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Fuzzy's Taco Shop is now fully integrated within the Dine Brands system and is leveraging shared resources to accelerate its strategy.

Fuzzy’s Taco Shop has a playbook to get back to growth in 2025

Fuzzy’s integration with Dine Brands is complete and now the company is shifting its focus to culinary and growth.

Dine Brands added Fuzzy’s Taco Shop to its roster in late 2022 and the fast casual chain has since become fully integrated within its parent company – which also owns Applebee’s and IHOP – leveraging shared resources that have accelerated its strategy by about “10 to 20 years.”

So says President Paul Damico, who has been with Fuzzy’s since August 2021, well before that $80 million acquisition. His excitement about Fuzzy’s potential post-integration was palpable during a recent interview at Dine Brands’ headquarters in Pasadena, California.

“I’ve gained about 450 new friends, and we now have resources that we’ve never had before. Our franchisees are really loving that support,” he said.

With that support, Fuzzy’s will spend the rest of this year “cleaning up its system,” a job that has included a smattering of closures. According to Technomic, the chain finished 2023 with 132 locations, compared to 137 in 2022 and 137 in 2021. The pace of closures was a tick higher during covid; the company had about 146 locations at the end of 2019. The foundational work being done now is expected to position Fuzzy’s for a “growth year,” which Damico said will come in 2025.

Growth in this instance won’t be defined just by unit count, however, but a multifaceted strategy that entails everything from development to topline sales to marketing to culinary. The chain recently hired Patrick Kirk from sister brand Applebee’s as CMO to help execute its plan, which includes, among other things, “getting loud about the things we’re great at.” What are those things exactly?

“Food and beverage. Experiential drinks where you’re not just sipping on a straw, you’re playing around with it, taking pictures of it. There’s a lot of organic traction we can get just by doing fun creative,” Kirk said. “And our signature go-to Baja tacos, our ‘OG’ tacos, and we have new innovations that may not necessarily roll up to an OG or Baja, but it gives guests an excuse to try something new. We want to be the premier destination for a great taco.”

He adds that Fuzzy’s is in a good spot amid a challenging environment because it provides such “creative” menu offerings, as well as an experience that can’t be replicated at home. And, as the taco category intensifies, Damico adds that the chain has several key differentiators – its service model, or what he describes as a fast casual concept in a full-service environment; its three dayparts, including breakfast all day; its dog-friendly patios; an entry-level price point that includes some tacos at sub-$3; and a full-bar.

“You wrap all that up with a bow called franchising and I can’t find another concept out there that has what we have,” Damico said. “Everyone is pushing the culinary envelope, but we want to make sure our position is fast-casual-plus – an experience with the value of great food and a full-bar.”

Of course, there are challenges with such a position; namely finding the right real estate to support this “come as you are,” dog-friendly experience. Fuzzy’s locations are about 3,000-to-4,000 square feet with patios. Damico said the company is focused on second-gen real estate to enable faster development.

“Our prototype is energetic, it’s attractive and it’s a place you want to be and that’s why we’re focused on maintaining that as we grow,” Damico said.

The company has recently signed several development agreements, including a 40-unit deal in Arizona and Texas, and a 20-unit deal in Nevada. It’s looking for multi-unit, well-capitalized franchisees, some (a growing number) of whom are from within its new Dine family; that Nevada deal was done with existing IHOP franchisees, for instance. As the company starts to bring these new agreements to life, Damico said such growth should beget even more growth.

“The deals are done, which gives us comfort to gear up. We’re laser focused on the culinary and growing the topline and the overall growth of the brand,” he said. “I think 2025 is going to be a year where we introduce the brand into new markets and have a bigger opportunity to share our environment and food with a whole new group that has never tried our brand before. Then it becomes less difficult because every time we’ve entered a state, the brand becomes the fun place to be.”

Contact Alicia Kelso at [email protected]

TAGS: Franchising
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