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With a Hit on its Hands, Taco John's Resists Temptation


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Taco John's Walking Tacos are boosting same-store sales.

It’s Taco John’s second year to test limited-time-offer tacos from April to August, and this year is a bigger hit than last, said CEO Jeff Linville. The trick now will be to resist the clamor to make the LTOs permanent.

Same-store sales were up 9.6 percent this April compared to last, for example, when its Street Tacos line was rolled out. April 2014, in turn, bested the year before by 5.4 percent, said CEO Jeff Linville. May numbers were up 7.3 percent from last year.

By contrast, the quick-service restaurant average sales increase was 1.9 percent in April and 1.1 percent in May.

So why not add the hot items to the permanent menu, and enjoy that sales bump all year around?

“Yes, I get that call darn near daily” from franchisees, Linville says with a laugh. “But we’re going to stay disciplined about this.” Selling Street Tacos and its newest line, Walking Tacos, for a limited time is part of a five-year plan that will culminate in a new menu in 2020.

“Frankly, I’ve worked for a brand, every time we’d get a big hit it would go on the menu,” Linville says, but the end result isn’t pretty—a bulbous list of offerings that can’t be executed quickly or well. He cites McDonald’s as a case in point.

Linville arrived at the 40-year-old Taco John’s about two years ago, and began extensive research to find out how to attract everybody’s darlings. “We thought the next thing for Taco John’s is to break into this millennial crowd. So we did a lot of studies, frankly, and spent a lot of money,” he says. “One of the things we found was, from an innovation standpoint we were really behind. We were lumped in with Taco Bell and Del Taco.”

Further research included checking out what the kids were eating from food trucks in Austin and Portland—and Taco John’s answer was to go back to its roots, the humble but delicious taco.

A former senior vice president at Arby’s, Linville knows the current fads won’t last forever, so he’s looking ahead. “I’ve been around long enough to know what comes around goes around. I’m not naïve to the fact in the United States, Mexican QSR is hot, and even within Mexican QSR there’s a lot of new, shiny pennies coming in. I think you have to realize, another new, shiny penny will come in, too.”

Taco John’s store count actually was cut last year, to 382 restaurants from 398. That’s because half the system—209 units—came up for renewal at the beginning of 2014. “So we had a lot of decisions to make, and frankly, with an old brand, there were a lot of hard decisions to make.” Strict new standards were imposed, and those franchisees who didn’t want to pony up for the remodels were not signed again.

Now, he says, seven or eight new franchisees have entered the system, and will add 14 restaurants onto the count by the end of the year. Over the next five years, Taco John’s has plans to add 20 corporate stores, as well.

By that time, he believes, it will be time to unveil the new menu—and likely start the process all over again. “Our business is always going to be about food, but I think your brand’s personality is becoming almost just as important. So we’ll help drive that,” he says. “Probably about 2020, or 2019, we’ll look at what direction to go next.

 

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Laura MichaelsLaura Michaels is editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Beth EwenBeth Ewen is senior editor of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is restaurants editor at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
 twitter.com/mlarson1011.
 

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