FAST FORWARD FALL 2019
A newsletter from the Association of Taco John’s Franchisees
Big Returns on Safety Dividend for Insurance Program
By Amy Olson-Miller, McKinneyOlson Insurance
This past June, the Association received a check for $143,222 from Continental Western Insurance Company. Let me repeat, $143,222! That means every participant in the Association Insurance Program will receive more than 5% of their premium back as a safety dividend! Each policy year, the safety dividend is calculated based on the overall loss history of the entire group. The safety dividend is paid to the Association and is applied as a credit toward annual Association dues. In many cases, members haven’t paid dues for years! The safety dividend is just one of the many benefits of participation in the Association Insurance Program. In addition to the safety dividend, the program offers very competitive rates and a coverage package specifically tailored for the Taco John’s Franchisees.
In 2019 alone, we have added 14 new locations to the program. If you aren’t currently participating in the program, you are likely paying too much for your insurance! McKinneyOlson Insurance has been writing coverage for Taco John’s Association members since 1994 and we continue working to enhance the program. In addition to the property, liability, auto, work comp and umbrella coverage we offer through Continental Western Group, we are also able to work with you for your other insurance needs. For example, we can write flood insurance, employment practices liability and cyber liability insurance. To learn how you can save money on your insurance — as well as potentially reduce or eliminate your Association dues — please give us a call today. You can reach me or Lori at 1-800-431-6714.
OUR MISSION “To provide our membership an environment for increasing long-term profitability in support of improved business value and brand equity.”
APC/Marketing Update By Brian Fuder, APC Chairman average UPK of 68.65. Overall transactions were down 3% and sales declined 0.3% during the Steak Burrito window. After Steak, we transitioned to the 50th Anniversary celebration referenced above. Results from the summer celebration should be available soon.
Greetings, ATJF members — I hope you’ve had a fantastic summer! Below is a quick update on sales results and what’s ahead from the Ad Production Committee (APC) and Taco John’s marketing. As I write, we’re just days away from celebrating Taco John’s 50th Anniversary with our guests by offering 69-cent Tacos all day on Tuesday, August 13th. We’re in the heart of the promotion bringing back the Sierra Chicken Sandwich. Complimenting the Sierra Chicken marketing is an aggressive 1 in 3 wins beverage upgrade opportunity giving our guests a chance to win food, prizes and a $50k cash prize.
Upcoming Promotions September marks a new beginning for Taco John’s marketing. Barkley’s work will hit airwaves and social media channels with the 3 for $5 Street Taco promotion in September. All promotional materials will include a “$1 Upgrade to Steak” message for the Street Tacos. In addition to 3 for $5, Barkley has also completed work on new Taco Tuesday®, Wake Up Wednesday, Six-Pack and a Pound® spots. There will be updated television and radio spots available that reflect the new brand work and persona. After the Fall window, we’ll move to Stuffed Grilled Tacos and Nachos Navidad to close out 2019. If you haven’t heard, there’s exciting news regarding Taco John’s menu of the future scheduled to be unveiled in early 2020. Work on those projects has already begun and will be reviewed by APC, starting in September.
Past Promotion Results This spring, we promoted the Quesadilla Tacos along with the return of Fish and Shrimp Tacos. Quesadilla Tacos performed well as a percent of sales averaging 5.1% of sales and a UPK of 123.6 during the promo. Fish & Shrimp Tacos accounted for around 1.5% and 0.9% of sales for the window, respectively. Overall, transactions for the window were down 1.6% while sales were up 1.6% during the that same timeframe. After Quesadilla Tacos, we once again celebrated Cinco De Mayo (CDM) with our traditional five-day (May 1st-5th) celebration of 5 Softshell Tacos for $5.55. Year-over-year, comp sales for CDM were positive 2% comparing 2018 day vs. day.
Next APC Meeting APC will hold its next meeting September 18th-19th in Loveland, Colorado. Please reach out with any questions or comments. The APC directory is included in this newsletter and members want to hear from you!
After CDM, Sirloin Steak Burritos returned to the summer window on our marketing calendar. The lineup included three different Steak Burrito options that accounted for 4.1% of sales during the promotion or an
Setting the Bar for SOS Drive-through speed-of-service is one of the most critical metrics for every Taco John’s franchisee. Quick and accurate service translates to satisfied customers and return business. Midwest Mexican Foods (MMF), operator of 12 Taco John’s franchises in South Dakota and Nebraska, currently boasts the fastest speed-of-service times in the Taco John’s system. According to Ted Miller, vice president of operations for MMF, this isn’t something that was accomplished overnight.
