Taco John's Summer 2019 Newsletter

FAST FORWARD SUMMER 2019

A newsletter from the Association of Taco John’s Franchisees

A Fitting Conclusion "For the last 30 years, Taco John’s has been a part of my life. A big part! It has always felt like family to me—a big family that I was happy and grateful to be a part of. That hasn’t changed and never will." - Cindy Wofford

Gary Wofford didn’t realize he’d been set up until he heard Jim Creel announce the recipients of the 2018 Mr. Taco award—only this time, for the first time, it was Mr. and Mrs. Taco.

“It’s not easy to surprise us, since Cindy and I organize the convention,” Gary states. “I thought it would be Bryon Itterman, because I’d been asked to make hotel arrangements for Bryon’s sons to be there for this award. That made perfect sense to me. So, I was stunned when I heard our names. All I could say when we went up to receive the award was, ‘Gosh. 31 years. Thank you, and I love you all.’”

“When I heard Jim read our names, I think I went a little bit into shock,” Cindy Wofford agrees. “I was just sure I had mis-heard what he said. I started looking around to see who was going to get up out of the audience. Then it hit me. I was overwhelmed, honored and humbled—and back to overwhelmed again. I still have moments that I have to pinch myself.”

Gary Wofford

Continued on page 2

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 31 years of love

Association was at a crossroads in the early 2000s, and we viewed the management of the national convention as an opportunity”,” he says. “As an entrepreneurial organization, we believed we could run it at a profit, and we have. The national convention is how we went from a cash-poor position to a healthy cash reserve today.”

This September will mark 20 years since Gary and Cindy joined the Association, but Gary’s connection to Taco John’s goes back another 11 years. “I started with Taco John’s in 1988 as their vice president of operations and franchise services,” he recalls. “That’s where I met and built a rapport with all these great people.”

Gary launched his own consulting business in 1996, and it wasn’t too long until some old friends came calling.

“The Association contacted me and gave me one of the biggest professional compliments I’ve ever had and asked me if I would consider taking them on as a client,” Gary says. “That was where my journey with the Association began.”

Bonds beyond business The Woffords’ official connection to the Association will end with the 2020 national convention, but there are memories and relationships that will last forever.

“It’s been all about the people,” Gary states. “I can’t express enough my appreciation to Dennis Batteen, Bruce Cutler and the late Kevin Vance for inviting me to be part of the Association.

Much has changed for the Association in the two decades since the Woffords came onboard, and Gary points to several accomplishments he’s particularly proud of. “Store membership has grown from 65% to 85%, we’ve been able to achieve a measure of financial independence, and we provide programs, like the business insurance program, that save some real dollars,” he notes. “Having been on both sides of the table, I feel I’ve been able to help create the current strong and healthy collaboration between the Association and Taco John’s International (TJI).

We’ve strengthened over the years to the point that we are now recognized by TJI as ‘the voice of the franchise system.”

I’ll never forget the privilege it has been to serve in this capacity. I treasure the personal relationships I’ve formed, and those will last forever. I have nothing but respect for everyone—the franchise and supplier communities and Taco John’s International. The award was an exclamation point for us, one of those lifetime memories. Normally, we’re part of creating the moment, but this time the moment was created for us.

“I think something Cindy said the other day sums it up for both of us,” Gary concludes. “She said, ‘For the last 30 years, Taco John’s has been a part of my life. A big part! It has always felt like family to me—a big family that I was happy and grateful to be a part of. That hasn’t changed and never will.’”

One of the contributors to the Association’s financial independence has been the annual convention, which has been a labor of love for Gary and Cindy. “The

From the left, the past three Mr. Taco recipients—Alex Habeeb, Jeff Brands, and Gary and Cindy Wofford—with Taco John’s International president Jim Creel.

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From the President

By Jeff Brands, Association President things, positioning the brand for what could be a strong 2020.

