Seeking opinions and experiences with Taco Del Mar

I'm a business reporter with the Seattle Post-Intelligencer daily newspaper, seeking opinions and experiences of franchisees with Taco Del Mar. That company is based in Seattle, so its business practices are of concern to me.

Most valuable to me are franchisees who are willing to let their names be used. Less valuable, but still desirable, are those will share their stories but not allow their names to be used.

I am posting this because I received an anonymous but detailed and angry email from a current franchisee, and I need to substantiate some of this person's claims. Please call or email me at the contacts below. I will maintain your confidentiality to the limits of the law.

The owner of this site knows I am making this post.

Thank you for your assistance.

Dan Richman, Business Reporter, Seattle Post-Intelligencer, 206-448-8032, danrichman@seattlepi.com

Re: Seeking opinions and experiences with Taco Del Mar

Taco del Mar

No day at the beach for franchisees

By Julie Bennett
As published in: Franchise Times - November-December 2007

“W e’re opening new stores just about every week!,” announces Taco Del Mar’s colorful Web site.

“So grab your surfboard, let’s head out and catch the next wave together.”

Caution is advised. Taco Del Mar, a casual Mexican concept, was launched in 1992, not on a beach, but on a pier in Seattle by two brothers, James and John Schmidt. Their inspiration—and their surfboard and fake palm tree décor—came from the burrito shacks that lined Southern California beaches during James’ college days. In 1996 the brothers formed a franchise company, with James as its CEO. “We adopted the business plan of Subway,” James Schmidt said, “and sold master developers their own territories to run for us. They’d find franchisees and help them find locations and we’d give them half the franchise fees and half the royalties.”

Expansion started slowly along the Washington, Oregon and California coasts, then took off as master developers moved inland. “We’re growing, growing, growing!” the Web site proclaims.
But a group of current and former franchisees, who call themselves ‘The Truth about Taco Del Mar,’ said that while some franchisees who caught the wave are riding high, others are swamped by high food costs, knocked adrift by poor distribution systems or floundering without support.

Problems are so deep that franchisees are closing stores almost as fast as new ones are opening. Or faster. When we began our research, Taco Del Mar had 269 open locations; by press time that number had sunk to 265. When we asked CEO Schmidt about the closings, he said his team calculated that 27 stores had closed this year, but that final numbers would not be available until December.

Our count is closer to 50. According to its most recent UFOC, Taco Del Mar had 264 franchises operating in the U.S. and Canada as of December 31, 2006. But when we checked their addresses against the 265 open locations on the company’s Web site, 49 were no longer listed. Because the same number of new taco stands had opened, it appeared that the concept was at least holding still. But we also found that 16 of the stores still open are for sale, some at fire-sale prices. “Owners want out” proclaims the classified ad for a Taco Del Mar in California, selling for $50,000. The seven listings for Washington State include one “priced to sell” at $70,000, and another listed at $99,000 for a restaurant that cost $250,000 to build.

Drowning in food costs

The most common reason cited for the closings is high food costs. Darryl Thompson of Fort Worth, Texas, was a retired civil servant when he caught the wave. He opened a Taco Del Mar in October 2006 and said he was prepared not to make money the first year. The franchisor does not make an official earnings claim in its UFOC, but does publish a P & L (profit and loss) report for five stores in the Seattle area. The stores average $378,000 a year in sales, with food costs averaging 31.2 percent of that. New franchisees are told to aim for food costs of 30 to 32 percent.

Thompson said his food costs were almost 39 percent no matter how carefully he watched inventory and portions. “I shopped around, buying cheaper produce at farmers’ markets,” he said, “and found a local supplier for tortillas, some paper products and cleaning supplies. I was putting in $5,000 a month of my own money just to stay open. We had a good site, in a center anchored by a Wal-Mart and a Lowe’s (home improvement) and I wanted to be successful, but each time I ran the numbers I knew it wouldn’t work.” Thompson lost his $300,000 retirement savings, closed his store in July 2007, and filed for bankruptcy. “We’d always paid our debts before,” he said. “Now, at age 62, I’m looking for a job to help clean things up.”

