No other brand is better positioned for growth in the limited fast-casual taco category than Velvet Taco, CEO Clay Dover said.

Velvet Taco considers its competitors to be Rusty Taco, Chronic Tacos, Torchy’s Tacos, and national behemoth Chipotle. Velvet Taco, which has 17 company-run stores and one licensed location, is the smallest of the bunch, but there is reason for Dover’s optimism.

Velvet Taco’s mode of operation transitioned smoothly to COVID times. In many locations, the restaurant has a dedicated takeout window and drive-thru pickup window. Pre-COVID, sales outside the four walls mixed 37 percent, but rose to 65 percent in 2020. That translated to a 90 percent increase in off-premises orders. The chain expects off-premises to hover around a mix of 55 percent in 2021.

“In trying times now, as well as in the future, we’ll make sure that we get great tacos in the hands of everyone who is interested,” Dover said during the brand’s ICR Conference presentation earlier this month.

Digital mixed 23 percent pre-COVID, but boosted to 42 percent in 2020—good for an 83 percent increase in digital sales. The brand believes digital will mix around 30 percent this year as it develops a new loyalty program. Velvet Taco also launched a catering channel that’s projected to add $10 million in incremental sales in 2021. The program is COVID modified for individual lunch orders as well as large group orders.

The chain boasts an AUV of $4.2 million and an average check of $20.75.

“Our high average unit volume and industry-leading restaurant performance makes me feel confident that we will continue to provide a great ROI performance for our restaurants,” Dover said. “We have a great team in the Restaurant Support Office as well as in the field leading our multi-unit, seasoned managers that have been well-trained. They’re very excited about growing our brand.”

Founded in Dallas in 2011, Velvet Taco has been majority-owned by private equity firm L Catterton since 2016. In the years following that transaction, the brand has more than quadrupled in size. Four locations debuted during the pandemic, including record opening week sales of more than $100,000 at the Addison and Plano stores. Eleven stores are planned for 2021, and nine restaurants are in varying stages of development for 2022.

Currently, Velvet Taco is located in the Dallas, Houston, Chicago, Atlanta, Austin, and Charlotte markets. It’s planning to expand into Nashville, San Antonio, and college towns like Lubbock and College Station, Texas, and Norman, Oklahoma. On average, stores are 2,500 square feet, but Velvet Taco does have a 400-square-foot food hall location that earns $30,000 in weekly sales. It’s also developing an 800-square-foot pickup only store.

“We believe that we have great market share, not only in the existing markets that we have, but we’ve commissioned a white space study with Sitewise in which we’re going through and identifying opportunities throughout both the U.S. as well as internationally,” Dover said. “We believe there’s a great opportunity to grow in the years to come.”

Dover said Velvet Taco fills a gap for those looking for a chef-driven experience. The difference is that the brand is 100 percent taco-centric, meaning it doesn’t do bowls, wraps, or any other variation. The menu comprises 20 tacos, four sides, and one dessert. Everything in the restaurant is scratch-made without a freezer—kitchens char their own tomatoes, roast meats, and marinate chicken.

Some of the tacos are globally inspired, including the best-selling Spicy Tikki Chicken (crisp tenders, spicy tikka sauce, buttered cilantro basmati rice, raita crema, Thai basil, and flour tortilla) and Korean Pork (angry crema, kimchee slaw, pickled fresnos, cilantro, corn tortilla). Velvet Taco also runs a Weekly Taco Feature that highlights different flavors throughout the year, such as Chicken Fried Oyster, Paneer Hash, and BBQ Ranch Pork.

“I’m passionate that Velvet Taco is an innovative concept and uniquely positioned,” Dover said. “Between our limited service, our ability to scale with takeout and our digital positioning, we’ll be able to scale with growth and be well-positioned for consumers, not just in this time, but in the years to come.”

Emerging Concepts, Fast Casual, Story, Velvet Taco