Taco Cabana

Taco Cabana is an American fast casual restaurant chain specializing in Mexican cuisine. A wholly owned subsidiary of Fiesta Restaurant Group, it is headquartered in San Antonio, Texas. As of September 2014, Taco Cabana had 166 locations throughout Texas, Oklahoma and New Mexico.[2] As of July 2017, there were 176 Taco Cabana restaurants.[3] Taco Cabana is known for its pink stores and semi-enclosed patio dining areas. Most menu items are handmade daily on site in open display cooking areas.

Taco Cabana
Subsidiary
IndustryRestaurant
GenreFast casual
FoundedSeptember 1978 (1978-09)
FounderFelix Stehling
Headquarters
San Antonio, Texas
,
United States
Number of locations
162
ProductsMexican food and packaged salsas
Revenue297,470,000 US dollar[1] (2019) 
ParentFiesta Restaurant Group, Inc
Websitetacocabana.com

History

Formation of the restaurant chain

Taco Cabana was founded by Felix Stehling in September 1978 with its first restaurant at the corner of San Pedro and Hildebrand Avenue in Midtown San Antonio.[4] Stehling purchased a vacant Dairy Queen because the family needed additional parking space for their popular bar across the street, the Crystal Pistol. Stehling decided to open a taco stand. The open-air design of the existing structure led to the "patio cafe" concept that defined the chain's subsequent locations. Felix Stehling's wife, Billie Jo Stehling, created the décor and interior theme for the restaurant chain. After finding all of the patio furniture stolen following the first night of business, Stehling decided to keep the place open 24 hours.[5]

The original Mexican patio cafe

The restaurant focused on fresh foods, rather than pre-packaged or pre-prepared foods. The restaurant served beer and margaritas, staying open 24-7 and allowing takeout orders. As the business grew, Stehling asked his two brothers to help expand the chain throughout San Antonio. It soon grew to nine restaurants. In 1986 the brothers left the company, after differences in opinion on how to manage the business.[6]

In 1990, Taco Cabana began expansion into neighboring states and continued its growth throughout Texas. Richard Cervera became president of the company in 1990, implementing a plan to franchise the brand.[6]

IPO and imitators

In the late 1980s and early 1990s, the success of Taco Cabana encouraged imitators such as Two Pesos. In January 1987 Taco Cabana filed a suit against Two Pesos for allegedly duplicating Taco Cabana's branding style. Two Pesos lost the case and appealed, and in 1992 the Supreme Court ruled in favor of Taco Cabana and awarded the company $3.7 million in damages.[6]

In 1992 Taco Cabana went public with its first stock offering, and ended the year with 17 restaurants.[6] In January 1993 Taco Cabana announced that it was purchasing cash-strapped Two Pesos' restaurant assets in exchange for 940,000 shares of Taco Cabana stock, valued at approximately $22 million.[7] For $30 million, the sale[8] included all 30 San Antonio restaurants of Two Pesos.[6] Taco Cabana converted most Two Pesos locations into Taco Cabana restaurants, closed others and sold the associated Shortstop Hamburger chain.

Taco Cabana sales hit a high in 1994 at $127 million. That year, Stehling decided to resign as chairman and was succeeded by Cervera. Despite the rise in revenues the company saw while Cervera was in charge, stock prices for Taco Cabana drastically dropped, and Cervera resigned in 1995 and was replaced by Stephen Clark.[6]

Business model change and purchase

In 1995 Cervera resigned as president for a position with the House of Blues,[6] remaining chairman and CEO.

Stephen Clark was appointed both COO and president. Clark began evaluating of Taco Cabana's operations with his own management team. He closed several of the company-owned restaurants, restructured some of the franchisee debt, sold assets not related to restaurants, and slowed the expansion. In 1996, Taco Cabana introduced a new type of restaurant to the Dallas-Fort Worth area, reminiscent of an old Mexican cafe. It featured a rounded front, clay tile roofing, aged wood paneling and stainless steel counter tops. Customer visits and profits increased, with plans to extend the designs to new restaurants.[6]

Acquisition by Carrols

Taco Cabana had spent around $30 million on brand image by 2000, and while profits had grown, stock price remained low. Clark began looking at sale options. In 2001 the company became privately held as a wholly owned subsidiary of Carrols Restaurant Group. After the acquisition, Clark left the company[6] and was succeeded by Mike Biviano.

In 2001 it introduced its Mexican grill concept, including made-to-order grilled beef, chicken, pork and shrimp. Throughout 2002, the franchise closed seven stores in the Phoenix, Arizona area, but Taco Cabana proved profitable. In 2003 Taco Cabana began creating a new restaurant prototype with an eight-foot char-grill.[6] That year Taco Cabana opened nine new restaurants. In 2004, it marketed the concept of fresh food and San Antonio heritage. From 2004 through 2005 Taco Cabana added five more restaurants.

The franchise operated 120 restaurants in 2005.[6]


Renovations
A Taco Cabana location in Dallas, Texas.