Franchisees from “The Truth” group and others we called at random also complained about high food costs. One from the Seattle area said he came up with so many marketing ideas for his two stores that he won the Taco Del Mar annual award – a free PT Cruiser to drive for a year. But he couldn’t drive down costs enough to make a profit. “I was borrowing money from my wife’s parents and still a couple of employees’ paychecks bounced. When they walked out, I had to close,” he said.

Schmidt said, “We have franchisees in every market with food costs of 29 percent to 32 percent. If franchisees’ say food costs are so high, it means that employees are stealing from them, they’re over-portioning each order, they’re buying incorrectly or they’re doing the math incorrectly. Ask the people not doing 32 percent if they’re doing their weekly food cost inventories and calculations. I’ll show you they didn’t.”

A Washington State franchisee who asked that his name not be used because he’s trying to sell his store, said he does his weekly calculations and his food costs consistently run at 37 percent. “I thought I was the only one,” he said, “and felt like an idiot. When James said my employees must be stealing from me, I fired them all and hired new ones. The problem persisted.”

Ashley Kapur said, “I’m a soccer mom who opened a store in Federal Way, Washington, just 10 minutes from my home.” The location was fortuitous, because Kapur said she had to work “24/7 just to reach a point where we were almost breaking even. I think the only people making money with Taco Del Mar are the master developers, because they’re earning royalties from the rest of us.”

Jeff Masterjohn is a master developer for southwest Washington and Oregon, but said his seven Seattle-area Taco Del Mars have made money for years and other operators he knows are also profitable. “There will always be disgruntled franchisees who make most of the noise,” he said.

Stranded too far from the sea

Inland franchisees are also making noise over distribution problems. Terri Turner, of Memphis, spent years helping to run the 13 Subway stores his family owned and said he was attracted by Taco Del Mar’s Subway-like model. Turner signed on to be the master developer for Tennessee and Mississippi and his girlfriend, Rhonda Brown, quit her banking job, cashed out her savings and became his first franchisee, opening a store in Southaven, Mississippi.

“Our first order for products was fine,” Brown says, “because we’d placed it with Sysco, our distributor, long before we opened. But the first time I called Sysco to restock supplies, I was told we couldn’t get certain items, like mild taco sauce, for several weeks,” Brown said. “And they told me they could only continue to deliver protein (meats) if I ordered a minimum of five cases at a time. My freezer wasn’t big enough to hold that much.” When Brown complained to corporate that she was about to run out of ground beef, Bruce Lane, Taco Del Mar’s director of operations, suggested she drive to the Sysco warehouse in Jackson, Mississippi, about four hours away, to pick up meat products herself every couple of weeks. “They fed us false hopes and dreams,” said Brown, whose store was destroyed in a fire and has not reopened.

John Nelson, Taco Del Mar’s director of purchasing, admits there is a problem stocking outlying stores. “We use Sysco nationally because we want all our franchisees to have the same products. But there can be delivery problems until each cluster of stores gets to critical mass, of five to ten in a marketplace.” Single stores in several states, in fact, have closed.

Is the model broken?

Even profitable franchisees admit there are problems. Retired Army Major Jim Templin was a Subway franchisee in the Tacoma, Washington, area, who in 2003 signed on as a master developer for the Austin, Texas, market for Taco Del Mar.

Templin sold two franchises in Texas, then stopped because both were failing. “I think Taco Del Mar’s model for expanding into outer markets is broken,” Templin said. “You need to have a lot of stores developed quickly in an area to build brand awareness. And you need to reduce costs, because franchisees in outer markets are paying more per case of product to cover transit costs. In Texas, Sysco didn’t stock every item because there wasn’t enough volume. Franchisees had to do special orders, and delivery wasn’t reliable.”

