2018 Multi-Unit Report: Growth in Mexican Multi-Units Speeds Along

UPDATE: CLICK HERE TO READ THE 2022 MULTI-UNIT REPORT

By Ed Avis

            Multi-unit restaurants have certain advantages over single-unit operations, and many Mexican multi-units have exploited those advantages over the past year to grow at a solid rate. The 50 largest Mexican multi-units have a total of 15,251 locations, which is up 4 percent from last year and 9 percent from two years ago. (Click here to see the el Restaurante Top 50 Multi-Unit Restaurants List.)

            “The more familiar people get with Hispanic food, the more they expect availability,” says Diego Rondon, senior director of multicultural segments for Sysco. “And chains benefit from that. Even if a restaurant customer hasn’t tried a particular type of food, if it’s all over the news and media, they will give it a shot. And where’s the best place to try that, but in a chain?”

            Of course, some multi-units have done better than others in the past year. For example, Fuzzy’s Taco Shop added 43 locations in the past year, and now has a total 146. The chain, which was profiled in the Jan/Feb 2017 issue of el Restaurante, is now the 14th largest Mexican multi-unit on our list. Another winner is Chronic Tacos, which has nearly 90 percent more units than it had two years ago and now stands at number 31 on our list. Chronic Tacos is profiled below.

            Not all chains have grown. While researching our Top 50 list, we discovered that 14 chains on our list have fewer units today than they did in 2016, and four have the same number. The other 32, however, grew by at least a few units over that period.

            What distinguishes a growing multi-unit from a shrinking one? Our data didn’t hold those answers, but Rondon offers some ideas.

            “One big factor in the success of a multi-unit is the ability to adapt and bring change to the menu,” he says. “The lifecycle of flavors is very short right now. Millennials are seeking constant change – they have been exposed to a multitude of different ingredients, so they want constant innovation in a menu.”

            Menu size also seems to play a role. Having a shorter menu seems to contribute to success, says Dave Eschler, senior manager of restaurant operations consulting for US Foods in Chicago.

            “We’ve seen that larger menus are less profitable,” Eschler says. “If you look at who’s really successful, part of the success is a short menu. There is less inventory to manage with a short menu, and it’s easier to train workers.”

            Marketing well also is essential, and Eschler says a good social media campaign is another sign of success.

            “We feel that social media is underutilized, given its low cost,” he says. “If you look at what successful chains do well, that’s part of what they do every day.”

            Two chains that are making the right moves are Chronic Tacos and Taco Bueno. Learn what they are doing below.

Chronic Tacos: The Right Vibe

            Chronic Tacos was founded in 2002 by Randy Wyner and Dan Biello, laidback SoCal buddies who wanted to bring the L.A. Mexican taqueria experience to some of the nearby beach cities. They melded authentic Mexican recipes with vibrant music and festive decor to create what has since come to be known as Taco Life.

            The first location of Chronic Tacos was in Newport Beach, and they slowly added locations in other beach cities in the following years. In 2006 they offered the first franchises, and within five or six years they had a total of 26 locations.

            “I met Randy when the company expanded in 2010 to Vancouver (Canada),” says Mike

Mohammed, who is today the CEO. “Randy and I talked and immediately saw that we shared a vision for the business, and in 2012 we made the strategic decision to buy out his partner.”

            Mohammed and his brothers, Dan, Joey and Dave, took over the company and strengthened the fundamentals. The brothers came from a real estate background, not restaurants, but they applied their business sense to Chronic Tacos.

            “We focused on streamlining everything, from operations to strategy to vendor relationships to purchasing to restaurant design,” Mohammed says. “We also formalized the training, so that we could bring in anybody and they could learn our business and our methods of doing things.”

            Of course, keeping the high quality taqueria type food was key. The menu allows customers to choose a base – such as taco, salad, tostada bowl or torta – and add a protein, ranging from polla asado to beer-battered shrimp. The menu is short and simple, one of Eschler’s key to success.

            Another area the brothers emphasized was design.

            “We didn’t want the restaurants to have cookie cutter looks, but we wanted a palette – so when you walk in you know it’s a Chronic Tacos,” he says. “The art was a huge pivot point for us. At the time, their art was very skateboardy surfy, which is still part of us, but we wanted more authenticity, so we went more to a Day of the Dead look.”

            Mohammed’s brother Joey is the brand’s art director, and he brought in an artist named Michael Duncan, aka Tewsr, who is well known in Los Angeles for his graffiti art. He creates the Day of the Dead murals in each restaurant with spray paint, and even is flying to Japan in early 2018 to paint some Chronic Tacos franchise locations there.

            The food, art, and music all feed the overall mood of the restaurant.

            “We spent two years getting the brand to where we are now,” Mohammed says. “We talked about the Taco Life, and about being who you are, and the individuality of our customers, and how we could be a part of that.”

