When Heather Neary took over as CEO of Taco John’s earlier this year, she took leadership of a brand that in some respects was like a 50-something high-school English teacher: It had a need to connect with the younger generation, it just didn’t quite know how to do it.
Take, for instance, marketing. At a time when small brands have generated big attention through effective use of social media, Taco John’s largely focused on traditional channels.
“We’ve kind-of just stuck to traditional marketing, traditional media buys, with cable TV and terrestrial radio,” Neary said in an interview. “Do you know anybody under 40 who listens to the radio?”
Not sure I know anybody under 50 who listens to the radio.
Neary told a story about playing golf in Kansas City, before she moved to Minnesota to take over Taco John’s. Her friend’s daughter had just gotten her driver’s license. “She’s like, ‘Yeah, my dad gave me his old car and it doesn’t have the right hookup, so I have to listen to the radio, like this guy’s actually talking to me. What’s this guy talking to me for?’” Neary quoted her as saying. “That’d be the DJ.”
The point, both for Neary and for Taco John’s, is to bring an older brand into the modern era, one in which technology is driving much of the business. It's one in which the younger consumers that are the brand’s future are on platforms that are different from their parents. Which means they’re not on the radio.
It’s a key point for the chain, which is based in both Cheyenne, Wyoming, and suburban Minneapolis.
Taco John’s is conducting a brand study to determine what makes the brand tick and use that to guide decisions going forward.
Taco John’s operates 364 restaurants, mostly in the Midwest and the West. But it has also closed 10% of its locations over the past decade, even as its average unit volumes have grown by more than 42%. That lack of unit growth and the closures have put a tight lid on the chain’s potential.
Taco John’s, and the moderately larger Del Taco, have been vying for attention in a fast-food Mexican market dominated by the many-times-larger Taco Bell. That marketing dominance was in full view last year, when Taco Bell used its advertising prowess in a campaign to get Taco John’s to cancel its registration of the trademark “Taco Tuesday.”
The much larger Taco Bell has cracked the code with younger consumers, and it’s up to Taco John’s to figure out how to tap into that group.
Neary spent nearly 16 years with Auntie Anne’s, the last five as the brand’s president, before she moved to Kansas City to oversee Taco Bell restaurants for the giant franchisee KBP Foods.
Both of those experiences give her some credibility with Taco John’s, both with the company and its franchisees.
Taco John’s remains a family-owned brand, a situation with which is is familiar. “It’s a lot like Auntie Anne’s,” Neary said of Taco John’s. “Auntie Anne’s was family-owned when I joined the company in 2005.”
The KBP job, meanwhile, gave her experience with the Mexican business. But it also gave her experience overseeing a group of franchisee-owned restaurants.
That experience could serve Neary well with Taco John’s, where all but about 10 of the chain’s restaurants are operated by franchisees.
“You want to say that you know what it’s like to be a franchisee on the franchisor side, but until you’re actually living it every day, you don’t really know the challenges with people calling in sick, the challenges with customer-service issues," she said. "You can train your people to do the best things in the world, but you still have people that aren’t as respectful to guests as they should be. And those are the problems that you deal with as a franchisee day in and day out.”
Neary’s experience as a franchisee also leads her to be more flexible in ways that someone without that experience might not have.
For instance, the brand required franchisees upgrade new equipment, even if the equipment wasn’t in need of replacing. For operators who just remodeled locations, that replacement can be problematic.
“Is it really necessary to run the brand to standard?” Neary asked. “If it’s not, maybe we make it optional. That’s what we’ve done this year a couple of times already. There’s some things that were required to be in place at the end of this year. We’ve now pushed that out and said, if your existing piece of equipment is operating properly, you don’t need to replace it.”
That must be great for some of the chain’s smaller operators that can’t necessarily afford that kind of equipment.
“The bigger operators that have to do that times 20 or 25 restaurants appreciate it, too,” she said. “Cap rates are high. Interest rates are high, in order to take loans out for equipment. We’ll make sure we’re making the right decision.”
But Neary and Taco John’s management are taking a hard look at the brand and its positioning and where it sits in the market.
Over the summer, following Neary’s arrival, the company undertook a brand positioning study. Executives are sharing the results of that study with operators and are not ready to share those results publicly. “It’s just really defining who we are and following that as our north star,” she said.
Taco John’s is also simplifying operations, an effort that started before Neary’s arrival. “Our menu needs cleaning up,” she said. The menu is filled with former limited-time offers, or LTOs, that had just stuck around.
For instance, the brand eliminated street tacos three weeks ago. In so doing, the company is opening up room for additional innovation, such as a line of Fiesta Chicken Tacos that Neary believes could become a platform down the line.
“There’s just some things that have gotten tired over the years,” Neary said. ‘We’re selling maybe one or two a day per restaurant, and that really isn’t worthwhile.”
Taco John’s also wants to work more closely with its vendors. The company is planning a webinar with some of those vendors next year that Neary hopes can morph into a full-day conference.
It was a strategy she used with the pretzel chain Auntie Anne’s.
“I just think there’s an opportunity to partner with our vendors in a way we haven’t done here necessarily,” she said. She then quoted Pepsi. “Hey, I see you’ve got this mix of Pepsi products. You should think about transitioning to what’s more popular today versus what we were talking about 15 years.”
Taco John’s efforts do extend to technology. The company is testing voice-activated AI at some company restaurants.
Neary, who says she has visited about 70 of the chain’s restaurants since she started, said she spent six hours one day working in one of the restaurants using the technology. “I want to hear how the AI works like, if we’re going to expand this test past our company stores,” she said.
“It’s working nicely for us,” she added. The technology does “a nice job upselling.” But the company has to prove the return on investment for the franchisees that will be deploying the technology.
Operators typically are chomping at the bit to get ahold of voice-activated AI, but Taco John’s is taking it slow.
“If it makes sense for them,” she said. “We’ve been very cautious and careful about making sure that we waited until we felt good about it in our company stores.” But Taco John’s is beginning to expand it now into some franchise locations.
Yet, while Neary is focused on bringing the company into the future, she is aware that the brand has its strengths. She noted that the shells for the chain’s hard-shell tacos have just three ingredients, for instance. The company never mentions that in its marketing.
It also doesn’t talk about arguably its most well-known product, Potato Oles. Neary recounted a story of a heavy user talking about the product in one of the chain’s focus groups. The customer suggested that Taco John’s develop a line of “loaded” Potato Oles.
Except the chain does have it. They’re called Super Oles. “But what does Super Oles mean to anybody?” Neary said.
Indeed, Taco John’s doesn’t talk about Potato Oles much at all. Yet it is a product with numerous potential extensions.
Taco John’s Potato Oles is one of the more unique side items in the restaurant industry. But the company doesn’t talk about them.
“We have a unique blend of spices we use in those Potato Oles that nobody else has, but that we haven’t talk about,” she said. “I mean, we haven’t talked about our Potato Oles in our advertising in years.
“They’re delicious, and they’re addictive, and you just love to sit there and munch on them.”
But that’s the point. Taking over a new brand—effectively—isn’t about changing the brand. It’s about finding what makes the brand great, accentuating that and marketing it.
“We’re never losing sight of who we are,” Neary said. “We don’t want to be something that we’re not. Let’s focus on what we’re good at, and let’s own it.”