Taco John’s earlier this summer opened a new restaurant support center in a suburb of Minneapolis, in a trendy, mixed-use development next to a Punch Bowl Social, above a group of retail shops and other businesses. Many of the company’s functions, including its test kitchen, were moved here.
The reason for doing so was simple. The Twin Cities is the brand’s biggest market. What’s more, “six hours from Minneapolis, we can hit half the chain,” CEO Jim Creel said.
That won’t last long if Taco John’s keeps its current pace. The brand has been on something of a development tear of late. It is on pace to add 16 stores this year, which would be the most the chain has added since 2005. It expects to add another 22 to 25 stores next year and 25 to 30 in the years after that.
Many of them will be out East. Taco John’s last year inked a huge, 50-unit development deal with the Michigan-based Wendy’s franchisee Meritage Hospitality Group. It has also inked a deal for 22 locations in Boston, the first of which is expected to open in January.
“This is our biggest pipeline of development agreements we’ve ever had,” Creel said.
A drive-thru-only location has done well in South Dakota and could be a model for the brand in the future. / Photo courtesy of Taco John's
Taco John’s was founded in Cheyenne, Wyo., by John Turner, who operated a pair of small restaurants called Taco House. Two local businessmen, Harold Holmes and Jim Turner (no relation), acquired the franchise rights and renamed the brand after its founder.
They then sold franchises by flying Holmes’ Cessna 310 to small towns in Wyoming, Montana and South Dakota where they’d identify locations to place one of the chain’s tiny, portable shacks, according to “Family Style: 50 years of Taco John’s.”
The brand operates 370 locations and last year generated $410 million in system sales. It is the third largest fast-food Mexican chain, behind market giant Taco Bell and the Jack in the Box-owned Del Taco. Most of the chain’s locations are franchised, though the company is building more corporate restaurants, including some in the Minneapolis area where it can test items and provide some training. It may also build stores to seed markets that are later sold to franchisees.
The brand’s unit count had stagnated for more than a decade. Taco John’s operates fewer locations today, for instance, than it did in 2001. Yet the brand has undertaken a massive overhaul in recent years involving just about everything, from its menu to its store design and the composition of its executive team, not to mention that support center. “It’s been a busy two years,” Chief Marketing Officer Barry Westrum said.
Creel, who has been with the chain since 2000, was named CEO in 2016. Much of the executive team has also changed. Westrum, a former chief marketing officer for Del Taco, was named CMO in 2020. Mark Kocer was recently brought over from Arby’s to serve as its chief operating officer. Richard Bundy was named chief financial officer last year. Brad Bergaus, former manager of culinary product inspiration at Buffalo Wild Wings, was named corporate chef.
The Minneapolis support center is also expected to give the company a pipeline of more talent, given the historic presence of restaurant chains there such as Dairy Queen, Buffalo Wild Wings and Famous Dave’s. “We have the ability to build our team and add talent in marketing, operations and supply chain,” Westrum said.
Brad Bergaus, Taco John's corporate chef, demonstrates the chain's "Kitchen of the Future." / Photo by Jonathan Maze.
Under Creel, Taco John’s developed a new brand persona, with the tagline “Bigger, Bolder, Better.” The company also unveiled a new prototype in 2019 featuring brighter colors, dining room windows and new technology, including digital exterior menu boards. It then crafted a remodel program in 2020.
Since then, 47 restaurants have been remodeled. But between remodels and new store builds, executives believe three-quarters of the system will be under the new image by the end of 2025. “We’re really excited about what this is going to do with the reputation of the brand,” Westrum said.
Executives also say it’s helped them attract some of those new franchisees. “Our new image has done a lot to attract outstanding individuals to the brand,” Creel said. “The brand is on its way up.”
Some of the new locations may be drive-thru-only units. Taco John’s has two such units in South Dakota, one of which generates $1.7 million in annual sales. Executives believe that model has considerable potential.
And the brand is working to improve the function of its kitchens. At the support center, Bergaus showed off the chain’s new kitchen format, in test in 20 locations and expected to be expanded to other locations as more stores are remodeled.
It features a design that cuts down on how much employees have to walk and new equipment, such as a tortilla heater that saves six seconds. The company one day hopes to connect that with its point-of-sale system so it automatically begins heating tortillas upon order. Altogether, executives say, the kitchen cuts 20 seconds from service times.
Taco John's Kitchen of the Future features automated Potato Olés dispensers.
The company is also pushing menu development, hoping to attract customers with higher quality. Taco John’s launched a Fried Chicken Taco last year that went on to become one of the best launches in its history. Taco John’s sold 4.2 million of the tacos. That helped drive same-store sales up 6.2% last year. Same-store sales are up 4.6% so far this year.
It is now testing other items, such as a Smoked Carnitas Quesadilla featuring pork carnitas that is pit-smoked for eight hours.
Many of Taco John’s products, such as a Meat & Potato Breakfast Burrito or a Grande Beef Taco, feature the company’s signature Potato Olés. There’s reason for that: Items that include the Olés test better than those that don’t. “Potato Olés are kind-of like our pixie dust,” Westrum said.
As such, many (but not all) items currently being tested feature that ingredient. That includes a new Breakfast Griller being tested. It features eggs, bacon, pico de gallo, salsa, cheese and Potato Olés wrapped in a tortilla and grilled. It’s easy to eat with one hand, which provides the chain with the kind of portability a brand wants in the morning.
Breakfast is a key daypart for the chain, something Taco John’s has had for 15 years. The brand generates 10% of its sales in the morning, but executives believe they can do more with it. “We’re making the menu more relevant,” Westrum said. The company is planning to start advertising the daypart. “We’re going to talk more about breakfast.”
Some markets near Cheyenne can generate 20% of sales in the morning. “I think we can get to 15%” chainwide, Creel said.
A strong breakfast daypart could help the chain increase competitiveness, which will only improve its growth prospects.
And executives believe there is room in the business between a chain like Taco Bell and a higher-end concept like Chipotle. “There’s room in the middle of the menu,” Creel said. “A higher-quality Taco Bell and a faster Chipotle.”