It was a joy to celebrate the 50th anniversary of Taco John’s surrounded by the beauty of Maui. A highlight for me was to see individuals recognized from all aspects of our organization who have contributed so much to the success of the business—Gary and Cindy Wofford with the Mr. and Mrs. Taco Award and Bryon Itterman, Barry Sims and Andy Rodriquez with Lifetime Achievement Awards.

We can all play a role The ATJF board recognizes that reaching the targeted goals stated above will require a focus on operational excellence within our own restaurants. It will challenge us to seriously evaluate and implement all possible options to achieve operational excellence within all Taco John’s restaurants that we, as franchisees, operate.

While we are grateful we could celebrate the 50th anniversary of the brand we all love, at the same time, we recognize that, if Taco John’s is to celebrate 100 years, things must change. So, I would like to recap some of my thoughts from the Member Meeting to reinforce where we are, what we need to do and how we get there.

This is where you come in. We can move the chain forward by enhancing operations. You may already have a good operation, but I am one who believes we can always strive to make it better. Let’s eliminate any possible excuse that poor operations are the reason the chain is not moving forward. This is the part of the process that we, as franchisees, can control.

The mission of the Association of Taco John’s Franchisees is: “To provide our membership an environment of increasing long-term profitability in support of improved business value and brand equity.”

At the member meeting, we discussed the challenges of delivering on this promise when we are currently operating in an environment of decreasing long-term profitability, business value and brand equity.

So, let’s challenge ourselves to run the best restaurants we can. Let’s hold each other accountable to maintain our part of the franchise deal. Let’s serve our customers in the best way possible so they will recognize Taco John’s for its outstanding service. People come to our restaurants for the food, but they will return if they enjoy a great service experience.

With the obvious need to move the brand forward, we felt it was very important for us to state some bold goals in our strategic plan. A 2021 PSA of $1,200,000 with correlated transaction growth and operating profits of 25.7% are bold, but calculated, goals. They may be challenging, but they are what we feel the chain needs to achieve to get back in the game.

Let’s not underestimate the important role that we as franchisees play in moving the brand forward. Great operations will drive sales.

Can the Taco John’s system get to where we want it to be? Absolutely. But it will require discipline, hard work and creativity from each one of us. I look forward to working with the ATJF Board, Taco John’s International and all of you to meet the challenge.

The brand needs to be fixed from the inside out. In our opinion, that starts with menu innovation and marketing. People come to Taco John’s for the food, so brand revival must begin with food and marketing.

We must become proactive instead of reactive, getting out in front of menu development and innovation and staying there. We will continue to push TJI to make this happen.

Association Priorities for Quarter 2 of 2019: • Complete a review of the ATJF Insurance Program.

• Work with TJI to establish a “Menu Think Tank” focusing on future menu innovation.

We believe that by working together with TJI, things can change, and we can accomplish the goals we have set. We are encouraged by Jim Creel’s desire and willingness to work with us. We are also encouraged by the foundation we are laying for better communication with the TJI Board and its potential results. We do believe that Jim Creel and his team are doing good

• Work with TJI to finalize and implement a System “Scorecard.”

• Complete post-event survey on the 2019 convention.

• Construction Task Force continues work with TJI to refine building prototype construction plans.

• Complete Profit Study.

• Complete Executive Director training and transition.

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Coming Full Circle

By Jody Schindler, ATJF Executive Director While I had the opportunity to meet many of you at the 2019 national convention, I appreciate this chance to introduce myself to the entire Association family.

I’m excited to be back in the world of Taco John’s. As a farm kid from the Southwest Minnesota area, I am most attracted to the family, relationship-oriented culture here. Our team works through issues professionally and calmly, but we have fun, too.

In a sense, taking the executive director reins from Gary Wofford brings my career path full circle. I began as the marketing director for Walt Cressman and his Twin Cities Taco John’s stores back in the late 1980s. Since then, I’ve spent several years at the sales office with Taylor Made Golf, 20-plus years working as a healthcare consultant and, most recently, another five with Verizon Wireless on the network engineering team. In the process, I’ve earned my PMP® certification as well as my Six Sigma Green Belt certification.

