Risk Score
Pending analysis
Investment Range
$1,266,500 - $2,776,200
Franchise Fee
$35,000
Total US Locations
146
Business Summary
Taco Cabana operates fast-casual restaurants specializing in premium quality traditional Mexican-style food. The menu features tacos, fajitas, burritos, flautas, and other food and beverage items, all prepared fresh by hand using unique recipes. Taco Cabana Restaurants also incorporate Mexican-influenced decor to enhance the customer experience.
Corporate History
Taco Cabana Franchising, Inc. was formed in Texas on January 17, 2023, and began offering franchises for Taco Cabana Restaurants in March 2023. Its parent company, Taco Cabana, Inc. (TCI), was established earlier on November 11, 1991, in Delaware. An affiliate, Texas Taco Cabana, L.P., operates 140 Taco Cabana restaurants and holds the intellectual property rights, licensing them to Taco Cabana Franchising, Inc. Another affiliate, NTG Franchising, LLC, has been offering franchises for 'Nick the Greek' Restaurants since December 2018.
Financial Overview
Investment Range
$1,266,500 - $2,776,200
Franchise Fee (Low)
$35,000
Franchise Fee (High)
$45,000
Royalty %
5%
Marketing %
3%
Equipment Costs (Low)
$909,000
Equipment Costs (High)
$2,007,000
Working Capital
$105,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Taco Cabana Franchising, Inc.'s financial statements for the year ending September 29, 2024, received an unqualified audit opinion, indicating fair presentation in all material respects. The company reported $785,113 in total assets and stockholder's equity with no current liabilities, suggesting a strong financial position. Cash balances were in excess of FDIC insurance limits, and the auditors found no substantial doubt about the company's ability to continue as a going concern. However, a concentration of credit risk exists, as each of the company's six franchisees accounts for more than ten percent of its revenues and accounts receivable, meaning the loss of any franchisee could significantly impact operations. Additionally, Taco Cabana Franchising, Inc. frequently advances funds on a short-term basis to a related party entity based on its liquidity needs, with these advances not having a set repayment schedule or accruing interest, which are presented as contra-equity.
Financing Details
Taco Cabana Franchising, Inc. does not offer any direct or indirect financing options. Franchisees are responsible for securing their own loans, leases, or other financial obligations, as the franchisor does not guarantee these arrangements.
Performance Metrics
Total US Locations
146
Franchised Units
6
Corporate Units
140
Avg Square Footage
2,850
Franchising Since
2023
Legal & Compliance Analysis
Recent Litigation
No
Bankruptcy
No
Litigation Summary
Taco Cabana Franchising, Inc. has no litigation that is required to be disclosed in this item, indicating a clean legal history for the franchisor and its key personnel.
Bankruptcy History
Taco Cabana Franchising, Inc. has no bankruptcy history that is required to be disclosed in this item for the franchisor or its key management personnel.
Agreement Terms
Initial Term
10 years
Renewal Term
10 years
Renewal Conditions
To renew their franchise agreement, Taco Cabana franchisees must provide written notice between 6 and 12 months before their current term expires. They must have substantially complied with their existing agreement and the System, and not be in default of any agreements with Taco Cabana, its affiliates, lenders, or suppliers. Franchisees are required to have the right to operate at their location for the full successor term and must renovate and modernize the restaurant to meet Taco Cabana's then-current image standards. Additionally, they must sign a general release, complete any new training required by Taco Cabana, and pay a successor franchise fee equal to the initial franchise fee being charged to new franchisees at that time.
Training & Support Program
Franchisor Assistance
Taco Cabana provides various forms of assistance to its franchisees. Before opening, Taco Cabana offers site authorization, reviews lease agreements, and provides a list of approved suppliers for signs, fixtures, and initial inventory. They also offer management assistance during the grand opening period and loan or provide electronic access to their 1,095-page confidential operating manual. Up to 4 designated individuals, including the Operating Principal and General Manager, must attend the 7-10 week Initial Training Program (ITP) in San Antonio, Texas, or another designated facility, and Taco Cabana's marketing team will execute the Grand Opening Plan. After opening, Taco Cabana manages and spends contributions from the National Brand Fund for advertising and marketing. They periodically update the System, including the menu and required equipment, and may require franchisees to make necessary expenditures for these changes. Taco Cabana also offers ongoing training programs for franchisees and their managerial personnel, along with periodic advice and consultation on operations, management, marketing, and new developments through various communication channels. For franchisees developing more than five restaurants, Taco Cabana assists in establishing and certifying a training facility.
Initial Training Hours
494
Training Location
San Antonio, Texas
Ongoing Support
Taco Cabana provides ongoing support to its franchisees after their restaurants open. This includes collecting, administering, and spending advertising funds from the Brand Fund for national and regional marketing and public relations. Taco Cabana periodically changes the System, including modifications to the menu, equipment, and decor, requiring franchisees to implement these changes. The franchisor also offers additional ongoing training for franchisees and managerial staff as deemed appropriate, and provides periodic advice and consultation on restaurant operations, system developments, and improvements. This consultation can occur through site visits, printed materials, electronic forums, meetings, seminars, or telephone communications. For multi-unit developers, Taco Cabana assists in establishing and certifying their own training facilities and may periodically evaluate them.
Franchise Requirements
Ideal Candidate Profile
Taco Cabana recommends that its franchisees, or their appointed Operating Principal, actively participate in overseeing the restaurant's operations. The Operating Principal, who must be an owner (at least 10% for multi-unit partners or 25% for single-unit owners) and live within a reasonable driving distance of the restaurant, is required to dedicate full-time effort to supervising the business. This individual must complete the Initial Training Program, have authority over all business decisions related to the restaurant, and be able to bind the franchisee in dealings with Taco Cabana. Franchisees must also demonstrate sufficient financial capabilities to properly develop, operate, and maintain the restaurant.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
retail
Owner Participation
supervisory
Territory Type
limited
Territory Size Requirements
Taco Cabana defines protected territories based on location type. In urban areas, a protected area will typically extend 4 city blocks in each direction from the front door of the franchised location. For suburban areas, the protected area will include at least 30,000 full-time residents. In rural areas, the protected area will be a one-mile radius in all directions from the front door of the franchised location.
Staffing Notes
Taco Cabana requires that each franchised restaurant employ two managerial personnel who have met their training requirements for their positions. The restaurant must always be under the personal, on-premises supervision of either the Operating Principal, a general manager, or an assistant manager. Furthermore, at all times the restaurant is open, at least one person trained in ServSafe (or an accepted ANSI program alternative) and other locally-required safety/health training must be on site.