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Del Taco, the underdog in the fast-food Mexican scene, is making a bold move. With over 138 new franchise agreements signed in fiscal 2023, the chain is poised for significant expansion, setting its sights on becoming a major competitor to Taco Bell, and giving the chain a run for it’s money.
Del Taco is making major moves to grow exponentially…having signed 138 new franchise agreements in 2023. It’s currently in 16 states compared to Taco Bell’s nationwide, and international footprint. The new deals would see Del Taco roll into completely new territory in the states of Texas, Montana, North Carolina, Virginia, and Wyoming. It will also expand operations in California, Florida, Georgia, South Carolina, and Nevada.
Van Ingram, Del Taco’s VP of franchise development, told Restaurant Dive:”[We’ll] continue to really exploit the Southeast because it’s the fastest-growing part of the U.S. and Florida is the fastest-growing state. It makes sense. And there’s a lot of pent-up demand for a brand like Del Taco. … We can go out there and compete with a brand leader like Taco Bell.”
Del Taco’s Expansion Plans
This growth spurt is fueled by several key factors:
Fresh Flex Appeal: Del Taco’s “Fresh Flex” prototype, unveiled in 2021, offers a modern and efficient design with features like dual drive-thrus and digital ordering kiosks. This resonates with today’s tech-savvy customers and streamlines operations, making new locations more profitable.
Sunshine State Sizzle: Florida is a key target, with 52 franchise agreements signed there alone. The state’s booming population and growing Hispanic community make it fertile ground for Del Taco’s unique brand of Mexican-inspired fare.
Beyond the Border: Del Taco is venturing beyond its traditional West Coast and Southwest strongholds. New agreements in Texas, Montana, Wyoming, North Carolina, and Virginia signal a national ambition. This expansion taps into new markets and diversifies the brand’s reach.
Franchise Focus: Del Taco is transitioning towards a predominantly franchised model, aiming to be over 90% franchised by 2026. This allows for faster growth and leverages the expertise of local franchisees, who are invested in their communities’ success.
Value Proposition: Del Taco’s menu offers perceived value compared to its competitors. Its larger portions and competitive pricing resonate with budget-conscious consumers, especially in an inflationary environment.
Can They Out Taco The Bell?
While Del Taco’s expansion plans are ambitious, it faces a formidable opponent in Taco Bell. The latter boasts over 7,000 locations compared to Del Taco’s current 600. However, Del Taco has several advantages:
- Differentiation: Del Taco emphasizes its use of fresh, never frozen ingredients, which appeals to health-conscious consumers.
- Innovation: Del Taco’s menu features unique offerings like its Crinkle Cut Fries and Epic Burritos, attracting customers seeking something different.
- Agility: As a smaller chain, Del Taco can adapt more quickly to market trends and customer preferences.
The battle for fast-food Mexican supremacy is heating up. While Del Taco may not dethrone Taco Bell anytime soon, its expansion plans are a clear sign that it’s no longer content to be the “little brother.” With its fresh approach, strategic expansion, and focus on value, Del Taco is well-positioned to carve out a significant share of the market and become a force to be reckoned with in the fast-food landscape.
Jack In The Box is making a similar move with their own ambitious plans to expand into four new states, and open 123 locations. The chain announced their intentions this past November, and similarly to Del Taco…aims to grab a bigger piece of the pie. Will both chains be able to make it outside of their comfort zones? Guess we’ll find out soon enough!