On the personal side, my husband, Pat, and I have six children, and are now officially “empty-nesters.” As a former college volleyball player, I love sports of any kind. I have completed several marathons over the years and the Twin City marathon last year was officially my last one—but I still run, as I am not good at sitting still. I’ve also coached volleyball at the high school, Junior Olympics and community levels. I am involved in the youth group at my church and am active in my community.

On rare occasions, opportunity finds you and that was the case for me. Walt Cressman contacted me about this position and the timing turned out to be perfect.

April 1, 2019, was my official start date but attending the convention in March gave me the opportunity to meet many of the people I’ll be working with.

To those of you I’ve met, thank you so much for the warm welcome. For the rest of you, I look forward to visiting with you.

A Taco John’s Life Tacos weren’t always in Bryon Itterman’s plan for the future.

Bryon’s Taco John’s adventure began in Sioux City, Iowa, where he partnered with Dick Campbell, Dick Murray and Craig Heath. Bryon says. In 1986, he moved to Aberdeen, South Dakota, and joined Dennis Batteen, Duane Thurow, Bruce Cutler and Brad Baloun. Over the next 33 years, he helped grow the Taco John’s segment of the Pentex Restaurant Group from five units to the current total of 23, with two more stores on the way.

Bryon’s son Brett is now the Pentex CEO.

As has been the case for many others in the Taco John’s family, Walt Cressman played a role in launching Bryon Itterman’s restaurant career. “Walt was a friend of mine from church, and he was hitting me up once every six months about coming to work at Taco John’s,” he recalls. “At the time, I was newly married, selling real estate and didn’t have a lot of interest. But in 1981, business was slow, so I took a meeting with Walt. I found out that Taco John’s restaurants make money and are a viable business model.”

Through the years, Bryon also served on virtually every Association committee, including two separate terms as Association president.

“Over time, it doesn’t matter so much what role you’re serving in,” he comments.

“In every position, you’re just working with others for the common good.”

Thus began a 38-year adventure with Taco John’s that was celebrated at the 2019 National Convention, where Bryon received a Lifetime Achievement Award. “It was a total shock,” Bryon says. “It’s one of those things you don’t think about. Jim Creel gave me that ‘Gotcha!’ look when he announced it. Having all three of my boys there and speaking onstage, that was humbling.”

Bryon Itterman

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2019 National Convention Celebrated 50 Years for Taco John’s The Westin Maui Resort & Spa on the beautiful island of Maui was the ideal setting for the 50th anniversary celebration event for the Taco John’s chain. The attendance numbers for the March 2019 event were the highest ever with more than 600 people from the franchisee, corporate and vendor communities. From the opening Welcome Reception to the closing Taco John’s Luau, there was a lot going on and much to do.

The business sessions were filled with valuable content, outstanding guest speakers, enjoyable entertainment, and terrific food and service. Based on the post-event survey responses, the 2019 convention can be labeled a success!

Jim Atkinson (#102) Raising the Bid Later in the evening, the Golf Calcutta Auction and Make-A-Wish Foundation® fundraiser was well-attended and a lot of fun. The auctioneers created a lot of excitement and positive energy selling the golf teams but the highlight was the Make-A-Wish® fundraiser bringing franchisees, vendors and TJI together to raise $30,000 through the sale of raffle tickets, pledge cards and direct donations. 2019 marks the third year of this fundraising effort. The 2017 inaugural year raised $7,500 (the threshold for granting a single child’s wish).

Then in 2018, $15,000 was raised enabling the granting of wishes for two deserving children. The 2019 event resulted in raising a whopping $30,000 and the granting of four wishes!