Templin and fellow franchisee Robby Fuller, who has two stores in the Portland, Oregon, area, recently started a franchisee association to “open up a dialogue” with their franchisor. Fuller said other problems include communication—“Franchisees are not being taught correctly,” he said—and master developers who are so keen on collecting franchise fees that they let new franchisees open in poor sites. “I just want everybody to know that the problems are fixable,” Fuller said. “This is a good concept with great food, and franchisees should be happy doing it.”
Udo Schlentrich, director of the William Rosenberg International Center of Franchising at the University of New Hampshire, encourages such dialogue. “Even McDonald’s was in trouble a few years ago. Everyone had to sit down and explore what was wrong.”

Schmidt said he’s willing to talk, but he believes that selling even more franchises is the best solution. “When we have 1,000 to 1,500 stores nationwide, our franchisees will be predominantly making money,” he said.

Not surprisingly, some of the disappointed franchisees are talking about taking legal action against Taco Del Mar. In his emulation of Subway, Schmidt may have forgotten an important detail. During the 1990’s Subway had more franchisee lawsuits than all other franchise systems put together.

on October 30th, 2007

Be Careful of Copyright Infringement

Dear Guest,

Copying and pasting a full article from another author or publisher is against copyright laws. I have unpublished the article.

Fortunately, Franchise Times has the article online. For future reference, all a contributor to Blue MauMau needs to do is paste the URL of the story into the body of the text. After that, please say a few words on why you posted it.

Here's the story:

What is of particular interest is the group of "current and former franchisees, who call themselves ‘The Truth about Taco Del Mar'." They are saying that everything is not so bueno at the chain.

Problems? Food costs, for one.

Such investigative reporting on franchisee issues from Ms. Julie Bennett is good to see. There are some big stories out there in which her reporting is sorely needed.

Mr. Blue MauMau

on October 30th, 2007

Seeking Opinions and Experiences With Taco Del Mar

I'm a business reporter with the Seattle Post-Intelligencer daily newspaper, seeking opinions and experiences of franchisees with Taco Del Mar. That company is based in Seattle, so its business practices are of concern to me.

Most valuable to me are franchisees who are willing to let their names be used. Less valuable, but still desirable, are those will share their stories but not allow their names to be used.

I am posting this because I received an anonymous but detailed and angry email from a current franchisee, and I need to substantiate some of this person's claims. Please call or email me at the contacts below. I will maintain your confidentiality to the limits of the law.

The owner of this site knows I am making this post.

Thank you for your assistance.

Dan Richman, Business Reporter, Seattle Post-Intelligencer, 206-448-8032, danrichman@seattlepi.com

on September 4th, 2007

TDM is what you make out of it.

First off I’d like to say that I’m saddened that the women in BC would go to such extremes if her business was failing. She obviously had way more problems than just a bad business to do such a crime and then top it off with a leap off a cliff.

I’m a TDM franchisee and I know how hard it is to have a franchise fail. I’ve had some myself. As a matter of fact I closed two stores in the other system I’m involved in myself due to bad locations however never at anytime did I blame the Franchisor. In that same system I have two very successful stores that make a tremendous amount of money. Lets face it, they the company do all the product creation, R & D creative design and systems. For that they get 6% or what that franchise charges to use their system plus co-op fees, the franchisee has the other approximately 90% to pay for food, labor and overhead. Try opening that same restaurant yourself and see what you go through, I’ve done it. Supply lines, advertising discounts, systems creation and equipment buying power. All mentioned are much more costly doing it yourself. My description of a franchise is, going into business but not by yourself. This doesn’t mean they have step in every time someone fails for whatever reason. Also if they could guarantee every location would be a winner they would open all of them and not even bother with franchises.