In 2012, Taco Cabana began renovating their restaurants in San Antonio and Houston. The new design featured decorative metal "estrella" (star) lights hanging from the ceiling, papel picado accents throughout and large street-life photos from Mexico decorating the walls.[9] As of October 1, 2012, it operated 160 restaurants and was a subsidiary of Fiesta Restaurant Group.[10] Later that year, the founder, Felix Stehling, died at the age of 87.[11] In December 2012, Fiesta announced that would be moving the location of their headquarters to Addison, Texas, with plans to grow substantially over the next 2 years.[12]

In January 2016, Fiesta had 162 company-owned and six franchised Taco Cabana restaurants. In February 2016, there were plans to open up to 10 new Taco Cabana restaurants in Texas, adding to the 164 company-owned stores and 7 franchised ones.[13] In 2017, the store saw some declines in sales in the second quarter, which Fiesta attributed to less marketing. As of July 2017, it had 176 Taco Cabana stores.[3] On January 14, 2020, it was announced that Fiesta Restaurant Group will be closing 19 Texas Taco Cabanas immediately, citing - “eliminate all stores with significant losses".[14]

Most Taco Cabana restaurants have a drive-thru. Only a few restaurants are open 24 hours a day, except Christmas Day. For most of the chain's history all locations were painted in the company's signature pink. Taco Cabana is known for its interior, semi-enclosed and patio dining areas. Most menu items are handmade daily on site in open display cooking areas, including fajitas on an open-flame grill and tortillas made in-house.

In 2002, it temporarily introduced flautas to the menu. They were made permanent after they proved popular. In 2003, Taco Cabana introduced the "premium bowl," a precursor for salads and bowls on the menu. In April 2004, Taco Cabana introduced the Dozen Breakfast Tacos Box, a promotion that proved popular enough to become permanent. During 2006 through 2010, new products were tested, including the Shrimp Tampico and grilled pupusa. Taco Cabana has made a number of temporary items permanent since then, with steak street tacos added in December 2010, brisket tacos added in April 2011, sopapillas and flan in June 2011, and shrimp in February 2013.

In 2012, the company's chefs were experimenting with street food.[15] In 2015, Taco Cabana began utilizing an online mobile ordering app.[16] In January 2018, the chain began offering certain breakfast foods all day.[17] The chain continues to have alcohol, with happy hour specials for margaritas for Margarita Day in February 2018.[18] In March 2018, the chain brought back Texas smokehouse brisket. It continues to have taco boxes with a dozen tacos of various sorts, with breakfast tacos available in mornings.[19] It sells some of its hot sauces as of 2017.[20]

In mid-March 2020, all of the restaurants abandoned their in-store dine-ins and began take-away service caused by the COVID-19 pandemic. By June, some allowed outdoor dine-ins.

Programs

In 2008, Taco Cabana rolled out the “Cabana Cares” program to elicit guest feedback, followed by the “Welcome to the Great State of Cabana” passport loyalty program that summer.

Charity work

In San Antonio, Taco Cabana is involved with several local military organizations, offering discounts for those in the military.[21] For a number of years has supported the Warrior and Family Support Center (WFSC) at the Brooke Army Medical Center.[10] Since 2010 Taco Cabana has hosted Taco Treat fundraisers for the WFSC.[22]

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See also

References
  1. https://www.frgi.com/investor-relations/financial-information/sec-filings/sec-filings-details/default.aspx?FilingId=13956494.
  2. "Company Information". Retrieved December 24, 2014.
  3. "Fiesta attributes sales slide to marketing cutbacks", Ron Ruggles, Nation's Restaurant News, August 7, 2017
  4. Morton, Neil (December 11, 2012). "Stehling, Taco Cabana founder, dies at 87". San Antonio Express-News. Retrieved January 5, 2013.
  5. Ayala, Elaine (May 9, 2011). "Stehling created Taco Cabana décor". San Antonio Express-News. Retrieved January 5, 2013.
  6. Taco Cabana History, Funding Universe
  7. Ruggless, Ron (January 25, 1993). "Taco Cabana buys rival Two Pesos". Nation's Restaurant News.
  8. "Ailing restaurant chain to auction Mexican, Italian eateries", Houston Business Journal, Allison Wollam
  9. "Taco Cabana Opens in San Antonio with Remodeled Look", QSR Magazine, May 29, 2012
  10. "Wounded Warrior center to benefit from Taco Cabana donation", San Antonio Business Journal, James Aldridge, January 10, 2013
  11. "Felix Stehling, Taco Cabana founder, dies at 87", KENS5, December 11, 2012
  12. Addison Chosen for New Corporate Headquarters
  13. "Fiesta scuttles plan to separate Pollo Tropical, Taco Cabana", Nation's Restaurant News, Ron Ruggless, September 27, 2016
  14. Ralat, José R (January 14, 2020). "Taco Cabana Closes 19 Locations in Texas". Texas Monthly. Retrieved January 24, 2020.
  15. "Taco Cabana research chef develops street foods", My San Antonio, Jeremy T. Gerlach, July 7, 2012
  16. "Taco Cabana unveils new mobile ordering app", Korri Kezar, Dallas Business Journal, September 3, 2015
  17. "Taco Cabana Introduces All-Day Breakfast Tacos", Dennis Foley, January 4, 2018, KTSA
  18. "Taco Cabana celebrates Margarita Day with all-day happy hour today", KHOU, February 22, 2019
  19. "Texas smokehouse brisket arrives at Taco Cabana", KFOX14, March 22, 2018
  20. "Taco Cabana now selling hot sauces at H-E-B", Addie Broyles, February 10, 2017, Austin360
  21. "Taco Cabana to Present Check to Warrior and Family Support Center Thursday, Jan. 10", Taco Cabana
  22. "Taco Cabana Is Giving Away Free Tacos Today", Katharine Shilcutt, Houstonian Magazine, October 6, 2015
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