Industry News | March 21, 2017 | By Danny Klein | QSR Exclusive Brief

The Taco Shop with an Edge Preps for Explosive Growth

Chronic Tacos plans to grow by 50 percent in 2017. Chronic Tacos
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If Chronic Tacos was ever going to become a national player, Michael Mohammed knew it would need to look the part.

Two years ago, Mohammedwho, along with his brothers, acquired a majority stake in the company in 2012drew a circle around unit No. 100. By 2018, the 14-year-old taco shop out of Newport Beach, California, would crack the triple digits. As distant as the idea seemed, Mohammed wanted his brand to dress for the job it wanted, not the one it had, so to speak.

“Our method was to start acting like a 100-store chain at that point,” he says. “We weren’t going to just say we want to open 100 restaurants. If we say it, we’re going to act that way, too.”

Before charting a national path, Mohammed wanted the right team, proper operations manuals, and correct infrastructure ready to go. “We wanted to have everything in place that a chain with 100-plus units open would have. And we want to have that now because that’s how we’re going to get to those higher numbers,” he says.

Mohammed believes this mindset is the culprit behind the brand’s recent explosion. In 2016, Chronic Tacos increased franchise locations by 50 percent, a number it projects for 2017 as well. The chain now has 41 locations, with plans to open north of 20 this year. There are more than 20 units in various stages of lease signing and construction, he says, ranging everywhere from Las Vegas to Hawaii to Florida to Alabama, Canada, Georgia, Colorado, North Carolina, Tennessee, Washington, and California. The growth and potential landed Chronic Tacos on Entrepreneur’s Annual Franchise 500 list, where it debuted at No. 455—fifth among Mexican chains.

This, again, is a direct result of Mohammed’s ability to think ahead. Chronic Tacos, which started as a small shop by the beach, began franchising in 2006. When Mohammed took over, there were around 30 shops. The team closed some and started to focus on operations, and tuning up the brand’s image.

“It wasn’t really growing but we saw a lot of potential in the brand,” he says. “We loved the food and we saw a real uniqueness with the brand. When we got involved, we came in and we pulled back from any kind of growth and really focused on operations first. And getting all of the operational platforms in place and infrastructure so our training was strong and our manuals were strong.”

After refining Chronic Tacos’ design and systems, Mohammed relaunched the franchising initiative in 2014. Around a year later, it started to gain steam. A couple of shops opened and more and more deals were signed, and 2015 is really when the ink started to flow. All in all, Mohammed says there are 60-plus projects in the pipeline with no break in sight.

“Our marketing coin is 'Live the Taco Life,' and we felt there was a real opportunity in the segment. We’re a very unique brand in that we offer very authentic food but we really embrace the creativity and uniqueness as well," he says. "Through art and music, we’re a taco shop with a bit of an edge."

Chronic Tacos has no qualms about its branding. This extends from the consumers it aims to attract to the franchisees entering the system.

In November 2016, the chain announced its “Nothing To Hide” campaign. The goal was to highlight Chronic Tacos’ commitment to traceability in its supply chain, and its promise to menu all-natural proteins and eco-friendly products across all locations.

This included non-GMO corn tortillas and eco-friendly paper products that are compostable and biodegradable.

Was this a not-so-subtle nod to one of the industry’s biggest sourcing disasters, circa 2015? Mohammed says it wasn’t. “We’re not trying to emulate other brands,” he says. “We’re just trying to give consumers what they want and still be able to provide that authentic, third-generation recipes they love.”

The brand says it has franchisees who have jumped ship from some of quick-service’s giants, including McDonald’s and Taco Bell, to join the Chronic Tacos movement.

Mohammed credits that to the brand's status as an up-and-comer, and the environment the company fosters. “We’re the type of culture people want to be a part of. For lack of a better term, it’s a cool brand,” he says. “We do a lot of cool things. We have a lot of fun, and I think people really embrace that part of it. It’s not just a corporate machine.”

Chronic Tacos is also seeing an influx of multiunit operators enter the picture—people who want to own entire regions instead of single locations.

Mohammed says they walk every potential franchisee through the back of the house. “We want them to see the good, the bad, and the ugly of the restaurant business before they sign. We want to make sure they see every aspect of it but at the same time it’s really about a fit personality wise. Do they get the culture?” he says.

Chronic Tacos looks for franchisees willing to commit wholeheartedly to the brand. When somebody starts talking about changing details, such as color schemes, art, and recipes, a red flag is raised.

“We’re very firm on our branding,” he says. “We’re very firm on our recipes. It’s what’s made us who we are and obviously we evolve and we listen to what people are saying, but that doesn’t mean we are going to change it. We really do have to watch that kind of stuff. Every franchisee and franchisor does.”

Right now, Chronic Tacos is approaching its growth in three-year chunks. After 100, Mohammed says, it will start thinking about 300 units. All the while, the company will remain ingrained in its local communities, where Chronic Tacos has built a reputation in philanthropy. Through a partnership with The ECO-Warrior Foundation, Chronic Tacos organizes local beach cleanups and cultivates wholesome, active lifestyles for underprivileged youth.

Mohammed, who has a passion for paddle boarding, says this will never change.

“Really getting involved with the community and getting behind something that is real change, not just about raising money to go do something, that is who we are,” he says.