“For example, it’s everyone in the store having a headset on, including the manager on duty,” he continues. “Starting to warm shells when you hear the order placed. When you get a few cars in the drive-through, you get that second person over there helping them. Seconds equal minutes, and when you’re four-deep in line the last person ends up suffering.” Implementing this new standard, Ted said, was absolutely a collaborative project and it couldn’t have been done without the effort of Operations Managers Christine Riedel and Curtis Storm.
“A number of years ago Dan Murray and myself made this a focus for us,” Ted recalls. “We wanted to change some things in our organization and set some aggressive goals for our managers. A lot of the changes really focused on reinforcing the basic practices.
To raise and maintain initial awareness, Ted played on the natural competitiveness of his managers, creating a traveling trophy celebrating the speed-of-service Continued on page 3
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winners. “That trophy has been retired now,” Ted notes, “but they get a daily report from Fast Track® and we review our numbers as part of our weekly managers meeting.”
Shift in focus Ted notes that choosing a different way to measure drive-through efficiency might have been the most significant change they made. “It really helped when we switched our thought process from total line time to window time,” he states. “We quickly found that we also had to include a menu board goal as well, because customers were being held at the menu board to achieve the window times.
Using the technology tool Ted states that technology has also, in his words, “…simplified my life.” “I use QuikServe’s business intelligence software,” he says. “It integrates with Fast Track, which allows me to pinpoint the issues at every store each day. Then, I can follow up with the manager, check the camera system, if needed, and figure out how to address it.
“With our 12 stores, there are 11 different drive-through configurations of menu boards, pick-up windows and stack length,” Ted continues. “The most consistent way to work with all of them was window time. Once we started structuring goals around that, it really turned things up for us.”
“We’ve seen sales grow as a result of simply setting goals for window time, using the business intelligence system, and reinforcing the things we all know, but sometimes take for granted,” Ted summarizes. “The bottom line is, you can’t be in the quick-serve business and not be quick. People have too many choices.”
Ted notes that they’ve had to adjust their goals to avoid being too efficient. “We actually had some customers complain that they felt rushed, so we backed them down a bit.” Ted also reports that they’ve added a component to monitor in-store speed-of-service, as well. “Our counter customers notice how many drive-through customers are served while they are waiting, so we emphasize overall speed-of-service, inside and out.”
New Heritage Membership By Jim Atkinson, Vice President, Treasurer As our franchise owners have retired, many of you have expressed an interest in staying connected to the Taco John’s family. Until now, we’ve had no formal way to help maintain and define that connection. Now we do, with the adoption of our Heritage Membership policy.
While Heritage members may attend meetings of the association upon the invitation of the ATJF board of directors, they may not serve as an association director nor vote on issues coming before the association.
In summary, those franchise owners and ATJF members who have left the system as a result of the sale of their restaurants will be invited to attend the national convention event and will be on the mailing list to receive convention information. The convention registration fee for Heritage members will be an additional fee per person above the current registration fee for active franchisees.
If you have questions about the Heritage Membership, please contact Jody Schindler at 952-250-3121 or jody.schindler@atjf.net. The policy can be found on our website, atjf.net.
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Taco John’s Loses a Family Member By Walt Cressman, 1st Vice President The Taco John’s family has lost a dear, treasured friend and partner. Andrew J. Rodriguez, Senior, passed away August 3rd at the age of 81. He was a founding partner and the driving force in the All American Seasonings company that has been the spice and seasonings provider for Taco John’s since 1969. He and his lovely wife Margarita have been a constant and gracious presence in our business since day one. They shared an amazing life story which began in Cuba and grew into a purpose-filled and rewarding life in Colorado and Florida.
worked his way up from making 65 cents an hour to ownership of a thriving business. Andrew came to America on September 30, 1961. After working in the Miami area for a year, he and his family moved to Applewood, Colorado (near Denver), in November of 1962. They were sponsored by the local Saint Mark’s Lutheran church. Andrew spent the rest of his life paying forward the kindness and hospitality shown to his family by the good people of Colorado. Andrew and his father founded All American Seasonings in 1968 which became our spice suppliers in 1969. We have worked closely together ever since, and under his, his son Andy’s, and now granddaughter Rachel’s leadership, All American has earned our business, our trust and our friendship. We are blessed to have known Andrew. We salute his love for family, and respect his lifetime of ethics and faith lived out in a real-world tribute to a very good man. We will miss you, dear friend.