You probably did lose a lot of money for whatever reason, however when you point your finger at someone else there’s always 3 fingers pointing back at you. Let’s ask some key questions here.
1. Did you do your due diligence on TDM, bet not? You probably did even call one franchisee to see how they were doing in this company.
2. Did you operate the store yourself? Your CPA should have told you, if he or she has any knowledge about restaurants, that you’re lucky if you make money the first 3 to 4 years. This means 60 to 80 hours a week in your store the first year or two. Most franchisees make the same mistake, they open, work a few weeks or months then let someone else take their investment right to the toilet.
3. Were you portioning correctly? If you weren’t there how would know? If you were there, did you portion correctly? Again this is a common mistake, not portioning will cause inconsistent experiences in your restaurant and if you’re not there how do you know what the customers service and food were like. It’s a fact 8 out 10 people will not complain, they just don’t come back.
4. Were you advertising? Yea I know you gave the 1%, face it that’s gone when they take it. Forget about it, it’s gone; anything you get from it is gravy. Yea you were probably in a co-op at 2% to 3%, this, you should have had some say over. Now here is the real shocker. Shoe leather marketing, did you do it? I know you did when you opened, what about a month later, 6 months later, a year later, how about 5 years later. After 15 years in the other system, I still to this day, go out and greet business owners all the time. Heck when I did my due diligence when looking at TDM, I talked to a few businesses around a few TDM’S and found most of them didn’t even know TDM did catering. What’s that tell you? It tells me most franchisees don’t go out and local market their store. This is 50 to 70 percent of what will make you successful.

In closing, I’m sure a lot of the complainers on this page lost lots of money. Let’s face it, TDM does, like all franchise systems, take in franchisees that have no business doing a restaurant. TDM only take’s 7% of the gross sales with ad contribution, you take the rest. So take all the blame yourself for your failures excluding that 7% and move on. Please do yourself a favor and work for someone else for a living and let the people who know how to run and make money in the restaurant business do our thing.

P.S. I saw a Pizza Hut that closed the other day (the most successful Pizza Chain there is). I wonder if he’s on a Pizza Hut Blog complaining about his company right now. Maybe I’ll go check.

A Successful TDM Owner.

on February 20th, 2008

Re: Seeking opinions and experiences with Taco Del Mar

Taco Del Mar may have a few unhappy zees but any fast growing franchise will always have a few unhappy zees. In my opinion Taco Del Mar is a state of the arts franchise which they discovered a number of years ago developed a 3 tier franchise program with an area development system. As a franchise consultant I worked with them to develop their program after they ask what would be the best program to support their franchisees. The Schmidt brothers had developed an excellent model store program after some problems attempting to develop New England and discovering trying to maintain their model far away was next to impossible and so wanted a program that maximised store support. In all development areas they sold a development franchise for local support of the model store for uniformity, stanardization and communications in all markets near or far. Kevin Hansen their VP of ops was totally dedicated to the success of all stores in the system. They have, to date, if you check their web site they have 269 opened stores throughout the U.S. and Canada. ANy franchise that follows this system has a great chance of success as the franchisor must understand that they are in the franchise business. A successful franchise goal should be that they know what all their zees are doing to follow the model on a continuing basis. The other important factor, is to know in any given market, how the franchise rates as to its franchise benefits as to the overall benefits of franchising.

on September 5th, 2007

Clearity

Ok, so. I get that for the most part in this forum there are mostly unsatisfied Taco Del Mar people. I had to look around at other franchise blogs to make sure this was not just a TDM thing, which it is not. I was glad about that.

I have to say that I LOVE TDM. I am excited about the possibility of owning one.

My question would be this. Do you think the fact that your TDM did not make it is because of where you are located? May that be the state or the actual location of the TDM.

Are any of you in the Oregon/Washington area?

I was reading on another page that when we go into any business whether its a franchise or just opening a mom pop store that its a risk. In the olden days mom and pop would open a store and they would hold each other and pray it worked. Is this really that different? I mean we do have the luxery of going into a proven commodity. But I also know its still a risk. I know when I pull out large sums of cash to invest in the stock market I am praying while I am doing the short term investing that the market does not crash or do anything weird. I do it anyway and its a risk. You had to have known that when you purchased a franchise like TDM that you did not buy a McDonalds or a Taco Bell. Even though the food is much better at TDM the other places are global restaurants. You can not go anywhere in the world (for the most part) and have people not know what those two place are. The same does not ring true for TDM, yet. They are new in quite a few areas. You have to build your base and pray it takes off in your area. Its a risk. Isn't that what business is, is a risk?

