FAST FORWARD FALL 2020
Optimism in the Face of Change
By Jeff Brands, ATJF President
A newsletter from the Association of Taco John’s Franchisees
In our previous newsletter, I talked about 2019 initiatives from both ATJF and TJI that pointed towards positive momentum in early 2020. There was optimism that the Full Up Menu would be the beginning of an above-normal trend for sales and transaction growth for the chain. There were signs in late February/early March that this was true. And then…March rapidly changed into something less desirable with significant sales declines, closed dining rooms and a full-fledged national pandemic. Since March, we’ve all experienced the stress, challenges and craziness the pandemic brought with it. We have also been able to take advantage of the Continue on page 2
Our Annual Operating Profit Study wrapped up for year-ending 2019, allowing us to measure trends and identify opportunities for profit improvement for those stores participating in the study. Below is a high-level summary of some key metrics: • Average revenue decreased from $1,087,104 in 2018 to $1,077,244 in 2019. • Food cost (net of beverage rebates) stayed consistent at 26.5% of sales in 2018 and 26.6% in 2019. • Labor costs increased from 31.0% of sales in 2018 to 32.2% of sales in 2019. • Average hourly wage was virtually unchanged at $11.24 in 2018 and $11.23 in 2019. • Operating profit dropped from 22.3% of sales in 2018 to 20.8% of sales in 2019.
If you participated in the Profit Study this year, you should have received an individual custom report for each of your locations comparing that location’s results to the appropriate volume tier benchmark results. You also have access to a free iBLeague™ subscription which allows you to reference and manage your data online at any time. Please note that any submitted financial information is completely confidential. If you have questions or have not received a copy of your 2019 Profit Study Report, please contact Jody Schindler at jody.a.schindler@ gmail.com.
Profit Study Summary
By Jody Schindler, Executive Director
OUR MISSION “To provide our membership an environment for increasing long-term profitability in support of improved business value and brand equity.”
Continued from page 1
opportunities that came forth. By capitalizing on our drive-throughs, we saw sales rebound quickly and actually exceed last year’s numbers. While each store’s experience is different, system-wide sales have been positive. This did not seem possible in mid-March when dealing with large sales declines and PPP loan applications. My hope is that despite the pandemic, you are feeling some optimism about your current situation and the future. Unfortunately, we’ve had to cancel two National Convention dates. While we have tried to communicate more frequently during this COVID period, it does not replace the in-person interactions that typically happen at convention. We remain optimistic, and hope to see you all in Palm Springs, California in late March 2021. In the meantime, the ATJF board continues to work with Taco John’s International to push our chain forward. The survey we asked ATJF members to complete this spring showed our members strongly support the initiatives and positions the ATJF board is working on. So, we are continuing to push for operational excellence, menu innovation and marketing to drive system-wide sales to the level we need them to be. A few areas of opportunity identified in the survey include: • 52% of stores responding said they are worse off than 1 year ago. • 63% of stores responding said they are worse off than 3 years ago. • Our Profit Study showed that Operating Profit Margins dropped by 1.5% in 2019 vs 2018. We know the system needs to improve. We are thankful for positive sales in the midst of this pandemic. But we continue to work with Taco John’s International to ensure that we will see true, solid growth in the future. (See additional articles about the Member Surveys on page 5 and Profit Study on page 1.) Many people struggle with change. When we want change to occur in our favor, it never happens as fast as we would like. That is the Taco John’s story as well. If we expect to see real change, we need to change how we do things. In some ways, we want to continue to do things the way we always have. Although we have not seen the results as fast as we would all like, changes are happening.
Here are a few things the ATJF Board has asked TJI for. They have heard us and delivered — in some cases, much faster than we expected — and they really deserve credit for some of those changes. Here are a few examples: • New Taco John’s International board members with industry experience: Five new industry board members in the last couple of years. Six out of the 10 TJI board members are now outside board members. • New Taco John’s International office in Minneapolis: Opened in March 2020. • New CMO with stronger qualifications and experience: As you’ll read on page 3, Barry Westrum joined Taco John’s in May. • New COO with stronger qualifications and experience: Greg Miller has joined Taco John’s at the beginning of September (page 3). • Stronger commitment to Menu Innovation: TJI worked with ATJF on a Think Tank concept and is now incorporating similar methodologies into their day to day operations. That includes the hiring of Barry but they have also created new positions tasked with analyzing the menu needs of today and the future. • Direct communication between ATJF and TJI boards: The ATJF president participates in TJI board meetings quarterly via teleconference. The communication process and quality of the communication has improved each year. • Franchisee incentives: New restaurant incentive program is in place. Is there work to be done? Yes, there is. Are things happening? Yes, they are. Are they going to make a difference? Only time will tell, but I am optimistic about the future. Through recent meetings with TJI and ongoing communication, I feel the narrative is changing. Conversations are on a different level. Ideas are flowing. Actual results will be the only true measurement, but I feel the chain is positioning itself better than it has in many years to see real growth. I am a believer in team leadership. We will produce better results together than any one of us can achieve on our own. If we work together and all do our part — franchisees, franchisor and vendors — we can Go Boldly forward and produce the results we need and want.
