Article

Taco Del Mar keeps on growing and growing

In 2005, Taco Del Mar grew from 111 restaurants to 189.

February 12, 2006

There's an independent fast-casual Mexican concept making noise with a surf board and fish taco, and it is growing fast.

 

In 2005, Taco Del Mar grew from 111 restaurants to 189. The company reported system-wide revenues of $46.5 million for 2005, up from $33.5 million in 2004. And the Seattle-based company has opened 22 restaurants in Canada the past two years and plans to open 300 more over four years. That's quite a jump from where the company started in 1992.

 

Taco Del Mar opened on Pier 57 in Seattle's historic waterfront district. The founders, brothers James and John Schmidt, created a name and logo that reflected the signature menu item, the fish taco. The inspiration for the store came from shoreline shacks on the beaches of Southern California and the Baja Peninsula that served big burritos and fish tacos to the beach crowd. The company started with $22,000 culled from friends and family.

 

Since then, James and John have added some business-savvy executives. In 2002, the brothers hired DaveHuether as president and Neal Hollingsworth, vice president of franchise sales and development. Before joining Taco Del Mar, Huether served as COO for Godfather's Pizza Inc. and vice president of operations for Country Kitchen International Inc. Hollingsworth was formerly the director of regional planning for the Burger King Corporation.

 

Huether said the master-developer program allows franchisees to work with regional directors instead of corporate, empowering developers to manage and support geographies.

 

"We thought the strategy was more efficient in terms of developing markets," Huether said.  "The developers and franchisors are familiar with the market and have been in the restaurant business for a long time."

 

Huether said about 40 percent of the new restaurants come from former Subway franchisees switching from subs to burritos. For franchisers, Taco Del Mar requires a total capital investment of $119,000 to $244,000.

 

In terms of menu, Taco Del Mar is not the traditional Mexican food concept. Its taco and burrito stuffings include Alaskan cod, shrimp, braised chicken and pork mole among several other meats and vegetables. Huether said burritos account for 70 percent of total sales.

 

Oh Canada

 

Will Canadians like fish tacos? Restaurant consultant Kevin Moll said yes.

 

 "There is no reason why the Taco Del Mar concept wouldn't work, but the marketing is key, especially in Canada where this fast-casual Mexican concept is not widespread," Moll said.

 

Huether admitted American restaurants have not faired well in Canada, but said the company trusts its Canadian developer to make Taco Del Mar a Canuk staple. In fact, sales at Canada's first Taco Del Mar have increased 30 percent since opening two years ago. Perhaps that's because Taco Del Mar is one of the only Mexican fast-casual concepts in Canada.

 

TDM Federal Holdings president Darryl Chandra, Canada's master developer, said selecting real estate has been important to Taco Del Mar's success. Chandra, only 28, said he looks at existing spaces next to busy retail centers, such as Wal-Marts and major shopping centers.

  

Going public

 

Unlike two of its major competitors – Baja Fresh and Chipotle – Taco Del Mar is privately held.

 

"Being able to concentrate on the product and not keeping stockholders happy makes my job a lot easier," Huether said.

 

When Chipotle, owned by McDonald's, went public earlier this year, it became the best-performing IPO restaurant since Boston Chicken in 1993. In contrast to Chipotle's success, Baja Fresh, owned by Wendy's, saw comps down 3.9 percent in 2005, and the company has trimmed store count by three to 302.

 

Meanwhile, Taco Del Mar sits right in the middle, charging forward and growing unit count at a rate of more than 40 percent. Could the store that dared to combine fish and salsa go public?

 

"It's great to be a part of the independent side," Huether said. "I think it's great that Chipotle has done so well, too, because they really build recognition across the board for our segment."

 

So what's next?

 

Days after the company announced its 300-store plan in Canada, the London Free Press reported Taco Del Mar would set up shop in London by fall.

 

"We have no idea where that came from," Huether said. "Right now, our plans are to continue developing in North America."