Taco John’s has been in the news plenty as of late, but there’s much more going on at the Cheyenne, Wyoming-based chain than its Taco Tuesday riff with Taco Bell. For starters, the company recently signed a 50-unit franchise agreement with Meritage Hospitality Group.
And if that name sounds familiar, it’s because Meritage is Wendy’s largest franchisee, so it has plenty of operating experience in the quick-service space to help boost Taco John’s into a new phase of growth. That phase includes a goal of expanding well beyond its upper Midwestern roots and into markets like Boston, Michigan and Nashville. Taco John’s even moved its operating functions to Minnesota to better support this goal.
“Minnesota is important to us because that’s where our highest concentration of stores is, but we also think it’s a great springboard for the white space we see for this brand in the east and southeast. Our first priority is to grow out our core from the upper Midwest and there is a ton of opportunity for us,” CMO Barry Westrum said in a recent interview.
To better define “a ton,” Westrum said there is room in every U.S. city for the brand as the demand for Latin-inspired food increases, particularly among younger consumers. It’s fair to say Taco Bell dominates the domestic quick-service Mexican category with just over 7,000 restaurants. After that, the field is pretty open. Del Taco has about 600 restaurants, for instance, but is only in 15 states. By comparison, Taco John’s has about 380 restaurants in 23 states. Westrum believes there will be about 600 units across much of the country in the next 5-to-10 years.
“We believe there is a lot of room and demand for a higher quality, Mexican quick-service experience that’s cheaper and faster than fast casual. We believe that white space is lucrative and available in every city,” he said. “And we’re determined to fill that gap as soon as possible.”
Stronger unit economics at new restaurants in new markets are driving much of this optimism. Westrum said the chain’s legacy units in smaller towns average between $1 million and $1.1 million in average unit volumes, but new locations are seeing $1.5 million to $1.7 million.
“We’re excited about that, and we believe that is the promise of the brand. We’re growing in a way that hasn’t been done in a long time and it’s been fun,” he said.
Taco John’s has several marketing initiatives underway to support its growth. It’s heavily promoting its value position, for instance, both with prominent in-store displays and through its app.
“As more consumers realize that the way to get value is through deals and discounts in the app, that has opened up a lot of opportunity for us,” Westrum said.
And since the Taco Tuesday battle began, consumers have been downloading Taco John’s app in droves; Westrum said the company is now adding about 20,000 new app users a month. The company set solid groundwork well before recent headlines, however, launching a new points-based loyalty program a little over a year ago that has since driven a 30% increase in visits and spending every month.
“It’s been great because customers want to be rewarded for their existing behavior and they want it to be easier. And it allows us the ability to learn more about them. The promise of technology is more of that individual engagement and giving that person something that makes them feel good about the brand,” Westrum said.
This loyalty evolution, as he calls it, has also sharpened Taco John’s attention on local marketing. As the company plants flags in new markets further from its Wyoming roots, such local marketing efforts have become far more effective for building brand awareness.
“For us, the relationship with the community is critical and it’s more genuine. If I can get people with a 3-to-5-mile radius to know our story, we’ll grow awareness from there with old-fashioned guerilla marketing – apartment complexes, hospitals, military bases, whatever it takes to get coupons, flyers to those people in our community,” Westrum said. “Consumers want deeper connections with brands and this approach is resonating more than a massive, fragmented, national ad campaign for us.”
Contact Alicia Kelso at [email protected]