The first general session was opened by Hawaiian Chief Atu and his daughters who shared a Polynesian prayer and special Hula dance performance. Then, Association past-president, Walt Cressman and TJI president and CEO, Jim Creel welcomed convention attendees with their opening remarks. This was followed by a look into the future with a TJI team presentation describing what lies ahead in the areas of Guest Experience (Rocky Clark, Sara Roth, Stacie Homan, Amber Novak, Michal Hipp and Steve Smyth), Menu Innovation (Bob Karisny and Anthony Buzzanca), Kitchen Facilities (Michael D’Amico), Brand Persona (Alan Wright) and Supply Chain (Ian Kline).

The Vendor Show was a huge hit with 67 exhibitors on hand. The setting was unique with the show held in an outdoor setting surrounded by palm trees, waterfalls, beaches and the Pacific Ocean, rather than a hotel ballroom with pipe and draping. Exhibitors and attendees alike thought this was a terrific setting for the 2019 show. New products, along with new technologies and services, were presented providing a preview of things to come for the Taco John’s chain.

From the left, Angie Charlson, Gloria Steele, Cathy Gossett catching up at Welcome Reception

Dave and Sheila Rosno (Beatrice, NE) enjoying vendor show

Continued on page 6

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Continued from page 5 In addition to recognizing top performing restaurants for sales achievements in 2018, Monday evening’s Awards Program was highlighted by some special awards and recognition:

with past Association presidents, Bryon Itterman and Dale Gossett.

This was followed by an update from Jim Creel on the Taco John’s Strategic Plan along with an announcement of a new restaurant development incentive program benefitting franchisees developing new stores.

Mr. /Ms. Taco Award

This award is given to recognize those stakeholders who have contributed to the growth and improvement of the Brand. They represent the entrepreneurial spirit that makes Taco John’s the great company it is. The recipient will have contributed to the system beyond owning and/ or operating a restaurant or multiple restaurants.

Special guest speaker, Connie Podesta, was a huge hit!

Connie came across as a game-changer, idea generator ball of fire whose rare blend of humor, substance, style and personality have made her one of the most memorable, in-demand speakers in the world today.

Connie received a rare standing ovation after her entertaining and thought-provoking presentation!

And of course, the last night in Maui had to be a Luau and it was a terrific way to conclude the 2019 50th anniversary event!

Gary and Cindy Wofford received the “Mr. and Mrs. Taco Award” for their significant contributions to the brand and the Taco John’s chain. (See profile on Gary and Cindy in this newsletter).

Lifetime Achievement Award

This award recognizes stakeholders who have put the majority of their life’s work into the Taco John’s chain.

They have served as mentors to many in the chain over the years and have positively promoted the image of Taco John’s. This award is considered the highest and most prestigious recognition. Recipients were Bryon Itterman, long-term franchise owner (See profile article on Bryon in this newsletter), Barry Sims, former TJI President/CEO and Andy Rodriguez, Jr. of All American Seasonings, Inc.

Elvis is alive at Awards Banquet

Scott and Deb Dominiak, daughter Kara

Founder’s Cup Award

Franchisee Mike Sartwell, joined by his entire team, was presented with the Founder’s Cup in recognition of the highest sales for 2018 from his Williston, North Dakota, restaurant.

The last day of activities began with the second general business session that included a “Fireside Chat” with Jim Creel, TJI President/CEO interviewing past TJI presidents, Barry Sims and Paul Fisherkeller along

Future Taco John’s Franchise Owners

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Continued from page 6

Attendees Rate the 2019 TJ National Convention Rating Scale: Excellent = 5 Very Good = 4 Adequate = 3 Fair = 2 Poor = 1

Social Events

Welcome Reception - Overall Golf Calcutta Auction Make-A-Wish Fundraiser Golf Tournament Entertainment

3.70 3.94 4.37 4.77 4.25

General Sessions

ATJF Past - President, Walt Cressman Presentation TJI President/CEO, Jim Creel Presentation TJI Department Presentations (combined ratings) Guest Speaker Connie Podesta

Other Categories

Advance Information Provided On-site Registration Process Westin Maui Resort & Spa - Overall

3.93 4.46 3.94 4.67

4.24 4.98 4.22

Vendor Exhibit Show

ATJF Member Meeting – ATJF President, Jeff Brands Presentation Awards Program

4.38 4.54 4.27

Other Convention Events

Record-Setting Safety Dividend for Insurance Program

By Amy Olson-Miller, McKinneyOlson Insurance It was great to see so many of you in Maui! What a beautiful venue and perfect setting for the convention.

