In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Fuzzy’s Taco Shop franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Fuzzy’s Taco Shop franchise, based on Item 7 of the company’s 2019 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Fuzzy’s Taco Shop franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Fuzzy’s Taco Shop outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Fuzzy’s Taco Shop’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average, median, lowest, and highest gross revenue for the 121 system-wide, 114 franchised, and 7 company-owned Fuzzy’s Taco Shop Restaurants that were open and operating for the entire 52-week annual period beginning January 1, 2018 and ending December 30, 2018 (separately stated)
- 2018 average, median, lowest, and highest food cost %, labor cost %, and occupancy cost % for the 7 company-owned Fuzzy’s Taco Shop Restaurants that were open and operating for the entire 52-week annual period beginning January 1, 2018 and ending December 31, 2018
Section I – Background Information
22 Things You Need to Know About the Fuzzy’s Taco Shop Franchise
Launches Strategic Plan to Expand Franchise Presence Across the United States
1. In late June 2019, Fuzzy’s Taco Shop announced its plans for expanding its presence across the United States through franchising. The brand has plans to open an additional 20 restaurants this year on top of the seven already opened so far in 2019. Additionally, Fuzzy’s Taco Shop has a goal of opening its 200th store by the end of 2020.
2. Mel Knight, president of Fuzzy’s Taco Shop, said, “Everybody is happy in our restaurants. You can hear it when they say ‘My Fuzzy’s’ as they talk about us. When you walk into a Fuzzy’s at 7:30 in the morning, you see all types of people enjoying themselves – nurses, a Bible study group, policemen and firemen. It’s pretty amazing to walk into that environment and see how many people are having a great time before 8:00 a.m.”
3. One of the more attractive values that has built the fanatical following of Fuzzy’s is the personal relationship both customers and franchisees have with the brand. This contagious vibe has helped Fuzzy’s Taco Shop surf past its competition to become one of the fastest-growing brands in the taco category, opening 70 locations in the last three years with its sights set on reaching the milestone 200th location.
4. Knight added, “The wife of one of our franchisees described Fuzzy’s best. She said, ‘Every time I go to Fuzzy’s, I feel like I’m on vacation.’ We have created this environment at Fuzzy’s where you can come in a suit, come in shorts, come however you are. You can bring kids that run around. Mom can get a margarita, dad can get a cold beer, and the whole family can get a great meal for under $30. Everybody’s happy.”
5. This relaxed, family-friendly atmosphere and customer value proposition makes Fuzzy’s Taco Shop a standout franchise opportunity in the restaurant space. According to Michael Mabry, chief development officer of Fuzzy’s Taco Shop, “To our guests, laid-back locals who go with the flow and not with the crowd, Fuzzy’s is the taco place where Mexican faves are served with a splash of Baja at a price that makes it accessible for everyone. Fuzzy’s is the opportunity in the franchising world right now. If someone wants to invest in something special and be part of an exclusive club of people, this is it.”
6. According to the company, Fuzzy’s Taco Shop owns the fast-casual category in every sense – from location buildout and customer experience to its strong Item 19, with its average unit volume coming in at $1.48 million as reported in its 2019 Franchise Disclosure Document.
7. With solid unit-level performance, the unapologetic brand has captured the attention of multi-unit and multi-brand operators who are quickly scooping up territory claims. The 53 franchisees who have already joined Fuzzy’s on its mission currently own nearly 150 locations with another 70 in development.
8. As Fuzzy’s Taco Shop begins promoting its franchise opportunity, the brand plans to continue developing and supporting existing restaurants while carefully identifying new operators to join the club and establish emerging markets.
9. The brand is looking for operators similar to those who have joined the system, including Clint Bixler and Eddie White, the brand’s first franchisees and largest operators who currently own 12 restaurants; Merrick McKinnie, a Sonic, McAlister’s Deli, and MOD Pizza operator who has three Fuzzy’s open and 18 in development (the most in the system); Marc Rogers, who has nine open locations and one in development in Colorado and plans to open 10 more in Colorado and Idaho; and Manny Leclercq, who is developing the entire state of Oklahoma with his seventh of 14 units under construction.
10. Not only are Mabry and Knight guiding the franchise development efforts, but Fuzzy’s is also backed by franchise private equity specialist NRD Capital, which invested in the brand in 2016. At that point, Fuzzy’s had only 80 locations. John Teza, operating partner of NRD and former chief development officer of Jersey Mike’s, said, “The same way our franchise partners are seeing it, we saw the opportunity to be a part of a brand that had mastered its positioning and ownership of a category.”
11. On a final note about the future of the brand’s franchising efforts, Knight said, “Traditionally, our approach to growth has been a little bit backwards. We haven’t really focused on marketing our franchise opportunity; the growth we’ve experienced has all been organic, which is a great place to be. Now, as we plan to reach 200 locations by the end of 2020, we are looking to partner with franchisees that appreciate a laid-back atmosphere but aren’t afraid to roll up their sleeves and get to work. To me, success is defined by our franchisees being ultra-successful and proud they’re a part of this family. Our support is genuine; we will do whatever it takes to help them succeed.”
Hires New Chief Development Officer
12. In mid-April 2019, Fuzzy’s Taco Shop announced that it had rounded out its leadership team with industry veteran Michael Mabry as the company’s first chief development officer. In this new role, Mabry will lead franchise development while streamlining the real estate and construction processes. Prior to joining Fuzzy’s Taco Shop, Mabry spent nearly a decade as president and chief operating officer of MOOYAH Burgers, Fries and Shakes headquartered in Plano, Texas.
