Jimboy’s, Del Taco fuel growth for two, while dad helped Which Wich operator
Illustration by Jonathan Hankin
Americans have been consuming tacos since at least the 1920s. Yet their popularity in restaurants didn’t explode for another 20 years, with the advent of pre-fried tortillas and a new real estate strategy.
What Taco Bell founder Glen Bell was doing “was allowing Americans of other racial and ethnic groups to sample Mexican food without actually going into Mexican neighborhoods,” says Jeffrey Pilcher, author of “Planet Taco: A Global History of Mexican Food.”
Bell wasn’t alone. Ed Hackbarth and David Jameson debuted Del Taco in Yermo, California, in 1964. Ten years earlier, Jim and Margaret Knudsen converted a 16-foot trailer into a mobile vehicle, launching Jimboy’s American Tacos in Kings Beach, on the north shore of Lake Tahoe. A restaurant opened in Sacramento five years later.
Jimboy’s growth—39 restaurants to date—was markedly slower. But its Original Ground Beef Taco eventually caught on in northern California, in no small measure because of longtime franchisee Gary Perez.
Perez, who currently operates nine Jimboy’s, recently agreed to add eight more by 2020. Three or four openings are planned for this year. The franchise disclosure document estimates one unit costs from $375,000 to $1.37 million to open.
Meanwhile, he’s re-imaging his existing stores with the brand’s new decor package, described in a press release as featuring “vintage design elements, natural wood, digital menu boards, historical prints, and stainless-steel attributes that pay tribute to the food trailer from which the first tacos were served.” Perez estimates the update cost to franchisees ranges from $50,000 to $90,000.
Perez opened his first Jimboy’s early in 1980, selling his house to finance the restaurant. More recently, he has used cash flow from Jimboy’s, a line of credit and the sale of real estate to finance growth.
He plans to put new units in power centers, developing a two-space building for the purpose. Jimboy’s will open in the space that accommodates a drive-thru while a national brand tenant will rent the other one. “We are super-excited,” he says.
More on tacos
Meet Del Taco franchisee Mark Miller, whose company, Three Brothers Restaurants, operates 12 outposts in western Washington state and northern Idaho. He plans to open two to four new units by year-end using a joint-venture strategy. He’s hoping to double the store base within the next five years “depending on the economy.”
Miller, who’s also an independent grocer and co-owns a food manufacturing plant, has been a franchisee for seven years. He got involved with Del Taco when a business partner floated the idea of buying two existing franchised units in Boise. Miller was reluctant. “I didn’t think it would work, quite honestly,” he recalls. The deal—which included the participation of the landlord and the seller—worked out in the end.
Miller, who now finances growth internally, is entering joint-venture agreements with developers (who are also equity partners) instead of leasing a building. “It’s a leap of faith from an economic standpoint, but not a leap of faith with these developers,” says Miller, adding they’re friends.
The benefits of sharing equity are appealing. “It helps us lower our cost a little bit going in and still gives the organization some upside if the cap rates and all that stuff work out,” he explains.
Miller believes the brand’s strength leaves plenty of room to grow throughout Washington, where he already operates two stores, in Walla Walla and Federal Way. There’s also opportunity in Grand Junction, Colorado, where Miller now operates two Del Tacos. “We will look to augment that area,” he says, adding he’s also scouting for sites in northern Idaho and Spokane.
Will it be difficult to recruit experienced managers for the restaurants? “I wouldn’t say it that way,” he offers. “We have a very competitive pay and bonus structure for GMs. We remain confident we can bring in and recruit talent.”
While he won’t reveal salary ranges for general managers, Miller insists compensation ranks at or near the top in each market. “We believe in paying our GMs a livable top wage, including a significant bonus structure,” he boasts. “They participate in our success.”
Back to the future
Three-unit Which Wich franchisee Julio Chavez won the brand’s Founder’s Award last year. Created by Founder and CEO Jeff Sinelli, it honors a franchisee on the basis of dedication, leadership and drive.
Chavez, who was born in Michoacán, Mexico, and brought to the U.S. as a 1-year-old, began working at the Which Wich on Richmond Avenue, near Houston’s Galleria mall, when he was 17. He quickly learned how the model worked in the high-volume environment, crediting a general manager who delegated tasks to him.
Eventually promoted to area manger for four franchised units, Chavez began thinking about franchising one himself. Corporate was skeptical, he recalls. “I said, ‘I’ve been here six years. I have too much in here to fail.’ That was my mentality.” He got a store in Humble, a Houston suburb, financed with his dad’s life savings. Notes Chavez: “We turned that store around.”
Chavez, however, lived an hour away in Katy. When two units became available there, he bought them. His wife, sister and brother are managers. Now, his sights are set on the Galleria area, again. “My broker showed me three sites. I fell in love with the one near the Galleria mall. It is a brand new space,” he says, adding he’ll need a bank loan to finance half of the project’s cost.
As for the rent, he adds: “They told me it was $5,000 a month. I can work with that.”
David Farkas has covered the restaurant business for 25 years as a reporter and food writer, and writes about development deals in The Pipeline in each issue. Send your franchise’s development agreements to him at firstname.lastname@example.org.