2023 Mexican Multi-Unit Report: Focused on the Magic Number 100

By Ed Avis

     The world of muti-unit Mexican restaurants can be viewed in three rough categories: The really big chains with several hundred or even thousands of locations (with Taco Bell and Chipotle at the top); a middle group with 100 or so locations; and many more with fewer than 100 locations. There is a beauty to the 100-unit threshold – it’s symbolically meaningful and it might give a multi-unit operator the critical mass to get the best supplier prices and interest from franchisees.

     That magic 100 group has definitely been in the focus over the past year. Six multi-units on the el Restaurante Top 50 List (see the table below for our complete Top 50 List) have either just reached that number of units or announced plans to do so in the next few years.

     Let’s first look at the multi-units that just reached 100 locations, starting with Bubbakoo’s Burritos. This chain, known for customizable burritos, was founded in 2008 and reached the 100-unit milestone with a location in Orange, Connecticut that opened in January 2023.

     “Words cannot express how thrilled we are to be opening our 100th location,” said Paul Altero, co-founder of Bubbakoo’s Burritos, in a press release. “This is a landmark achievement that every restaurant concept dreams of reaching, and it is incredibly exciting that we’ve reached this goal after just 15 years in business.”

     When el Restaurante profiled Bubbakoo’s in 2019, the restaurant had just 32 locations, but they were stepping on the gas with 31 more locations on the drawing board. Despite COVID, they eventually got those units – and more – built. And they’re not stopping at 100 – they’ve already opened another location since the 100th, and several more are planned for 2023.

     Chuy’s, a full-service Tex-Mex restaurant that is publicly held (Chuy’s Holdings), reached the 100-location mark in 2018, but closed a few locations during COVID and now stands at 97. However, the company plans to open six to nine locations in 2023, so it should pass the centennial number this year. And it’s shooting for a 10 percent jump in 2024.

    Most of Chuy’s new locations will be about 5,500 square feet, compared to its traditional size of 7,600 square feet. Jon Howie, the company’s CFO, was quoted at a restaurant industry conference that the smaller size stores – which have larger patios and more drive-thru space – provide a better return and allow them to build on smaller footprints.

     Torchy’s Tacos is another fast-growing multi-unit that recently passed the 100-unit milestone. It jumped from 84 units in 2021 to 100 last year, and now stands at 112. The Austin-based fast-casual restaurant started as a food truck in 2006 and now has locations across 11 states. Company founder and CEO Mike Rypka was quoted in Nation’s Restaurant News saying that he had planned to grow even faster but COVID-related construction delays slowed things down. He said he hopes to grow by 10 to 15 percent a year going forward.

    Now let’s consider three Mexican multi-units that have not yet achieved 100 locations, but appear to be headed that way quickly.

     Condado Tacos is a new entry to the Top 50 list. The chain, founded in 2014, only has 39 locations across the Midwest at the moment, but they’re growing rapidly and plan to hit 100 locations in the next few years. The company has 12 locations on the drawing board for 2023. Many of those are planned for new markets, including St. Louis, Louisville, and Birmingham, Alabama.

     “We are thrilled to announce our goal to grow Condado Tacos significantly over the next few years,” said Chris Artinian, Condado Tacos president and CEO, in a press release. The release explains the restaurant’s appeal: “Condado Tacos has created its niche as a full-service restaurant company and fits perfectly into the NextGen Casual category of exciting restaurant growth concepts. Craveable and innovative tacos and margs combined with its speed of service and accuracy are major components for both Condado's in-restaurant dining and To Go.”

    Fajita Pete’s is another restaurant that appears to be headed quickly in the 100-unit direction. The company currently only has 27 locations according to our count, but they signed a deal in mid-2022 with a franchisee to open five locations in Chicago, and when they announced that deal they issued a press statement that said, “This latest deal signing brings the total Fajita Pete's opened plus awarded unit count to just north of 100.”

    Fajita Pete’s, opened in 2008, distinguishes itself from most other Mexican/Tex-Mex establishments in that it focuses on takeout, delivery and catering. A typical location is about 1,200 square feet and only has a handful of tables for in-store dining. The restaurant’s current locations are in Texas, but it has awarded franchises in at least three other states.

    Finally, Velvet Taco also is racing towards 100 locations. The company was founded in Dallas in 2011 and is known for its selection of 20 gourmet tacos and a weekly special. It has made a point of repurposing existing buildings, such as previous restaurants or gas stations, for its new locations. It added 12 locations in 2022 and plans for 13 more in 2023, which would bring its total to 55. CEO Clay Dover has said he expects to reach 100 units by 2026.

Multi-Units Sold

     Joining the 100 Club is a goal for many multi-units, but that’s not the only aim for most CEOs. Another is to sell the company when the time is right. The time apparently was right for at least three Mexican multi-units in 2022.

     In August, QDOBA was sold to Butterfly Equity, a Los Angeles-based private equity firm. QDOBA has 740 locations and is third on the el Restaurante Top 50 list, and reportedly it is aiming to eventually reach 2,000 locations. The company plans to open 100 to 200 new locations per year. This was not the first time QDOBA was sold – the company, founded in 1995, counts among its previous owners Apollo Global Management, Jack in the Box, and Western Growth Capital.

    In December the then-owners of Fuzzy’s Taco Shop decided the time was right to sell the company. It was owned at that point by NRD Capital Management; they sold the 138-unit restaurant to Dine Global Brands for $80 million. Dine also owns Applebee’s and IHOP. Fuzzy’s was founded in 2003 in Ft. Worth, Texas, and specializes in fast casual Baja-style Mexican cusine.

     Finally, in January 2023,  Rusty Taco found new owners. This 35-location taco shop, founded in 2010, had been owned by Inspire Brands since 2018. But it was a small fish for Inspire, which also owns Arby’s, Sonic and Jimmy Johns. The new owner is Gala Capital, a firm that focuses on 50- to 100-unit brands.

Ed Avis is the publisher of el Restaurante.