13. According to Mabry, “Having been a longtime user of the brand, I am thrilled to join the Fuzzy’s team. Along with being one of the restaurant-industry’s fastest growing chains, we are focused on providing the best service, support, and guidance to our current franchisees and thoughtfully identifying new partners to grow the brand.”
14. Mel Knight, president of Fuzzy’s Taco Shop, said, “We’re fortunate to have Michael on our team and look forward to his leadership as we continue to drive growth. He brings experience across all aspects of our business, and, more importantly, aligns with our passion and commitment to putting the interests of our franchisees first.”
15. Mabry’s hiring completes the leadership team that has evolved over the past four months with three additional executive appointments: Kevin Rychel, vice president of operations, a promotion for Rychel, a three-year Fuzzy’s Taco Shop veteran; Samir Wattar, vice president of supply chain; and Laura Purser, vice president of marketing.
Treats Firefighters for National Hot Breakfast Month
16. To celebrate National Hot Breakfast month in February 2019, Fuzzy’s Taco Shop delivered hot breakfast tacos to local firefighters in a show of appreciation for the sacrifices they make daily to keep our communities safe. Nearly 150 Fuzzy’s Taco Shop locations in 16 states across the U.S. delivered hot breakfast tacos to at least three fire stations near them.
17. Most restaurants showcased Fuzzy’s famous breakfast and Baja-style tacos that are served all day long for a great value. Some of Fuzzy’s most popular breakfast options include Bacon, Egg & Cheese; Chorizo, Egg & Cheese; and Shrimp, Egg & Cheese.
18. David Catalano, chief operating officer of Fuzzy’s Taco Shop, said, “At Fuzzy’s Taco Shop, we make it a priority to truly get to know the people in our communities and provide opportunities to give back to them when at all possible. This time of the year the temperatures are cold, and firefighters are out in the elements protecting our homes and keeping our loved ones safe, so we thought there was no better group of heroes to support.”
19. Throughout the year, each franchisee determines their own community outreach efforts. From hosting a fundraiser for youth sports leagues to providing discounts to military veterans and first responders, each community strives to make a positive impact on the people around them.
20. Fuzzy’s Taco Shop was founded in 2001 by Paul Willis near Texas Christian University in Forth Worth, Texas. Willis’ new restaurant was a success but he decided to sell the restaurant in 2003 to father and son restaurateurs, Alan and Chuck Bush (2003 is often cited as Fuzzy’s Taco Shop’s founding year). After spending the next few years expanding on Willis’ original concept, the Bushes began franchising the Fuzzy’s Taco Shop concept in 2009.
21. Over the next few years, Fuzzy’s Taco Shop continued to grow in the United States. However, most of the brand’s restaurants are located in Texas. In 2016, the Bushes sold a 70 percent stake to Atlanta investment fund NRD Capital Management, LLC to propel Fuzzy’s Taco Shop’s corporate and franchise growth.
Entrepreneur’s Franchise 500
22. Fuzzy’s Taco Shop ranked No. 77 on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Fuzzy’s Taco Shop franchise costs, based on Item 7 of the company’s 2019 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Fuzzy’s Taco Shop’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 79
- Outlets at the End of the Year: 100
- Net Change: +21
- Outlets at the Start of the Year: 100
- Outlets at the End of the Year: 127
- Net Change: +27
- Outlets at the Start of the Year: 127
- Outlets at the End of the Year: 137
- Net Change: +10
- Outlets at the Start of the Year: 7
- Outlets at the End of the Year: 7
- Net Change: 0
- Outlets at the Start of the Year: 7
- Outlets at the End of the Year: 7
- Net Change: 0
- Outlets at the Start of the Year: 7
- Outlets at the End of the Year: 10
- Net Change: +3
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- The following charts contain certain historical data related to the operation of franchised and company-owned Fuzzy’s Taco Shop Restaurants. The data included in this Item 19 was taken from information reported to the franchisor by its franchisees and affiliates, and reflects information for the 52-week annual period beginning January 1, 2018 and ending December 30, 2018 (the “Measurement Period”).
Part 1 – Unit Gross Revenue
- As of December 30, 2018, Fuzzy’s Taco Shop had 147 system-wide Restaurants (137 franchised Restaurants and 10 company-owned Restaurants), 124 of which were open and operating during the entire Measurement Period (116 franchised Restaurants and 8 company-owned Restaurants).
- For the purposes of this Item 19, Fuzzy’s Taco Shop is excluding: (i) 2 franchised Restaurants that were reacquired by Fuzzy’s Taco Shop or its affiliates during the Measurement Period, because performance of Restaurants that change ownership can be different before and after the transfer; and (ii) 1 company-owned Restaurant located at Texas Motor Speedway, because it is located in a Closed Market and is not open for business to the public on a daily basis during the Measurement Period.
- Therefore, the information presented in this Item 19 pertains to the remaining 121 system-wide Restaurants that had been open and operating during the entire Measurement Period (“System Reporting Units”), of which 114 were franchised Restaurants (“Franchised Reporting Units”) and 7 were company-owned Restaurants (“Company Reporting Units”).
- All Company Reporting Units were operated by an affiliate of Fuzzy’s Taco Shop during the Measurement Period (each a “Reporting Affiliate”).
Unit Gross Revenue