he said in a prepared statement. The fast-casual Mexican dining style, Gibby said, is a growing trend throughout the nation that many companies have adopted. He believes their style and ambience are a unique alternative in the restaurant market.
The lawsuit includes claims that a former general manager of a Cafe Rio restaurant and others "improperly copied and used Cafe Rio's trade secrets, menu, layout, food presentation, procedures and processes." The employee worked at Cafe Rio for about two years and reportedly signed a confidentiality agreement each year of employment. Since that time, he has worked at several different eating establishments and now does some work for Costa Azul.
Bob Nilsen, president of Cafe Rio, said the company is "reluctant, disappointed and frustrated" at the situation. He said their brand reputation is hard-earned and well-deserved.
We work extraordinarily hard at what we do," he said. "We can't sit idly by and let them capitalize on our concepts."
Nilsen said he was alerted to the situation by some customers who allegedly called Costa Azul restaurant locations "fake," "knock- offs" and "copy cats." Questions were raised about the two restaurant's affiliation with each other.
However, Gibby said the allegations are not true.
As evidence of its claims, Cafe Rio compares menus, selection of items offered and a frequent-dinerfrequent diner program that provides diners a free meal after 10 are purchased. Cafe Rio claims ownership of the origin of such concepts.
The lawsuit aims to prove that not only are the presentations similar, but that the foods and tastes exhibit very little distinction.
Cafe Rio claims that Costa Azul and its principals "blatantly and illegally appropriated" their recipes, as stated in the suit. They are claiming that Costa Azul's alleged misappropriation of confidential secrets "has caused and will cause (them) to lose existing and potential customers."
Cafe Rio is asking for an injunction to keep Costa Azul and its affiliates from using any of their trade secrets and confidential information, including recipes and proprietary information. They are also seeking monetary damages, including legal costs as decided by the court, full disclosure of Costa Azul procedures and an order that their activities constituteconsitute unfair competition.
Costa Azul has yet to obtain legal counsel, but Gibby said the company intends to retain their edge of the "refreshing Mexican Grill" market.
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