John RamsayTexas-based Taco Cabana is a fast-casual chain that offers Tex-Mex staples like tacos, burritos and fajitas alongside frozen margaritas and other cocktails. Guests can use the drive-thru or opt to dine in where they can enjoy patio seating and an extensive salsa bar.
The concept currently has around 150 locations. Other than a few restaurants in New Mexico, these are all company owned and all in the state of Texas.
That should change very soon, though. In 2021, Taco Cabana was acquired by Yadav Enterprises, a longtime restaurant franchisee with hundreds of locations across multiple brands. Yadav has plans to add hundreds of stores to the Taco Cabana system in the coming years via franchising and expanding beyond Texas.
To achieve this, Taco Cabana has built out a franchise support team and created a new prototype, dubbed TC3.0, a smaller footprint and off-premises-friendly design.
John Ramsay, Taco Cabana’s director of franchise sales and development, recently spoke with rd+d about the new prototype, the chain’s franchising strategy and what excites him about the restaurant industry today.
Why did Taco Cabana decide that now is the time to roll out a new prototype?
JR: For us, it really started during COVID, like a lot of other companies. The external pressure was this shift to off-premises. We’ve always had drive-thrus and it’s always been a big part of our business, but as we all know, COVID dramatically changed that. Not only did the drive-thru become more critical but so did takeout and third-party delivery. So, we realized that we had to make a shift because, post-COVID, those things continue to grow. Internally, we saw this as an opportunity. If we need to address the functional and operational issues around off-premises, why not take advantage of it also to modernize the brand, modernize the image. We really saw it as a way to keep heritage items that our long-term guests know us by while introducing other design elements that would appeal to a new crowd or a different crowd as we start to expand.
How did you adjust your design for off-premises dining?
JR: Number one is the double drive-thru. We have one pickup window but there are two order stations. During busy time periods, we’ll put a live individual outside with an iPad to speed that process up. Number two was an exterior pickup window. The way we positioned the interior POS station allowed us to put a pickup window facing the parking lot in that same spot. If you ordered online for pickup, you don’t even have to come into the restaurant. Say you have a child in the car. You can literally park at the curb, walk to the pickup window, pick up your food and get right back into your car.
On the inside, it was about making sure that we had a pickup spot. Back during COVID, a lot of brands, us included, created a shelving system where you didn’t really interact with a team member. But we’ve taken that away. One of the things we heard was that one-to-one guest relations, talking to a real individual, was an important piece that a lot of people missed during those COVID days. So, we’ve taken away the shelves and now keep the food behind the counter. We have an individual, someone not taking orders, who is available. They can greet the guest or the 3rd-party delivery person and hand them their food in person.
Taco Cabana has been almost exclusively company-owned for decades, why start franchising now?
JR: One of the main reasons is the Yadav acquisition. Anil Yadav, [the company’s CEO] got his start in franchising as a relatively small Jack in the Box franchisee. As they have grown over the years, they’ve added additional brands, also as a franchisee. This was their first acquisition of a company. So, I think that their goal from the beginning was to take their 30 years of experience as a franchisee and create a franchise system that reflected what they like as a franchisee. Part of it is the ability to have an offering that’s created by a franchisee for franchisees.
Beyond building a franchise support team, what must change culturally at a company that’s shifting from company-owned locations to a franchise model?
JR: That, quite frankly, was my role when I first joined the brand. We already had in place a very robust group of people who are very experienced in their functional areas. Some of them had franchise experience, some of them didn’t. We started by working with the team on a strategy and asking what franchising means. What does it look like? How does their role change when supporting a franchisee versus supporting company restaurants? That was about getting buy-in. It was about bringing people along on the journey instead of coming in and saying, here’s how we’re gonna do it. We came in and said, here’s what we want to create, here’s what we want it to look like. Now let’s talk about what your role is and what you can do. I got them involved in the strategic process itself and let them write their own roadmap, if you will, for their department. And so, when we got to a finished plan there was buy-in, because each individual department had a role in developing the strategy.
What is your franchise growth strategy?
JR: Number one is to grow smart and not fast. That starts with our franchisee selection process. We believe that the best partners are ones that have experience in the business. And so, we’re talking exclusively to folks who have already been through the process of operating and owning a restaurant. We can teach them how to operate a Taco Cabana, but we don’t want to be in the business of teaching them how to open, operate and own a business. Another piece of that is local expertise. As we start to grow outside of Texas, it’s important to have a franchisee who’s based in the market, who has connections there, whether it be with the building department, the Chamber of Commerce, schools, etc. This gets to your earlier question about why franchise. It’s very difficult for a company to create that kind of network, whereas a franchisee brings that to the party. The third component is site selection. We’re really targeting new growth markets, where there’s new housing being built. The people there don’t have a pattern of restaurants they visit. Within that new market we have a better shot of bringing them on board as regular guests versus trying to convert them from an old pattern of restaurants they visit.
Why is now the right time to franchise with Taco Cabana?
JR: We believe there’s an opportunity with Mexican food in particular to increase our market share and to take market share when we go into new markets. You have places like Chipotle on one end of the spectrum, and then you have the Taco Bells on the other end. It’s all the way from fast food up to fast casual. We’re in between, and we don’t see a lot of competitors in the in-between space.
What excites you about the restaurant industry today?
JR: One thing that really excites us is innovation in food. Our menu really lends itself well to flavors and spices and different profiles, so we’ve had some very successful limited time offers as well as some changing of our menu items overall. For example, we recently rolled out a dessert that has tajin flavor. Five years ago, people didn’t even know what tajin is. Now, it’s becoming more mainstream. So, we’re able to do a lot of fun things like limited time offers and unique products and beverage lines that we probably couldn’t do a few years ago.
Another is sort of transparent to the guests, but we’re excited about it. In years past, a lot of products were very prep-intensive, made from scratch, and things like that. Now, a lot of manufacturers can recreate that same quality in a commissary-type system. We’re able to offer food that has the same flavor profile, the same quality but with less labor. It reduces our costs in the restaurant without increasing our food cost.