The program also offers very competitive insurance rates and coverage that meets all the requirements of TJI. In addition to pricing, McKinneyOlson Insurance understands the needs of the Taco John’s Franchisees and has a variety of insurance products specifically tailored to your needs. Because we insure many of the stores, we can identify loss trends and offer loss control services. All participants in the insurance program receive a monthly e-newsletter with safety tips to usein their restaurants.

We also have a large library of safety resources available to assist franchisees, if needed.

The Association Insurance Program continues to perform very well. One of the benefits of the Program is the potential to earn safety dividends based on the loss experience of the entire group. I am pleased to report that for the policy term ended October 1, 2018, the program earned a safety dividend of $143,222.

This is the largest payout the group has ever received!

Congratulations to all participants on a job well done. The payment will be made to the Association and prorated back to the participants based on total premiums paid in to Continental Western Group.

For all you program participants, thank you for your support! If you aren’t currently participating, please give me or Lori a call today at 1-800-431-6714.

The safety dividend is just one of the many benefits that participants in the insurance program enjoy.

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Ad Production Committee-Marketing

By Brian Fuder, APC Chairman Greetings ATJF members. I hope your spring is off to a great start! Below is a quick update on sales results and what’s ahead from the Ad Production Committee (APC) and Taco John’s marketing.

numbers on Quesadilla tacos are strong at over 5% of sales and a UPK around 126. We did see a change in trend towards more positive with preliminary March sales comps up around 0.4. The system saw twice as many weather-related closures in 2019 vs. 2018 during the first quarter. I think it’s fair to say weather-impacted system-wide sales.

Agency RFP

The biggest news from marketing is the hiring of our new advertising agency. An RFP was sent out in December and six firms were selected as finalists to make their pitches in January. APC had input from the beginning. Aaron Schommer, Brett Itterman, and I were invited to be part of the process. We saw a lot of great work but in the end the decision was to move forward with Barkley out of Kansas City.

Upcoming promotions

After Quesadilla Tacos, we move into our traditional Cinco De Mayo (CDM) celebration May 1-5. Following CDM will be a return of the Steak Burrito lineup in May/June. This year, we will feature the Grilled Cheesesteak burrito, Steak & Potato and Steak & Shrimp. We’ll also market a Breakfast Steak & Potato alongside the Breakfast Triple Meat burrito to cover all dayparts. On May 20th, Happy Hour returns featuring Sparkling Lemonades in three great flavors: Blue Raspberry, Prickly Pear and Strawberry. We’ll be marketing all 20-oz drinks for $1 from 2pm-5pm daily.

Barkley brings a wealth of industry experience including work done for Dairy Queen®, Sonic®, Applebees® and Wingstop®. They have a proven track record of helping turn legacy brands around through impressive sales and unit growth. Barkley has a deep pool of talent throughout their agency and the “horsepower” to take us to new levels. You’ll begin seeing Barkley’s work with the Street Taco promotion in September.

In July, the party begins! We’ll celebrate our 50th anniversary with our guests by bringing back the Sierra Chicken Sandwich. We also have an exciting beverage promotion to help drive beverage sales growth by offering an aggressive drink and win promotion. Guests who purchase a 30-oz or 42-oz drink will have a chance to win prizes ranging from free food, gift cards, swag, and $50,000 cash! There will be a 1 in 3 chance to win a prize. Finally, on Tuesday, August 13, we’ll celebrate 50 years by offering 50-cent beef Crispy Tacos all day! This should be an exciting day for the brand.

Let’s celebrate 50 years while looking forward to the next 50!

