Franchisees in Texas, Utah and other western states are expected to drive expansion for Mexican-flavored burger chain Del Taco LLC.
“We still have room to grow in Southern California, but not at the rate that we feel the brand should grow at,” said Jim Lyons, Del Taco’s chief development officer and franchising chief operating officer. “We could not achieve the pace of growth that we’re looking for strictly through Southern California.”
The Lake Forest-based company is the second largest restaurant chain based here after Irvine-based Taco Bell Corp.
Del Taco now has more than 525 restaurants in 18 states. California is the chain’s largest market with nearly 200 restaurants.
About half of Del Tacos are owned by the company with the rest run by franchisees.
Del Taco had $579 million in sales last year, ranking the company No. 16 on our list of the largest privately held companies here (see list, page 24).
The company debuted on our list this year after a restructuring by former parent company Sagittarius Brands Inc. of Nashville left Del Taco as a stand-alone operation under Del Taco Holdings Inc. in Lake Forest.
Del Taco’s strategy calls for further expansion in the South, Southeast and Midwest, Lyons said.
In Utah, the company has a deal with a franchisee to open 13 restaurants. One recently opened with a second expected this year.
Del Taco had 24 Utah restaurants before the latest franchisee deal.
“It was critical for us to grow our success there,” Lyons said.
The key to entering a market is to do it in a “quick and efficient manner,” he said.
Del Taco has expanded in the Dallas area following its first restaurant there, which opened in the city of Denton in November.
McKinney, north of Dallas, is set for a second location.
Expected growth in Texas stems from a franchise agreement signed in February with Supremo Taco LLC, part of Dallas-based Sun Holdings LLC.
The agreement allows the franchisee to open several restaurants in the Dallas area during the next five years.
Dallas matches Del Taco’s strategy of targeting markets with 18- to 49-year-olds with steady disposable incomes in communities expected to grow, Lyons said.
A company-owned restaurant in the Dallas area also is under construction and is expected to be completed by the end of the year.
“Restaurants do well for us,” Lyons said. “We get a return on our investment, so we’ll continue to build company restaurants.”