In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Taco John’s franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Taco John’s 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 Taco John’s franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Taco John’s 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 Taco John’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 and 2017 average, median, high, and low sales, cost of sales (food, paper, and total), and gross profit for 15 company-owned and operated Taco John’s Restaurants with drive-thru in Colorado, Wyoming, Nebraska, and Illinois that were opened for all of calendar years 2017 and 2018

• 2018 average, median, high, and low sales, by quartile, for the 291 franchised Taco John’s Signature T16 Restaurants with drive-thru windows that reported sales to Taco John’s through its QuikServe Point of Sale System for all of calendar year 2018

• 2018 average, median, high, and low sales, by quartile, for the 26 franchised Taco John’s Restaurants with Endcaps in Strip Malls with drive-thru windows that reported sales to Taco John’s through its QuikServe Point of Sale System for all of calendar year 2018

• 2018 average, median, high, and low sales, by quartile, for the 15 franchised Taco John’s Restaurants in Convenience Stores and Travel Plazas with drive-thru windows that reported sales to Taco John’s through its QuikServe Point of Sale System for all of calendar year 2018

Section I – Background Information

15 Things You Need to Know About the Taco John’s Franchise

1.  In early April 2019, Kansas City-based creative agency Barkley announced that it has been named agency of record for quick-serve Mexican restaurant brand Taco John’s, following a competitive review process earlier this year. Barkley will be responsible for brand strategy, integrated creative campaign development, digital/social strategy and content, media strategy and planning. Barkley is also tasked with amplifying Taco John’s new brand persona (developed by AWC), and partnering with Taco John’s franchisees to improve the guest experience.

2.  Jason Parks, chief growth officer of Barkley, said, “Taco John’s is an iconic brand with a fiercely loyal fan base. We’re excited to leverage our deep restaurant expertise and understanding of modern consumers to build on that and connect with new guests. Our research on modern consumers tells us that millennial parents’ use of quick-service Mexican food offers tremendous growth potential for the Taco John’s brand.”

3.  Barkley’s first work for Taco John’s will launch in September of this year. Alan Wright, vice president of marketing for Taco John’s, said, “Barkley has a history of building long-term growth stories in the restaurant space, and reinvigorating legacy brands by connecting emotionally with modern consumers. That combined with a new strategic plan, our ‘Bigger. Bolder. Better.’ brand persona, several new menu innovations, and a fresh new store design – we’re excited to partner with Barkley and build a strong foundation for the next 50 years for the Taco John’s brand.”

Brings Back Signature Favorites and Launches New Quesadilla Tacos

4.  At the beginning of March 2019, Taco John’s brought back its popular Crispy Fish Tacos and Shrimp Street Tacos, and also introduced new cheesy, grilled Quesadilla Tacos. The specialty tacos were only available until April 28.

5.  Taco John’s launched its new Quesadilla Tacos – a melty quesadilla shell filled with your choice of sirloin steak, classic beef, chipotle chicken, or pork carnitas. Customers could also indulge in Taco John’s Crispy Fish Tacos – crispy fish, fajita sour cream, ranch dressing, lettuce, cheddar cheese, and lime; or Shrimp Street Tacos – golden popcorn shrimp topped with crisp lettuce, chimichurri sour cream, and pico de gallo.

6.  Alan Wright, vice president of marketing for Taco John’s, said, “Our Crispy Fish Tacos and Shrimp Tacos are fan favorites, so we are excited to reintroduce them to our menu. Plus, we are now offering our new Quesadilla Tacos filled with cheesy goodness and grilled to perfection – they are guaranteed to be a new fan favorite.”

Elects Industry Leader to Board of Directors

7.  In June 2018, Taco John’s announced that industry visionary Gerard Lewis has joined Taco John’s board of directors. Lewis brings over 40 years of experience in the food and beverage industry with both franchise and company operations to his new role at Taco John’s.

8.  Lewis most recently founded G&S Food Group, LLP where he spent most of his time with McDonald’s, leading their menu turn-around effort by developing their menu and food visions. He was instrumental in the “All Day Breakfast” and Fresh Beef launches.

9.  Prior to that, Lewis served as the chief concept officer at Wendy’s International where he assisted in developing a new brand position and activated the new position to achieve profitable sales growth each and every year.

10.  Lewis said he was energized to join the popular Mexican quick-service restaurant because of its history and potential. He added, “Taco John’s is an interesting brand. Not only is their food great but they’ve got this wild, almost cult-like following. Their fans have this instant menu-item recognition – not just for Potato Olés – that most brands would kill for. Building upon that loyal base is what excites me.”

Company History

11.  Taco John’s started out as Taco House, a small taco stand opened in 1968 by John Turner in Cheyenne, Wyoming. During that summer, just before the annual Cheyenne Frontier Days rodeo, Turner decided he needed a restaurant so he could serve tacos to the thousands of tourists who were coming to town. Turner looked to Cheyenne real estate broker James Woodson and his business partner, Harold Holmes. Since Turner’s request was last minute, Holmes turned a camper into what was essentially a food truck.

12.  Turner’s tacos and burritos were such a hit that he asked Holmes to build him more food stands. Woodson and Holmes realized that there was an opportunity to grow Taco House beyond Cheyenne and in 1969, Turner sold them the franchising rights to the business. In honor of Turner, Woodson and Holmes named the new business Taco John’s.

13.  In its early years, Taco John’s expanded only in smaller Midwestern and Western communities, but grew quickly. Taco John’s eventually started opening stores in larger cities and also expanded its menu. According to Taco John’s, the company is responsible for coining Taco Tuesday and has even trademarked the name.

14.  In 2004, Taco John’s partnered with Good Times Burgers & Frozen Custard and Steak Escape to open co-branded restaurants. Today, Taco John’s has locations across the United States.

Entrepreneur’s Franchise 500

15.  Taco John’s ranked No. 105 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Taco John’s 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 Taco John’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

Franchised

2016

• Outlets at the Start of the Year:  378
• Outlets at the End of the Year:  381
• Net Change:  +3

2017

• Outlets at the Start of the Year:  381
• Outlets at the End of the Year:  382
• Net Change:  +1

2018

• Outlets at the Start of the Year:  382
• Outlets at the End of the Year:  381
• Net Change:  -1

Company-Owned

2016

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  10
• Net Change:  0

2017

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  10
• Net Change:  0

2018

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  11
• Net Change:  +1

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

Part 1 – Average, High, Low, and Median Income for Company-Owned Restaurants

• The following chart provides the average, high, low, and median gross sales results for calendar years 2018 and 2017 for the 15 Taco John’s Restaurants with drive-thru windows that are company-owned and operated, or were owned, directly or indirectly, by persons who are identified in Item 2 of the Franchise Disclosure Document.

• All of these Restaurants are located in Colorado, Wyoming, Nebraska, and Illinois. All 15 of these Restaurants were opened for all of calendar years 2018 and 2017. Of these 15 Restaurants, 11 are owned by Taco John’s and the remaining 4 are owned and operated by people who are identified in Item 2 (management).

• Taco John’s did not include 6 Restaurants that were owned at the end of 2017 by people identified in Item 2, because 5 of those Restaurants were sold to non-affiliated persons and one was closed during 2018, and thus were not operated by Taco John’s or any person identified in Item 2 for the entire calendar year 2018.

2018 Average