Finally, I’d like to thank TJI for the collaboration on this RFP process. I’d also like to thank Aaron and Brett for committing time away from their businesses and families to participate in this process. The team approach led us to a great decision and I’m excited about the future of marketing with our new partner.

Welcome Barkley!

Past promotion results

In January, we promoted the 3 Taco Combo for $6 for Window 1. The creative media was re-licensed from the 2018 promotion. We also ran the Six-Pack and a Pound as a secondary message in restaurants. During that window, sales were down about 4% and transactions were negative 6%. The 3 Taco Combo accounted for 5.2% of overall sales and delivered an 80.43 UPK. In mid-February, we rolled into the Quesadilla Taco Promotion in the featured top-line spot. We also brought back Fish and Shrimp Tacos. Preliminary

Next APC meeting

APC will hold its next meeting June 12-13 at the Barkley offices in Kansas City. Please reach out with any questions or comments. The APC directory is included in this newsletter and members want to hear from you!

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Continued from page 4 Lessons Learned As is the case with any successful business person, Bryon learned some key lessons along the way. “While I was in Sioux City, Dick Hamilton told me I needed to come to Rapid City and watch the Campbell Street store work the noon hour,” Bryon notes. “My store was in the top 10 at that point, and after watching them work I thought, ‘We’re at least that good.’ Well, when they did the sales readings at 1, they had done 40% more business than we normally did by then. I learned to be careful when you think you’re really getting it done, because you probably aren’t. There is always lots to learn from someone else if you open your eyes.

“I wasn’t always the greatest at creating new ideas out of whole cloth,” he adds, “but I always had the ability to take an idea I saw somewhere else and adapt it to our restaurants.

“Another thing that has made a huge difference is hiring the most talented people you can find, then getting out of the way and letting them do their job,” Bryon continues. “Any company is only as good as the people working for you, and our group has been blessed with a number of Manager of the Year winners. We have team members who enjoy success in many aspects of their lives.”

In a lifetime of professional accomplishments, Bryon most values the enduring relationships he’s built. “As I think of a Lifetime Achievement Award, I think more about the people who have influenced me and the people whose lives I’ve been able to be a part of,” he concludes.

“That’s what really matters, more than the sales and the growth. Those are just a byproduct of those personal relationships. And family comes first through that whole journey.”

Association Directory ADVERTISING PRODUCTION COMMITTEE

ASSOCIATION BOARD OF DIRECTORS

Brian Fuder, Chairman

brian@echosinc.com

Jeff Brands jbrands@tjiowa.com 605-338-1330 President, Supply Chain Liaison

Brett Itterman

bitterman@pentexmanagement.com 605-229-2005

Alex Habeeb, Vice Chair alexanderhabeeb@yahoo.com

218-770-1659 815-939-1313

Ted Miller tedkmiller@gmail.com 605-728-6616

Walt Cressman waltcres10@aol.com 612-804-9200 1st Vice President, Insurance Program Liaison

Jennifer Shama jennifershama@midco.net 605-381-1118

Jim Atkinson jimatkinson58@gmail.com 507-390-0466 VP, Treasurer, Legal/Finance/Training Liaison

Aaron Schommer aaron.tjohns@gmail.com

Mike Sartwell mikesartwell@gmail.com 701-838-3996 VP, Operations/Technology Liaison

Jim Atkinson jimatkinson58@gmail.com 507-390-0466 Dave Rosno

Robin Dallman

701-426-0948

tacodave2007@gmail.com

308-830-8003

rtjtacojohns@msn.com

307-899-1924

These franchisees serve on various boards and strive to represent your interests. Call them with your questions, comments and concerns. They want to hear from you.

Aaron Holthaus ahaus26@gmail.com 763-482-0340 VP, Secretary, Development/Construction Liaison Brian Fuder VP, Marketing Liaison

brian@echosinc.com

218-770-1659

Jody Schindler Executive Director

jody.schindler@atjf.net

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 877-455-4749 or by email to ATJFranchisees@comcast.net.