How many unhappy franchisees are there on here that are complaining? It really looks like about 6. 6 very loud and unhappy people that have found a place to sound off. Well, I get that you are upset but you really should move on. You took a risk and it failed. NEXT!

on January 11th, 2008

A little chuckle

I got a little chuckle out of the blog from Paul.  Thanks for noticing my spelling errors.  I am actually a real potential franchisee that is interested in TDM.  That would be cheesy though, wouldn’t it?You (ROI & Risk) make a lot of good points.  TDM gives a list of every owner.   There were over a dozen pages of names and numbers along with about a dozen previous franchisees that sold or transferred their TDM.  I will not move forward without talking to quite a few on the list.  I guess I just wanted to create some real conversation and I guess get to the bottom of the real issue.  Is it food costs?  Does work need to be done on negotiating the price that TDM pays for food or are the kickbacks the real issue?  I’m really not one to complain, I am a solution driven person.  I don’t want to sit around and complain about an issue I want to solve it.  I mean the prices that TDM is charging to eat at their places are not cheap.  I almost had a heart attack when they said it was $2.99 for chips and queso.  That is ridiculous.  I pay it, but it’s crazy.  Chips used to come free with every burrito you ordered and it was like a dollar to add queso.  Has there not been a difference with the price increase?   I mean if you order a burrito and the chips and queso you are looking at $9.00 per person to eat and if you get a drink its more.  Has anyone taken James S. up on his offer to call him?  I know I will.  And also, why are you not willing to sign your name?  Why be anonymous?   I am willing to sign my name.  Let me be the first.A. O’NeilMt. Hood, Oregon

on January 11th, 2008

Examples of Kickbacks

First, congratulations to you on purchasing a Taco Del Mar location. I sincerely hope that you have a better experience than most of us who lost everything have had with Taco Del Mar restaurants in the past. I can appreciate how you’re excited about your purchase and the possibility of making money owning a Taco Del Mar restaurant. I don’t want to discourage you, but we all had similar feelings when we first bought into Taco Del Mar. Considering that you’re a new “franchisee” (or some might say a victim) of Taco Del Mar, please allow me to address some of your questions and share a few things that have happened to us so you can hopefully avoid the same fate in the future.

Did your Taco Del Mar restaurant because of its location?

It’s ironic how similar your message is to what Taco Del Mar Franchising Corp is now telling people to explain why their franchisees are going out of business and filing for bankruptcy. James Schmidt also said that “some stores suffered from underlying problems like bad locations”: (read it here in the Seattle Times). There may be some merit to that statement, but consider that many of the Master Developers choose the locations and insist that their real estate broker negotiates the lease for any Taco Del Mar restaurant in their area. They then take a kickback on those leasing fees from the realtor which you typically don’t know about.

Just because James makes that suggestion doesn’t mean that it’s true or that it’s the only problem with Taco Del Mar. Some of the executives and master developers are taking kickbacks and that money is going to come right out of your pocket. That will affect your return on investment regardless of your location.

Taco Del Mar is a risk, just like any mom and pop location

Yes, all businesses are risks, but Taco Del Mar sold itself as a franchise that had a reduced exposure to risks than your typical mom and pop restaurant. We were told that we would receive support from people who had experience with the franchise restaurant business. In reality we were exposed to greater risks by having to pay additional overhead which ultimately went directly to the people who were supposed to be helping us: the Taco Del Mar Franchising Corp. executives and Master Developers. Neal Hollingsworth, for example, convinced us to invest in certain advertising and then pocketed half of the fees from the media buyer without telling us. If you were running your own business and got a media buyer to take half of the usually fee, wouldn’t you rather have that money to reinvest in your business or take as profit? Ladies and gentlemen, this is a kickback to a Taco Del Mar executive that deliberately hurts all of us who tried to make money as Taco Del Mar franchisees.

