South of the Border

Fresh-Mex restaurants are taking advantage of changing tastes...and becoming the next big thing in franchising.
3 min read
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Sure, franchising may have popularized Mexican food nationwide, but forward-thinking franchisees are looking way beyond Taco Bell. The next big thing? Fast-casual fresh-mex establishments. Unlike the ubiquitous Mexican fast-food drive thrus, these franchises are offering customers healthier, freshly prepared food and limited table service. In many ways, it's a logical extension of the fish taco craze that swept Southern California, thanks to franchises like Rubio's.

"People are burned out on cheap quality food, and they're willing to pay a few dollars more to get a higher quality product," says Todd Owen, director of franchise development for Qdoba Restaurant Corp.

The franchise industry, of course, is prepared to meet this demand. There are several newer Mexican fast-casual concepts, like the 7-year-old Qdoba, and veterans, like the 43-year-old Taco Time chain, who want to grow their fresh Mexican segment beyond the Southwest and make it a national favorite. Recently, the biggest names in franchising have jumped on the trend, as McDonald's acquired a majority share of Chipotle and, at press time, Wendy's was about to acquire Baja Fresh.

Even though some of the country may be unfamiliar with this grilled, vegetable-laden style of Mexican food, that doesn't mean they're not ready for it. "Taco Bell blew out thousands of restaurants and kind of set everybody's palate, but now people are looking for something more," says Michael Liedberg, president and CEO of Desert Moon Inc. "Consumers have tried burritos and tacos, but today there's better food out there to choose from."

Fresh Mexican chains are taking advantage of this new taste demand, as well as a growing desire among the American population, particularly the ever-influential baby boomers, to eat better. "Mexican systems have always had this advantage," says Jerry Wilkerson, president of Franchise Recruiters Ltd., a Crete, Illinois, franchise executive search firm. "The brands that sell the freshness move forward faster in market share."

That's the goal of Taco Time. The company, founded in Eugene, Oregon, in 1959, was offering fast-casual dining before the term was coined, but needed to clarify its image. "We found that people really love our food and our brand, but considered our facilities dated," says Debbie Porter, vice president of marketing for Taco Time. "Facilities relate so much to the freshness and feel of a customer's experience, we decided it was important to put together a [new look]."

The decor at Taco Time's restaurants are being cleaned, brightened and enhanced with new colors and artwork depicting vegetables in an attempt to highlight the "fresh" aspects of this Mexican concept. "We wanted to make sure our facilities were saying the same thing as our brand messages," Porter says.

Even though this segment includes players incorporated well before salsa overtook ketchup as America's condiment of choice, the race seems to have just begun for fresh Mexican concepts. "The overall category is very small. When you look at the major players, you don't find any that have more than 200 restaurants," says Kevin Osborn, president of La Salsa. "It's pretty early in the race. I equate it to a marathon--it's not where you're at at the end of the first mile but where you end up at the finish line."

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