A brother’s broken leg and a girl got Paul Murphy into the restaurant business.
“I kind of stuck with it as a result,” said the executive who turned around Colorado’s Einstein Noah Restaurant Group Inc. and is prepping Lake Forest-based Del Taco LLC for growth.
Murphy joined as chief executive of Del Taco, a quirky Mexican-flavored burger chain with $565 million in yearly sales, in February. He ran Einstein Noah from 2003 to last year.
He’s resettled from Colorado in Corona del Mar.
“I’ve worked it out that I can get to the office in less than 20 minutes,” Murphy said.
He’s come a long way from his youth in Virginia, where he got his start at a Marriott Dinner House covering shifts for his brother who broke his leg.
The experience led him to other food service jobs while perusing a teaching career, Murphy said.
A theology major, Murphy was attending the University of Virginia and working nights at a local delicatessen when he said two opportunities came his way.
The deli owner was opening a bar and offered him a chance to run it, Murphy said. At the same time, he was offered a teaching job.
But there was a hitch to the teaching job—he wouldn’t be able to see his girlfriend.
“My girlfriend could visit the restaurant,” he said. “When you’re in your 20s, you make different decisions.”
Decisions Today
Murphy now is making decisions for Del Taco, part of Nashville, Tenn.-based Sagittarius Brands Inc., which also operates Captain D’s Seafood Kitchen restaurants mostly in the central part of the country.
He has big plans for Del Taco, which now has about 520 restaurants, largely in California and other western states.
“We’re doing a lot of work to strengthen our ability to grow as soon as 2010, but more importantly to have the support for growth in 2011 and 2012,” Murphy said.
He’s looking to franchisees, just as he did at bagel chain operator Einstein Noah.
“The goal is to look at both the franchisee and the company as one company,” Murphy said.
The third Del Taco boss in the past two years, Murphy has some trust building to do with franchisees.
“It’s not like I’ve been here two or three years,” he said. “Trust takes time and you have to live it so the franchisees begin to trust in our future plan.”
He took over earlier this year after Nick Shepherd left after only three months on the job to run Dallas-based Carlson Restaurants Worldwide Inc., part of Minnesota-based Carlson Cos. and parent to T.G.I. Friday’s and San Clemente’s Pick Up Stix.
In late 2008, Shepherd replaced Shirlene Lopez, who started at Del Taco by mopping floors and wiping tables at its predecessor Naugles.
Franchisees
About 230 Del Tacos are run by franchisees. The rest are operated by the company itself.
“We’re not just franchisors, we’re restaurateurs focused on the same margins as our franchisees,” said Jim Lyons, chief development officer at Del Taco. “We’re operating our stores. Our franchises see that we’re in the same boat as they are.”
The company isn’t saying what markets are being targeted for expansion.
“We’re doing the market planning now, narrowing it down to markets where we felt had Del Taco profiles,” Lyons said. “We actually have folks who are driving those markets to confirm that.”
This year, Del Taco is on track to open 11 restaurants.
“It’s imperative we continue to build company stores, because I’m asking a franchisee to invest in the brand,” Murphy said. “What does that say if I’m not willing to invest as well?”
For franchisees, expansion could rest with a further easing of credit they’ll need to bankroll new restaurants.
Murphy’s doing what he can. He’s offering bonuses and lower royalties for top performing franchisees. That could make it easier for them to open more restaurants.
Del Taco has hired franchise business consultants to act as advisers and to do audits of franchised restaurants.
The company’s also adding regional marketing people in Denver and Phoenix, two big franchise markets.
The tactics aren’t so different from Murphy’s approach at Einstein Noah.
He took over three years after the bagel chain filed bankruptcy in 2000. He endured a pair of stock delistings and several financial restatements.
Murphy starting reworking things by sprucing up eateries, broadening the afternoon menu and cutting weak restaurants. He turned to franchisees for help righting the company.
When Murphy left, Einstein Noah had more than three years of growth in same-store sales.
Taking another page from Einstein Noah, Del Taco is looking to different types of places to open restaurants, including universities, airports and military bases.
Del Taco was in talks to open a restaurant at Honda Center in Anaheim but couldn’t make a limited menu there pencil out.
Earlier this year, Del Taco opened a test kitchen in Lake Forest to help develop food for its restaurants. Planning for the 2012 menu is under way.
“The difference between Einstein and Del Taco is the speed of new items and promotions,” Murphy said. “You need to be thinking what the next big seller will be two to five years out so if it doesn’t stick, you have something else to try to take its place.”