One of Andrew’s many talents was writing. He authored Adios Havana in which he tells the story of his early life and escape from Communism and Castro’s Cuba. It is a wonderful testament to trials and struggles of the people of Cuba as they coped with the dramatic changes in their beloved homeland. As an immigrant to this county, Andrew developed a fierce love for and pride in the United States, his adopted homeland. He became an eloquent spokesman for the free-enterprise system and
Andrew is survived by his wife of 59 years, Margarita, three children and four grandchildren. Adios, Andrew. Godspeed!
Profit Study Shows Continued Pressure We had 154 restaurants participate in the 2018 ATJF Profit Study. This is eight fewer restaurants than 2017, but still represents a strong sample size.
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Key points from the full study comparing 2018 to 2017:
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o So, operating profit has dropped 1.5% of sales in the last two years.
Average revenue moved up from $1,050,841 in 2017 to $1,087,104 in 2018, a 3.5% increase. Food cost moved up from 26.4% to 26.5% of sales. Total labor costs moved from 30.7% to 31.0% of sales. Total operating expenses moved from 20.1% to 20.2% of sales. Changes in operating expenses: o Marketing & advertising — down 0.1% of sales o Utilities — down 0.1% of sales o Maintenance — up 0.3% of sales Operating profit dropped from 22.8% to 22.3% of sales. o Our 2017 Profit Study showed average operating profit margins dropped by 1.0% of sales in 2017.
Average hourly wage went from $10.63 to $11.24, an increase of $0.61 or 5.8%. Average ticket increased from $9.04 to $9.43, an increase of $0.39 or 4.3%. o Food and labor cost per guest increased at higher rates than the average ticket. As a result, prime profit per guest only increased by 3.4%
Restaurants that participated in the study received a personalized report comparing their restaurant’s numbers to the appropriate volume tier benchmark. You can receive this report in the future if you participate in the study. We welcome your participation! If you have not received a copy of the 2018 Profit Study Summary report, you can obtain one by contacting Jody Schindler at Jody.Schindler@atjf.net.
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From the President By Jeff Brands, Association President As you are read this, we will be deep into the third quarter of 2019. The ATJF was able to accomplish most of its second quarter goals and has set a list of priorities for the third quarter. See the 2019 Q3 Priorities sidebar for more details.
Menu of the Future and give it a chance to succeed. We ask you to support the menu initiatives and create enthusiasm with your teams. For this menu to have a chance to succeed, we have to support it.
In our last newsletter, I talked about how we can all play a role in moving the chain forward by focusing on operational excellence within our own restaurants. To move forward, we must have an awareness of where we are. In the ATJF Strategic Plan, we had an initiative, “To work with Taco John’s International to set measurable operational metrics in areas such as speed-of-service, QSC scores, order accuracy and other measurable attributes to establish standards and expectations...”
It doesn’t stop there. We cannot stress enough the importance of menu innovation. We believe there needs to be resources devoted to regular, “business as usual” menu development. At the same time, we believe there should also always be resources working on menu innovation to produce future products and menu strategy. Whether the Menu of the Future is successful or not, we need to be prepared for whatever is next. Continued on page 6
We were pleased with how Taco John’s International, and specifically Rocky Clark, allowed us to have input and work with him to establish a Scorecard system that supports this initiative. The System Scorecard reports that each franchisee recently received showed how individual operations measure up within the Taco John’s system. The scores provide each of us with an awareness and baseline to work from. We, as franchisees, can use these reports to identify where we have opportunities to improve and then take steps to make those improvements. When the next quarterly report comes out, hopefully each of us will see an improvement in our scores which, in turn, will move system performance forward as well.
2019 Q3 Priorities 1. Implement System Scorecard and communicate test results, along with the importance of the program, to membership. 2. Finalize the Menu Think Tank and hold it first meeting in Q3. 3. Build a task force to work with TJI to review remodel plans. 4. Complete a Profit Study and distribute to participants and membership. 5. Increase insurance program participation to 80% through an insurance program mailing to non-participating members and nonmember franchisees.
