Unwrapping the Next Generation of Taco John’s
Taco John’s may not have moved up the QSR 50's Contenders ranking this year—it landed once again at No. 61—but CEO Jeff Linville sees nothing but upside for the Mexican quick-service brand he’s worked hard to transform.
Linville envisions his 388-unit chain—long concentrated mainly in the Midwest and West—growing into a national brand with household name recognition. To that end, the Cheyenne, Wyoming–based company rolled out its new tagline, “Unwrap the Original,” in 2014 as part of an across-the-board rebranding push.
So far, changes in the menu, store design, and marketing seem to be paying off: In 2015, Taco John’s boosted system-wide sales by about $30 million, ending the year with a $931,300 AUV.
While much is on the table, Linville promises some things won’t ever change; the brand’s iconic Potato Olés, for instance, aren’t going anywhere. But he plans to continue adding more sophisticated menu items and pushing growth across the country. The CEO hopes his suite of changes will propel Taco John’s into what he calls the “QSR-plus” category, earning the company of brands like Chick-fil-A and In-N-Out Burger.
In an interview with QSR, Linville laid out his thoughts on the brand’s future. (The interview was edited for clarity.)
What changes can we expect as you continue to evolve the Taco John’s brand?
The one thing we have absolutely decided when we’re re-creating the menu is that we want much more authentic Mexican food served in a quick-service format. Last year, we came out with a line of street tacos. Our regular corn tacos and soft shells sell just fine, but when we really talk about our future guests, we’re very, very focused on the Millennials and that [iGeneration]. That’s where the future spending will be. And for the first time in a very long time, we’re moving our menu that direction. We want to be authentic. We want everything clean label.
When you really get serious about Millennials and iGens, it changes your core menu.
What does that mean in practice?
A lot of fried foods you used to lean on no longer fall under that label of authentic Mexican. We’re moving some things off our menu and looking at bringing in different proteins. For 40 years, Taco John’s has leaned on a lot of chicken and ground beef. We’re now getting into shredded beef and carnitas. We’re really upping the game in protein, bringing much cleaner labels and kind of dispelling some of the older things on our menu that no longer resonate with Millennials and iGens, like fried chicken wings.
What kind of growth do you expect to see over the next few years?
We’re projecting that we should be adding another 14 (all franchise) locations onto our total store count this year. We have agreements already signed and in place for another 63 stores. We just signed a rather large deal in New York City. We’ll be putting our first unit in New York this year, and our first Nashville unit this year. We signed a 10-store agreement in Indianapolis, and we’ll be putting one to two stores in Indianapolis this year for the first time.
Our focus has certainly been to get into the Southern U.S. and get a much better presence in the Midwest and out to the East Coast. We’re really starting to see some good efforts in Champaign, Illinois; Detroit; and Knoxville, Tennessee. All of a sudden, to be frank with you, most of our time is spent trying to stay in front of that growth tide.
What’s different under your direction versus that of the previous leadership?
Previously, the AUV was fairly low, but cash flow was good. Comparative sales were good. They wanted to be in smaller towns throughout the U.S. That’s what they preferred. I think the ownership really wasn’t interested, frankly, in growing beyond that.
Our founder passed away a few years ago, and a board was formed and decided we can expand this. The board, which is made up of the founders’ children, decided, “Hey, let’s grow.” And that changed everything for us. Being in small towns is great, and it’s been very good for our brand. But our future growth will be around suburban areas around larger cities.
Who do you view as your biggest competition? And how is Taco John’s differentiating itself?
It would definitely be Taco Bell as a direct competitor for us. And there are a lot of different chains out here—Taco Bueno, TacoTime, [for example]. We also see McDonald’s, Burger King, and Wendy’s as competition in that quick-service space.
What we’ve decided is that as we move into this authentic Mexican menu and store design, we’re upping our game on menu to really separate ourselves from the rest of quick service. When we talk about steak, it’s going to be authentic steak on our menu. When we talk about pork, it’s really authentic and delivered in a way that’s different from one of our competitors. We’re moving into that “QSR-plus” segment. We really want to be in “QSR-plus” and sit at the top of quick service.
Are you worried that this ongoing brand evolution might alienate longtime fans of Taco John’s?
It absolutely is a concern, because today, our core customer has been with us for 20, 30, 40 years. And we certainly don’t want to alienate them. We’re very careful about how we continue to look at what our core customer is buying and why they’re coming to Taco John’s. It’s on a razor’s edge that you walk any time you’re doing menu management; you don’t want to lose core customers as you move into new segments. So we’re very careful about doing that. But we’re also very serious about moving forward.
How has the rise of fast-casual brands affected business for Taco John’s?
We certainly keep an eye on fast-casual Mexican and others in that category, there’s no question. I do think some of those folks have redefined what a Mexican burrito is and should be. They’ve certainly gotten our attention there. But I think overall, most of that has gone after the casual-dining segment. I think most chains would tell you that. We don’t really share that same guest with Chipotle.