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Nov. 14, 2004 New entrée heats East Bay's fast-food market
by David Goll - East Bay Business Times
 

Bill Wright and Gary Sidhu hope to snag the whole enchilada through the East Bay expansion of Taco Del Mar.

The two have acquired the master developer rights to the Seattle-based Mexican fast-food chain's charge into the Bay Area.

Wright plans to sell at least 15 franchised locations of the restaurant in Contra Costa County by the end of 2005. Sidhu, who owns a San Jose construction company, has even more ambitious plans. He will sell up to 44 franchised Taco Del Mar spots in Alameda County and San Francisco over the next year. He will also build some of them.

Taco Del Mar Franchising Corp., which has more than 100 restaurants in Oregon, Washington, British Columbia, Alaska, Arizona and other Western states, has a fast-food format with a limited menu featuring fresh ingredients. Tacos, enchiladas and burritos are made fresh by employees, a production concept similar to those at Subway sandwich shops and Chipotle, the Mexican food fast-casual chain whose majority owner is McDonald's Corp.

The chain's cornmeal-coated Alaskan cod fish taco is considered its specialty and the average bill for customers falls between $6.50 and $7. Besides fish tacos, Taco Del Mar restaurants are known for their Baja California beach-influenced interiors that inspire its "Release Your Inner Baja" marketing slogan.

But it won't be La Paz or Cabo San Lucas where Wright and Sidhu are seeking to build restaurants. They are examining sites in strip malls, neighborhood centers and lifestyle centers throughout the East Bay. More urban locations, such as the tony neighborhood commercial streets in Oakland and Berkeley, are not being ruled out.

"We have a location in Pioneer Square in downtown Seattle near the sports stadiums, shopping and nightlife that has been extremely successful," said Wright, a CPA and former corporate vice president who developed 20 Subway sandwich shops in Washington state with a partner. "But we have to walk before we run, and the (suburban locations) are where we will start building our business."

John Schaefer, vice president of the Terranomics commercial real estate firm, is working with Wright to secure locations. Schaefer said sites are being sought in Antioch, Brentwood, Concord and Walnut Creek and in San Ramon near the Bishop Ranch business park. High-traffic retail centers, especially newer ones, are considered excellent places to plant Taco Del Mar seeds when entering a new market, he said.

"Because the lunch business is key, ideal locations are near business parks and other areas with large daytime populations," Schaefer said.

At existing locations, about 60 percent to 70 percent of Taco Del Mar's business is done at lunchtime, Wright said.

In addition to highly visible sites, Wright and Sidhu are seeking franchisees willing to pony up the $20,000 needed for a first franchise, $17,500 for a second and $15,000 for each subsequent location.

The men say they realize competition will be stiff in the restaurant-saturated Bay Area, but they predict the chain will be a hit with a public short on time but more concerned than ever with healthful food.

However, they and their franchisees are entering an area already home to nearly 100 Taco Bell restaurants, the region's most ubiquitous Mexican fast-food chain, and a total of 15 locations operated by the two major Mexican fast-casual chains that also stress the quality of their food - Baja Fresh and Chipotle.

Another chain known throughout the Pacific Northwest - Taco Time - is also set to join the fray. It plans to open its first East Bay location at Richmond's Hilltop Mall in 2005. Up to 10 Taco Time restaurants may be opened around the region during the next 12 to 18 months, said Mike Reagan, vice president of Taco Time's parent, Kahala Corp., based in Scottsdale, Ariz. They will be built near two of Kahala's other chains, Surf City Squeeze juice bars and Rollers wrap shops.

Formidable competition can't convince Sidhu that the Bay Area isn't big enough for all comers.

"I think it's very promising for Taco Del Mar," said Sidhu, who, as owner of Guru Electric and General Construction in San Jose, also plans to build some of the new restaurants, which average 1,000 square feet and 1,500 square feet and cost an average of $600,000 to construct.

Fast-food and quick-service restaurants across the country recorded sales of $135 billion in 2003 and expect to grow by 4.5 percent this year, according to the National Restaurant Association. Although still dominated by McDonald's and Burger King, Irvine-based Taco Bell operates more than 6,000 locations.

Wright and Schaefer stress that when Taco Del Mar enters a market, it likes to do so in a big way. That's why it will open large numbers of locations.

"We're anxious to get our footprint in the county," Wright said, adding the company is big on radio and TV advertising. "But we also will make a concerted effort to reach those who live and work within two or three miles of our restaurants."

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