Del Taco Targets Detroit

The privately held 41-year-old fast food company, which began with a single store in the Southern California desert community of Barstow in 1964, aims to grow by more than 300 additional franchised restaurants over the next few years in what is the largest franchise growth in the history of the company.

Through it all, company officials say, they're going to remain true to their roots of preparing all meals to order, "actually cooking in our restaurants rather than just assembling food," as a company spokesperson puts it.

Del Taco, in a sense, is combining the old and the new in the fast food business. It's one of the oldest and most established chains, but it knows it's facing new competitors all the time, some of them touting freshly prepared meals, a company spokesperson says, pointing out that the freshly prepared concept fits snugly with the company's philosophy.

"We truly don't make it until you order it," she says. "We still grate our cheese, we still cook the beans on the premises, we still make everything fresh."

But why take the fresh approach to Detroit after all these years?"The time is right," the Del Taco spokesperson says. "The Detroit area is one of the most successful markets for fast food, so it makes sense from that standpoint, and there is very little on the competitive landscape in terms of Mexican quick serve." Del Taco has a Detroit area franchisee who is up to the task, the company says, so the plan is to break ground in the next couple of months and have the first Motor City Del Taco up and running this summer.

Franchisees are a key to the Del Taco expansion strategy, but only part of it, as the chain still places a strong emphasis on company-owned stores. With an average unit volume of more than a million dollars and 15 years of consecutive same-store sales growth, Del Taco continues to operate nearly 60% of its 433 restaurants, notes Ron Petty, president.

Recently, for example, it has opened new company-owned locations in Southern California and Las Vegas. The Southern California locations were right in Del Taco's back yard, in the Los Angeles County community of Norwalk and in the community of Wildomar in fast-growing Riverside County. The chain also opened a new company-owned store recently in Yuma, AZ.

The 2005 expansion plans follow a year in which Del Taco in 2004 opened 32 new restaurants and added six franchise groups. These six groups are experienced, multi-unit operators with quick-service and casual-dining experience, the company says. The expansion plans include an eight-store deal in Portland, OR that will more than double the number of restaurants currently planned for that market; a five-store agreement for the Seattle market that will open the first Del Taco restaurants to open in that metropolitan area; the Detroit location, part of a 10-store Michigan development agreement with Schostak Family Restaurants. Along with its geographic expansion, Del Taco is expanding its menu of late, adding a Crispy Fish Taco in February as its newest menu item.

The chain's latest expansion effort follows several other periods of expansion throughout its history, beginning with its mainly Southern California growth in the 1960s and 1970s. One of the fastest periods of growth came in the 1970s, when the company was expanding at the rate of a new store every month, a quick pace for those days. The company also grew through its merger with the then 225-store Naugles chain in 1988.