2
New Additions Strengthen Taco John’s Team Taco John’s has gained a wealth of experience as two new team members have come on board in the last few months. Here is a little background on these impressive additions to the team.
Barry Westrum
pursuing her law degree at the University of Texas, and Katherine, who recently graduated from Emerson College in Boston with a degree in musical theater.
“I may be the only person in history to have worked for Taco Bell®, Del Taco® and Taco John’s® — the top three Mexican quick-serve restaurant chains in the country.”
Greg Miller
That’s only one interesting fact from Barry Westrum’s impressive career. The new Chief Marketing Officer for Taco John’s has taken a lead role in building some of the best-known brands in the quick-serve industry. A Southern California native, Barry began his marketing career on the agency side working on the Pepsi® business. “Then I moved to the client side and started my restaurant career with Taco Bell and YUM! Brands,” he relates. “I was with YUM! for almost 20 years, serving as Senior Director of Brand Marketing for Taco Bell Corp., Chief Marketing Officer for A&W® and Long John Silver’s® restaurants, and Chief Marketing Officer for KFC Corporation. Next, I accepted an offer to join International Dairy Queen® in Minneapolis and helped grow that brand as Executive Vice President for marketing. Then in 2017, I had the chance to return to Southern California as Chief Marketing Officer for Del Taco.” When asked what attracted him to Taco John’s, Barry is quick to respond. “The business opportunity is very clear,” he states. “We have work to do, but there is ample white space between some of the players in the Mexican quick-serve market that is a perfect fit for us. With our product quality and a foundation of loyal customers who crave our menu items, we have a great opportunity to grow our footprint nationally. It was an invitation I couldn’t pass up. And, as a family, we had a wonderful experience in Minneapolis and were excited to come back.
New Chief Operating Officer Greg Miller knows the restaurant industry from the grill to the executive suite. “I started on the grill cooking burgers at McDonald’s,” he recalls. “I was with them for 27 years, ultimately working in seven regions. My last role was Regional Marketing Director for the Great Southern Region, but most of my career there was spent in operations.” Greg then spent two years as Regional Director of Operations for Whataburger® before taking on his most recent role as Division Vice President of Franchising and Operations for Jack in the Box®. He joined the Taco John’s team at the beginning of September. “What most enticed me about Taco John’s was the culture, the values and the brand vision,” Greg says. “I wasn’t necessarily looking, but this was a great opportunity and I fell in love with the brand, the strength of its franchisees and its reputation for quality and friendliness. It was an easy decision to make.” Though he’s in the early stages of his tenure with Taco John’s, Greg is excited about the potential he sees in the company. “The team wants to grow the brand while staying true to their roots of quality food and delivering a great customer experience. Helping Taco John’s expand by championing people and developing talent are things that are important to me. “There is a long legacy here,” he adds. “I’m just thrilled to be a part of the team, to listen and learn from them and to contribute.”
“I’ve had a chance to meet a number of the franchisees through the various committees, and I’m looking forward to meeting more in person,” Barry concludes. “I’m thrilled to be here and look forward to the opportunity to help everyone’s business grow and achieve its full potential.”
Greg has four children — Hannah, 19, Gabriel, 14, and twins Ellie and Emma, 10. Much of his free time is spent “doing fun stuff” with them. That includes travel (preferably to a beach), hiking, swimming and just about any other outdoor activity.
Barry and his wife, Stacy, have been married for 27 years. They have two daughters, Samantha, who is currently
3
Are
you interested in serving the franchise community? The ATJF Board of Directors is looking for eligible candidates for two open positions for the upcoming year. Please reach out to Jody Schindler or any of the board members below with questions or for additional information.
Association Directory These franchisees serve on various boards and strive to represent your interests. Call them with your questions, comments and concerns.
We want to hear from you!
ADVERTISING PRODUCTION COMMITTEE (APC) Board Member
Location
Phone
Jeff Bremer, Chair
Omaha, NE
jbremer@quikserve.com
402-850-3138
Lance Peterson
Mankato, MN
lancep@midco.net
507-236-4061
Matthew Keiser
Franklin, TN
keiser.matthew@gmail.com
615-663-7288
Ted Miller
Sioux Falls, SD
tedkmiller@gmail.com
605-728-6616
Brett Itterman
Fargo, ND
bitterman@pentexrg.com
605-228-8468
Aaron Schommer
Bismark, ND
aaron.tjohns@gmail.com
701-426-0948
Jim Atkinson
Owatonna, MN
jimatkinson58@gmail.com
507-390-0466
Dave Rosno
Beatrice, NE
tacodave2007@gmail.com
308-830-8003
Robin Dallman
Cody, WY
rtj_tacojohns@msn.com
307-587-4155
ASSOCIATION BOARD OF DIRECTORS Board Member
Titles
Liaison
Phone
Jeff Brands
President
Insurance
jbrands@tjiowa.com
605-351-3500
Brian Fuder
1st VP
Supply Chain
brian@echosinc.com
218-770-1659
Aaron Holthaus
VP/Secretary
Operations, Construction & Development
ahaus26@gmail.com
763-482-0340
Jim Atkinson
VP/Treasurer
Legal, Finance & People/Training
jimatkinson58@gmail.com
507-390-0466
Mike Sartwell
VP
Menu & Technology
mikesartwell@gmail.com
701-340-2312
Ted Miller
VP
Marketing
tedkmiller@gmail.com
605-728-6616
Jody Schindler
Executive Director
jody.a.schindler@gmail.com
952-250-3121
To learn more about Association membership or committee or Board participation, contact any member of the Board of Directors or the Association office by phone at 952-250-3121 or by email to jody.a.schindler@gmail.com.
