Future uncertain, R Taco keeps calm, carries on
Few restaurant chains have the emotional pull of the Dallas-based street taco concept, whose founder Rusty Fenton passed away just before Buffalo Wild Wings purchased an 80 percent stake in the brand in 2014. It was “the opportunity of a lifetime,” in the words of former R Taco CEO and co-founder Steve Dunn, especially sweet for a brand still reeling from the death of its namesake and front man.
That B-Dubs honeymoon was short lived, however, as activist investors won three seats on the BWW board last summer and publicly called for the ouster of President and CEO Sally Smith, who was a personal champion of the R Taco pickup. Then news broke in late November that Roark Capital-owned Arby’s would acquire and merge with Buffalo Wild Wings in a $2.9 billion deal, all while R Taco’s leaders work to keep an even keel and continue selling franchises in new markets across the country.
No rest for the weary
R Taco Director of Franchise Sales Eric Brown said he expected a continuation of business as usual, adding that new territories have continued to sell amid the corporate upheaval. Matt Baker, Arby’s manager of corporate communications, said it was too early to comment specifically on R Taco’s post-merger future.
R Taco started 2017 with 16 locations, as then-CEO Dunn announced plans to double the brand’s footprint by the end of the year. It ended up opening 10 new units by late November, with new locations in the Twin Cities, Ohio and Texas, among others.
Showing off fruits of its big-brand ties, the 10 latest R Taco units have a more mature, nuanced restaurant design that includes large garage-style doors bringing in fresh air, patio seating whenever possible, signage highlighting all-day breakfast tacos and freshly made ingredients, fewer corrugated strips of metal than the original template and cues that highlight Rusty’s lasting influence on the brand.
“It’s more refined,” said Brown, pointing out a picture of Rusty and his four daughters at the newest Minnesota location in Eden Prairie. “We’re telling the story of Rusty inside our restaurants, even though it doesn’t say Rusty on the outside.”
While waiting for a basket of tacos, including the tasty chorizo, egg and cheese, Brown explained how the brand is working to maintain the cantina vibe, while pumping up its promotion of breakfast, the fresh cooking that happens each day and alcohol in locations allowing a liquor license.
“In our Dallas market breakfast tacos are huge; it isn’t as big here” in Minnesota, he said. “It’s not really a Starbucks type of feel here, but we have that environment in Dallas where people come in, sit down and have coffee and breakfast tacos.”
Since joining the company in 2016, Brown spends a lot of his days commuting an hour and a half from his home in western Wisconsin to the five stores in the Twin Cities, while also flying to the brand’s other markets to meet with prospective franchisees.
“We’re trying to find operators who have a background in and understand restaurants,” he said. “We still smoke the brisket here, we smoke the pork, we’re doing all the sauces, guacamole—everything’s done from scratch—so you really need someone who has a restaurant background.”
After polishing off breakfast, our next stop was Minneapolis where an R Taco food truck catered to a line of hungry office workers outside a large corporate campus. Local franchisee Pam Ringgenberg has operated the truck for years, which requires a small dedicated team of workers, and pays off in terms of store volume and brand recognition throughout the market.
“I don’t know what tomorrow holds, but I’m very expectant,” says Denise Fenton, about R Taco, where she is brand director. Her late husband, Rusty Fenton, and Steve Dunn are co-founders of the concept, shown above.
Avoiding the taco wars
R Taco’s original co-founder Steve Dunn is no longer the brand’s CEO, but its acting leader is Thomas Berzinski, officially the vice president, managing director at R Taco. He joined Buffalo Wild Wings in 2009 and became part of the sub-brand’s executive team immediately after the acquisition. He confirmed that Dunn remains a shareholder, but declined to share additional specifics on the reasons or timing of his reduced role.
As the primary connection between R Taco and Buffalo Wild Wings, Berzinski said his first year was spent “understanding what we had” and meshing its culture with the parent company.
“You have to understand when we acquired it, I would call it an infant concept,” he said. “We’re still not a big company but … we’ll open quite a few units off of our existing franchise base and bringing new franchisees into the system.”
Acknowledging the intense competition within the fast-casual category, Berzinski said there’s a “uniqueness” to R Taco that he feels will apply to many parts of the country, perhaps excluding Texas, which is already saturated with taco players of all stripes.
“You have taco wars down in San Antonio … but you get into the Midwestern markets and people are pleasantly surprised,” he said. “I do believe this transfers to just about anywhere; the only place where maybe you don’t want to put too much effort is probably Texas, because of the landscape of good tacos.”
Before the Roark news dropped, he said that, amid the struggles inside the investor relations side of Buffalo Wild Wings, the overall company is still “highly profitable” and R Taco provides valuable fast-casual advice to its owner.
“You have to understand this is not a situation where our cash flow is nothing and we’re having a hard time paying our bills,” Berzinski said. “One of the challenges of being a startup in what is a mature company is getting people to think about Buffalo Wild Wings differently and understanding a lot of systems don’t work because it’s fast-casual versus casual dining.”
Good enough, smart enough
Aside from its founders, National Training Manager Shane Brewer is the longest-serving R Taco employee and calls Rusty his mentor, who first introduced him to his wife. After coming under the wing of a drastically larger corporation—more than 1,250 locations in 10 countries—Brewer said some of the most significant advantages have come for the brand’s team members who have received retirement and other benefits.
“The other is, we’ve just become much more efficient at what we do,” he said. “They went through this and we were able to pull on all of our processes and their knowledge and start integrating it sooner than we would have if we stayed by ourselves.”
Speaking of private conversations with franchisees in the wake of the first acquisition, Brewer said he is “less reactionary than a lot of folks in the restaurant business” and that he has reassured his contacts about the future of the brand, whoever is at the top.
“Restaurants go through different things. This is a very strong brand and regardless of what happens I don’t think R Taco has anything that we need to worry about,” he said. “We are strong and we’re well liked.”
That reassurance has become a familiar mantra for many of R Taco’s leaders in recent months. In the immediate aftermath of word that Smith would depart Buffalo Wild Wings by the end of 2017, Brown said he and the rest of the R Taco management team were saddened and felt bad for her after so many successful years growing the company.
“Yeah, it sucks all these changes are happening, but the food’s so great and what we’ve done with these restaurants, people love it, potential franchisees are loving it,” he said.
“So it’s just a matter of getting people in and putting restaurants in the right areas.”
Family, friends then food
Denise Fenton took on a larger role at R Taco after her husband’s death and the near-immediate acquisition by Buffalo Wild Wings, which she hadn’t been aware of due to a confidentiality agreement. She focuses on franchise sales and development and new store openings, but said her primary role is sharing her family’s story and “giving meaning to it, a connection to where we came from.
“I don’t know what the future holds, I don’t know what tomorrow holds, but I’m very expectant,” she said. “If anything it’s just exciting to see a company that believes in a brand I admire, Buffalo Wild Wings, and we’re along for that ride as well—it’s exciting.”
She said it’s too soon to know if any of her daughters, ranging from 15 to 26, will join the brand as adults, but she said “each of them are just so proud of what their dad created.”
But one thing she’s sure about is her purpose.
“It’s my story, I feel it, I live it every day and if I could continue to maintain that relationship … that would be my goal,” she said. “It’s what my husband taught me. He was family first, then friends, then food and that’s the way I am, as well. I take care of my family, they’re my purpose, and the next one is Rusty Taco.”