There are two examples of kickbacks that Taco Del Mar, its executives, and its Master Developers are taking at their franchisees expense. They completely undermine the trust that exists between franchisor and franchisee and makes you second guess any advice that you receive from Taco Del Mar Franchising Corp. I’m not sure about the exact number of franchisees who are posting on this forum, but this is a small sample of what a lot of franchisees are going through. The reality is that there are many more stores on the verge of bankruptcy and a lot of people you probably haven’t spoken with who have lost everything. James doesn’t know what he’s talking about when he says that most people are making money. Between the master developers and corrupt Taco Del Mar executives, he’s completely isolated from his own restaurants and that’s why new leadership at Taco Del Mar is required.

So, A. O’Neil from Mt. Hood, I won’t tell you how to spend your money. But at least you have a better idea of what you’re getting yourself into now. In 18 to 36 months, we’ll see if you’re as optimistic about your investment in Taco Del Mar.

PS – Looking at the most recent version of the UFOC, there are at least a couple of locations with incorrect or inaccurate franchisees listed in the appendix. Call people on the list, but try to find some of the locations that no longer exist and talk with those owners. Texas, Arizona, California, British Columbia, and Boston are all markets where Taco Del Mar has destroyed dozens of investors.

on January 11th, 2008

Appology

I am really sorry and was not trying to minimize the situation you and your family are in and going through.... I was just not clear, sense no one says who the heck they are if you people are even real TDM franchisees. I mean you could be the CEO of Baja Fresh sitting at your desk causing problems.
I mean they thought I was a corporate TDM person. Why couldn't the same be true of everyone on here that does not address who they are. The internet is the best way to be anonymous and say what ever you want with out saying who you are. It could have been ANYONE saying the things you are saying.

on January 15th, 2008

Lot's to say!!

Ya know.. I had a huge long "history" statement that I was going to post, I even talked to Dan Richmand at the Seattle PI about my story and he really wanted me to go on the record and state my name, but I do not have the energy or desire to "re-hash" how we lost over $200K+, no bank loans, not personal loans, just hard earned $$ that was taken from me and my family. I also do not put it past anyone at TDM to come after me for my post.

Basically this franchise sucks.. I would not wish this on anyone. Our location had strong sales, but NO profits.. and HUGE out of pocket expenses. I was discieved, lied too, and "shined on" to open my store. Their OFOC is a sham!! I would be more then willing to "HONESTLY" speak to anyone about my experience.. Respond with your info and I will call you back..
Also: If you are a current owner who's store is failing, or you have have to put $$ in every month to survive.. DO NOT BE ASHAMED OR EMBARASSED ABOUT YOUR LOSS!! I was for a long time, I did not want to talk about it in any way. The more who "come out" the better.. there is power in numbers.. and lets keep this from happening to others,,,

on January 17th, 2008

numbers

If you keep this going you may want to make up accounts so there is a better idea of how many of you there are.

on January 18th, 2008

Is anyone proposing litigation against TDM?

Has this been considered? I would sign on in a heartbeat. I do not want anyone one else to suffer my fate nor the fate of the other owners I know that are not making it.

on January 19th, 2008

Now that The Truth about Taco Del Mar has come out

Well it’s been about a month since I last posted on this discussion board. Here's a quick recap on what has happened at Taco Del Mar over that time:

  • David Huether resigned to work on another business opportunity. Kevin Hanson is now the COO and James is now the CEO. Seattle Times article
  • Neal Hollingsworth has “resigned” to move to “a fantastic job opportunity”. God help the franchise partners and coworkers that have to deal with him next. Seattle PI article
  • James has come out with an everyday value menu asking franchisees to cut their prices to grow their sales. (see above article on Huether’s departure)

This is a good start because it’s a sign that changes are happening within the company. But there is still a lot more than needs to be done to fix the problems that Taco Del Mar has. Just changing a few people who are mentioned on this thread does not mean that future franchisees are any safer than those of us who have already lost everything to Taco Del Mar Franchising Corp. David Huether is still involved with the company despite his resignation so there isn’t that much that has changed. I hope that Taco Del Mar Franchising Corp is taking more action that’s not being released to the public. Just in case it’s not, I’d like to outline four problems that still exist and what Taco Del Mar Franchising Corp should do to solve them.