            Once they smoothed out the operations and firmly established the vibe of Chronic Tacos, the brothers were ready to expand the brand. In 2014 they began seeking new franchisors, including those who could open and manage multiple units rather than just one-offs. The company has doubled its number of locations since then, to 53, and Mohammed says they are hoping to reach 75 units by the end of 2018.

            “We have 80-plus restaurants in development, including a couple of provinces in Canada,” he says. “We also just did a master deal in Japan, so we’re bringing the Taco Life to Japan now.”

            About 15 percent of current locations are company owned, and the rest are franchises. Franchising will be the main growth driver in coming years.

            “We have a lot of passion for our brand, and I think that resonates with our franchisees and I think they share that passion,” Mohammed says, adding that they are more interested in finding the right franchise partners than the right locations. “We want the right people involved with this – this is a real partnership.”

            Of course, in the end, it’s the customers who make any restaurant succeed. And Mohammed feels Chronic Tacos has the right formula for satisfying those key constituents.

            “Chronic Tacos is not your typical fast casual Mexican,” he says. “It’s taken the California taqueria and elevated it. More and more people can try it and really see what Mexican food is. That’s important to us. That’s the cornerstone of our brand.”

Taco Bueno – Pleasing the Bueno Heads

            What’s a Bueno Head? A loyal, passionate fan of Taco Bueno, the 184-location chain headquartered in Irving, Texas.

            “The Bueno Heads are one thing that set us apart,” says Sarah Beddoe, Taco Bueno’s

chief marketing officer. “Becoming a Bueno Head is being part of a passionate group of fanatics. I think there are probably 350,000 self-proclaimed Bueno Heads we talk to on a daily basis. They are boisterous and loud and we love every single one of them!”

            How did Taco Bueno develop such a loyal fan base? The formula naturally includes the food. The TexMex-style menu is loaded with comfort-food basics such as tacos, burritos, nachos and quesadillas.

            “We were started in Abilene, Texas 51 years ago with a strong foundation of serving fresh, really authentic TexMex,” Beddoe says. “That’s a cuisine that’s very well recognized, but rarely down very well.”

            Another key to growing Taco Bueno’s passionate fan group is smart use of digital marketing. The 350,000 Bueno Heads get regular emails about new menu items, fun things the brand is up to, and special offers. In addition, the brand cultivates fans with a vibrant social media presence – its Facebook page has 335,000 followers, for example.

            “We listen to what people say on social media, and we invite them to collaborate with us on menu development, and share ideas they have,” Beddoe says. “I will tell you that a lot of what we do today is in response to what our core customers have been asking for.”

            For example, Taco Bueno added queso as a side this year. But before they settled on a recipe, they made sure their giant fan club was in agreement.

            “We talked to tons of Bueno Heads and asked them what makes a great-tasting queso,” Beddoe says, adding that they sought customer and crew member input online and during face-to-face events in store locations over a five-month period. “We sat down with customers one-one-one and in groups in various formats, and talked to them about the queso and had them try different recipes, different flavor profiles. We perfected our recipe [based on that input] and that’s the queso that’s in our restaurants now.”

            One result of this regular contact with fans is that new store openings become parties for the Bueno Heads.

            “At openings hundreds of people show up dressed in celebratory gear, taco hats, taco suits, some carrying balloons,” Beddoe says. “They are the most powerful marketers we have. Some of them were children when they started with us and are now grandparents, and they have a story to tell. We get to know our local communities through our fans, and that’s how we’re set apart from other food companies.”

            Taco Bueno was founded in 1967 by Bill Waugh, a dry cleaner operator who later founded two other restaurant chains. The company has seen a number of different owners since the early 1980s, and was purchased by investment fund TPG Growth in 2015. Unlike many chains of its size, Taco Bueno locations are primarily company-owned – only 24 locations are franchised. Today it has stores in Texas, Oklahoma, Missouri, Kansas, Louisiana and Colorado.

            Beddoe says there is lots of room to grow in its current markets, fueled by the Bueno Heads.

            “The Bueno Heads have been critical to our success – they have paved the way,” she says. “Because they are so passionate about our brand, it is our responsibility to serve them well.”

UPDATE: CLICK HERE TO READ THE 2022 MULTI-UNIT REPORT

Ed Avis is the publisher of el Restaurante magazine. He can be reached at edavis@restmex.com

Sidebar: About Our Data

The information that allows us to create the Top 50 Mexican Multi-Units list comes from several sources. It starts with data from restaurantdata.com, which compiles multi-unit information year round. In many cases, we further refine the data by visiting the multi-units’ websites, reviewing their press or investors’ material, and talking with company representatives. The numbers are not 100 percent accurate – chains open and close locations constantly – but we believe they are the most accurate available.