4
ATJF SURVEYS By Jody Schindler, Executive Director
Pre-Convention Meeting Survey
The ATJF board conducted several surveys on various topics over the past few months. We sincerely appreciate you taking time to provide your feedback and ideas.
Proposed Joint Manager’s Conference/ National Convention Event Survey Taco John’s International and ATJF are currently considering hosting a “Joint Convention” that would include both the Manager’s Conference and Taco John’s National Convention. Highlights of the survey results from 37 respondents representing 155 stores include: • 57% of stores responding (68% of responses) support holding the National Convention annually. • 82% of stores (51% of responses) support holding a Manager’s Conference every other year. • While responses were mixed, if a Joint Conference was held, a local location like Minneapolis seems to be preferred.
Salsa Bar Survey
The Salsa Bar survey was sent in May 2020 on behalf of Taco John’s International to analyze the preference of keeping/removing the Salsa Bar in our stores. • More than 52% of the respondents and stores preferred to have the Salsa Bar removed permanently. • If the Salsa Bar is removed permanently, more than 49% of respondents prefer to hand out packets vs. pre-filled cups. • If the Salsa Bar is removed permanently, 42% of respondents would like to provide Super-Hot sauce packets in addition to current packet options.
This survey was sent prior to the cancellation of the 2020 National Convention. There were 49 survey responses representing 218 stores. The objective was to seek member input on the overall state of the chain and whether members support the actions, goals, and objectives of ATJF. Our intent was to discuss these topics at the 2020 convention. With the convention cancellation, we were unable to do that, but wanted to still provide results. • More than 90% of the respondents agreed that to reach our targeted goals as a chain will require a focus on operational excellence within our restaurants. • More than 90% of the respondents agreed that continuing Menu Innovation is critical for true organic sales growth. • Almost 60% of the stores responding indicated that they feel the new marketing campaign is impactful and memorable. • Almost 85% of the respondents agreed with the ATJF board position that we do not support a full, mandatory remodel program at this time. • 52% of stores felt their restaurant was worse off financially than 1 year ago. • 63% felt their restaurant was worse off financially than 3 years ago. • 95% of respondents and 85% of stores felt that the ATJF board was having an impact on influencing TJI by providing a unified voice on behalf of ATJF membership.
Ad Production Committee (APC) and Marketing Update By Ted Miller and Jim Atkinson Here’s a quick update on the latest from the Ad Production Committee (APC) and Taco John’s marketing. We’re excited about the experience Barry Westrum brings to our marketing department. We look forward to test results of new products and strategies resulting from the latest market research completed by Barkley in early 2020. Barry or Tami Peterman will be reaching out to different groups and/or Co-Ops to participate in market tests. Those tests may be under way by the time you are reading this.
our marketing strategies, which included some major pivots from the original calendar. Some other news — based on historical sales across the chain, Apple Grande will not return this year. We understand it’s a market favorite for some, but that isn’t representative of most of the system. Finally, APC will have three positions open for election in Fall 2020. Please contact anyone on the APC if you are interested in serving the franchise community.
This year has been unique. COVID-19 and increasing meat prices caused us to adjust and modify some of 5
Go Boldly, 2021 National Convention We were incredibly disappointed to announce the cancellation of the 2020 National Convention due to the COVID-19 pandemic, but we are thrilled to confirm new dates for the 2021 National Convention. The Taco John’s community will be gathering in Palm Springs, California for the 2021 National Convention at the newly renovated Hyatt Regency Indian Wells Resort & Spa. Join us March 24–27, 2021. We will keep you informed with ongoing updates leading up to the huge celebration when we come back together in March of 2021!
Some
of the highlights:
Wednesday, March 24 – Onsite Registration, Evening Welcome Reception Thursday, March 25 – Onsite Registration, General Session, ATJF Member Meeting, Golf Calcutta Friday, March 26 – Vendor Exhibit Show, Awards Banquet Saturday, March 27 – General Session, Golf Tournament, Closing Event
6
If you have questions or need additional information, please contact Jody Schindler at jody.a.schindler@gmail.com or 952.250.3121. On behalf of the Association of Taco John’s Franchisees and Taco John’s International, we appreciate your support and look forward to our time together at the 2021 convention!