  1. What is being done to lower operating costs for franchisees?
  2. What steps are in place to stop other executives from taking kickbacks?
  3. How will Taco Del Mar Franchising Corp provide more promotional and operational support for franchisees / master developers?
  4. How are you changing the way that you recruit franchisees?

Food costs

James, your supply chain is compromised. We don’t have a complete picture of the suppliers who are inflating their prices to the franchisees because of kickbacks. Asking franchisees to lower their prices right now is suicide. Do you really think that your customers are going to purchase that much more with lower prices? Are they going to tell their friends to start coming to TDM for lunch because of the really cheap burritos? No, it’s just going to reduce the money that franchisees have to run their stores and take care of themselves. You need to go to your suppliers and demand that these people cut their prices first. If they don’t cut their prices then you need to start looking at other vendors. If you don’t do it then the franchisees should do it themselves.

Franchisees, if you can get better prices from Pepsi and Neptune / GFS over Coke and Sysco then you should go ahead and do it. $5,000 is a lot of money and you can do a whole lot of Local Store Marketing with that. Taco Del Mar Franchising Corp might grumble about this at first, but they can’t sue everyone and it’s better than loosing your shirt following advice from corrupt executives. Besides, they’re going to get their pound of flesh from the increased royalty payments you’ll be making with a more profitable business so they should be happy about that.

Stopping kickbacks

Neal Hollingsworth’s reign of terror at Taco Del Mar is over, but who’s to say that other executives aren’t on the take from other suppliers? I wish that all of you knew how long I had to wait to explain The Truth about Taco Del Mar to someone who would take action. Like a lot of you, I’ve gone through my own share of grief and humiliation to reach this point. It should not be this difficult to stop corruption in a franchise like Taco Del Mar in the future.

So James, I want to challenge you to run a progressive company in 2008. You need to hire an independent ombudsperson to look out for the interests of the franchisees within the walls of The Whale Building at 400 Boren N and beyond. This person should have the power to make changes that influence the way that your management team operates. Give this person the power to affect what you pay all Taco Del Mar employees (including you) so that you reward your people for being honest and ethical. This person should report only to the franchisees and run an ethical audit every year. If there are any problems with any of your people, this person should be able to terminate the employee. Think of it as an investment to prove to us and to future investors that your team has changed and is now trustworthy.

Supporting Franchisees

A lot of people have invested in Taco Del Mar franchises over the past few years. Some of them have more experience in the quick service restaurant business than others. The people who have less experience need more support from Seattle than a couple of manuals and the odd visit from a BDD to help them get up and running. There are Master Developers who also need help with their businesses. James, you need to figure out a way to give them that support… it’s part of the reason that they bought into a franchise instead of building their own chain. If you are being stretched that thinly maybe it’s a sign that you should hold off growing for a little while and focus on building burrito sales with the people that you have instead of selling new locations. That’s why you’re a franchise instead of a multi-level marketing company.

Ethical Recruiting

We’ve spent a lot of time on this page talking about kickbacks and how they are hurting all of the franchisees, but I hope that we haven’t lost sight of this situation with Jeff Masterjohn. Taco Del Mar Franchising Corp needs to learn that deceiving new franchisees by having someone like Jeff misrepresent himself as a fellow franchisee is wrong. If David Huether’s resignation was related to my messages in any way, I suspect that it had to do with revealing Jeff’s real identity and the obvious conflict of interest there. I can’t believe that the SEC would condone that kind of behavior without it being disclosed in the UFOC. Federal regulators need to study what happened here and figure out a way to close this loophole before more franchisees get hurt. In the same spirit of stopping kickbacks, maybe the same ombudsperson in my first recommendation should be responsible for an ethical audit of Master Developers and their recruiting practices too.

