If Pacific Bells opens restaurants any further to the east it may have to consider a name change.
The giant Taco Bell franchisee started in 1986 with the opening of a location in Tualatin, Oregon, and has locations in Washington and California. But it has also been opening up locations in such decidedly non-Pacific states as Wisconsin and Alabama.
“It ebbs and flows a little bit, but ultimately our desire is just to continue to grow,” Scott Shepherd, president of Pacific Bells, said in an interview. “We’re in nine states today. We’ve got an opportunity to really grow in those nine states.”
That growth could include a ghost kitchen. Pacific Bells, or PacBells as it is often known, continues to build more units in Wisconsin, including one it recently opened in Greenville, which is southwest of Green Bay. The franchisee first entered the market five years ago with a purchase of 24 locations in the state. It is now up to 37 and is planning more.
One of those new locations next year is expected to be in a CloudKitchens facility in Milwaukee, which would be the second such ghost kitchen operation in the Taco Bell system. The operator’s goal: To take some of the pressure off the digital and delivery business at its locations in the city.
“Our existing stores in that area are very high digital,” Shepherd said. “Well over 40% of our total revenue in those stores close to downtown Milwaukee is just all digital business, believe it or not.”
That’s a big change, he said. “It’s really amazing because, you know, five years ago, we were probably in single digits in terms of digital percentage. But the post-COVID world has shifted.”
PacBells has had numerous conversations with Taco Bell corporate on the prospect of a ghost kitchen location. Franchisees typically have to get approval from the company before they open a new site.
Taco Bell is one of the more experimental franchisors in the U.S., a brand willing to let franchisees take on new and different ideas.
The franchisor “was very open and eager to hear our perspective on it and did their own research and ultimately came back and said, ‘Hey, let’s move forward,’” Shepherd said.
PacBells is the country’s eighth largest franchisee, according to the publication Franchise Times.
The company has largely expanded through acquisitions, though it prefers building. “We’d probably love to build more stores if we can actually find space to put them every year,” Shepherd said.
The market for Taco Bell acquisitions is traditionally difficult, as they don’t come for sale very often, and there are usually plenty of buyers given the chain’s strengths. Taco Bell has no real national competitor and has consistently grown sales.
“The market’s good,” Shepherd said. “It’s a great brand and a great model. Taco Bell is just a really great marketing machine, and it’s a very cool brand to be part of.”
“There aren’t that many folks out there looking to sell their Taco Bells, right?” he added. “Or there’s a lot of people that are looking to acquire Taco Bells. So I think that probably says it all.”
PacBells has a team dedicated to finding sites, and the company will build locations where it’s able to find them. Right now, Shepherd said, it is tougher to find locations in the Northwest due to various complicating factors, such as the number of existing Taco Bell restaurants operated by other franchisees.
Yet the company is working to open in the Northwest. And, Shepherd said, PacBells plans to keep opening locations in California, despite the state’s $20 fast-food wage.
Shepherd likened the situation to Seattle in 2015, when the city raised the minimum wage to $15 an hour, then an extraordinary amount that would affect businesses well beyond the city.
“We take a look at our business and figure out how we can keep moving forward,” Shepherd said. “People still keep coming to Taco Bell in California. It certainly put some challenge on margins. So we’ve got to work creatively through that. But we’re still happy to be in the state of California.”