Sharing best practices Brett Itterman suggested to me at convention that we should be creating white papers on best practices within the system to help each other out. We thought this was a good idea. We may work our way toward more extended white papers, but we are starting with a best practices article. My thanks to Ted Miller and his organization for sharing some thoughts on how they are achieving the fastest speed-of-service in the system.
6. Determine additional discount buying programs. 7. Work with TJI to develop a task force to review restaurant profitability utilizing Profit Study results as the base. 8. Consider ways to increase education and communication with ATJF membership.
In addition to operations, ATJF continues to believe that menu innovation and marketing must lead the way in providing true growth for the system. Taco John’s is working hard on the Menu of the Future that will be rolled out in early 2020. At our meeting with Taco John’s senior management in June, we had an extensive discussion regarding the Whys, the Whats and the Hows of the menu. There are changes coming to our menu, and while we have some concerns, we are encouraged by what we are seeing. We will work to support the
9. Promote the TJIA 2020 National Convention at Hyatt Regency Indian Wells Resort & Spa, Indian Wells, CA (Palm Springs) – April 1-4, 2020. 10. Hold Zoom or phone conference meeting with TJI senior management. 11. Revise the TJIA Bylaws to bring current with existing processes.
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With that in mind, we established an initiative to work with TJI to create a “Menu Think Tank” to focus on future menu innovation. This is a big picture group and process. It is different than the Menu Committee and does not replace it. The purpose of the Think Tank is to innovate a constant stream of menu ideas, concepts and growth opportunities for potential testing and menu inclusion. The Think Tank will discuss consumer and industry trends and evaluate their value to Taco John’s guests.
We must be proactive rather than reactive, enabling us to get out in front of menu development and innovation and stay there. We believe this Think Tank can help with this process. We are concerned about franchisee profitability and cash flow. Our 2018 Profit Study shows a drop in average operating profit margins for the second year in a row. (See the article on page 4). There is a lot of pressure in the industry. Restaurants are overbuilt, labor is expensive, and hiring is very difficult. We will be working with Jim Creel and his team to review restaurant profitability with a goal of finding ways to improve it. We are also working to find additional buying programs through ATJF that could save franchisees money.
In June, we presented this initiative to Jim Creel and senior management. We are pleased that Bob Karisny has latched onto this idea. Bob, with our input, has put together the structure and functionality of the Think Tank. The Think Tank will include representatives from Taco John’s International, vendors, Barkley and the franchisee community. We are close to assembling all the Think Tank members and anticipate the first Think Tank meeting will be held before the end of the third quarter.
The mission of ATJF is “To provide our membership an environment of increasing long-term profitability in support of improved business value and brand equity.” We will continue to work to accomplish that mission.
Association Directory ADVERTISING PRODUCTION COMMITTEE
ASSOCIATION BOARD OF DIRECTORS
Brian Fuder, Chairman
Jeff Brands jbrands@tjiowa.com 605-338-1330 President, Supply Chain Liaison
brian@echosinc.com
Alex Habeeb, Vice Chair alexanderhabeeb@yahoo.com Brett Itterman
218-770-1659 815-939-1313
Walt Cressman waltcres10@aol.com 612-804-9200 1st Vice President, Insurance Program Liaison
bitterman@pentexmanagement.com 605-229-2005
Ted Miller tedkmiller@gmail.com 605-728-6616
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
Aaron Holthaus ahaus26@gmail.com 763-482-0340 VP, Secretary, Development/Construction Liaison
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.
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 952-250-3121 or by email to jody.schindler@atjf.net. 6
SAVE THE DATES! 2020 National Convention April 1-4, 2020
Hyatt Regency Indian Wells Resort & Spa Indian Wells, CA (Palm Springs)
Preliminary Schedule of Events:
• Wednesday 4/1 – On-site Registration, Evening Welcome Reception
• Thursday 4/2 – General Session, ATJF Member Meeting, Golf Calcutta • Friday 4/3 – Vendor Show, Awards/Recognition Banquet
• Saturday 4/4 – General Session, Golf Tournament, Final Party Watch your mail for the detailed information package in late November.
MARK YOUR CALENDARS…
IT’S GOING TO BE MEXCELLEN