on December 10th, 2007

The wrong way to close a Taco Del Mar

A lot of us Taco Del Mar franchisees are suffering from the poor profits and artificially inflated costs that Taco Del Mar Franchising Corp is imposing on us through their kickbacks and shoddy support systems. Many of us have lost our homes, our families, and our savings so that James Schmidt and the fat cats in Seattle can convince (or some might say defraud) other people to pour their hard earned money into another Taco Del Mar franchise. Watching Taco Del Mar Franchising Corp executives pocket tens of thousands of dollars from our vendors is frustrating. But it certainly doesn’t justify this…

Earlier today, someone burnt down the Taco Del Mar restaurant at 680 W. Broadway in Vancouver, British Columbia (see Arsonist to blame in explosion [at Taco Del Mar]). The news reports say that the subsequent explosion destroyed a Starbucks and about two blocks of the city. They don’t say whether the owners of this restaurant had anything to do with the fire. But we do know that this store, like many other Taco Del Mar restaurants, was not making money. I am writing this message to other franchises that are loosing everything while running a Taco Del Mar. If you are considering some crazy notion of burning down your location to collect insurance money, PLEASE DON’T DO IT!

A lot of us on this forum know how frustrating it is trying to dig your way out of a loosing Taco Del Mar restaurant. Landlords want their lease money; the bank wants their loan payments; Sysco, Coke, and other vendors want their money too. And, of course, Taco Del Mar wants their royalties and a little extra money on the side too. It’s enough to make you pull your hair out. It hasn’t been easy waking up from the financial nightmare that is Taco Del Mar, but those of us who got out did it legally. Talk to your creditors to make payment arrangements. Use the liquidated assets from your store to help pay off your debts. Maybe you can change your location into a more profitable independant restaurant. If you have to, file for bankruptcy and find some work that will keep you alive and help to pay off the debts.

It’s also wrong to try to get out of a Taco Del Mar restaurant that clearly isn’t working by convincing other people that it’s a profitable business investment. A couple of brothers in Seattle started doing this several years ago by way of franchising and look at what it’s done to the rest of us. The Taco Del Mar brand was born, but dozens and dozens of frarnchisees and their families have been destroyed in order to keep it alive.

So let's be more responsible than the Schmidt brothers were back in 1992. Arson isn't the answer to a getting out of Taco Del Mar. The right way out is to work together to stop Taco Del Mar Franchising Corp from hurting more people and bail ourselves out of this terrible company at the same time. Who will file the first lawsuit and stop Taco Del Mar?

on February 13th, 2008

Thank You!

Firstly, I would like to thank all the unsuccessful zees who are able to speak out about their situations. It's definitely unfortunate to hear about such painful experiences, yet admirable that they're willing to educate those people that are interested in a TDM franchise. I have been considering this franchise for over a month, and am glad that I found this site, as I'm now pursuing other opportunities. I feel as though I just saved a whole lot of money.

Once again, thank you!

on March 13th, 2008

Willing to use there name for the Seattle Post-Intelligencer

It looks like here is someone that is willing to use thier name.

http://www.bluemaumau.org/comment/31483/posting_fulled_lies

I dont understand why all the people against Taco Del Mar just give general statements and ask if anyone else is filing a law suit?

If they have grounds, why doesn't that person just file a law suit or at a minimum expose any facts about illegal activity? These comments without facts seems like slander.

Im suprised that Taco Del Mar has not sued those making the general comments. Then again, I guess you can not sue people unwilling say thier name.

Seems pretty shady to me.

on February 15th, 2008

Consider yourself blessed

that there are sites like BMM where people can write their stories. I am so happy this helped you make a decision not to buy a franchise like TDM. Now I know why the TDM lady next to our zee looked so unhappy. She was a great person. But her and her husband work there day and night. She wanted someone to buy her TDM. The food is good and we bought lunch and dinner there many times. Hold on to your money and go out and prosper. Franchising the way it is today without laws to protect the zees is not the way to go. Unless you know it is 110% honest. And that involves hours of research. Which many people don't know how to do. Many here would say pay for advice. (Since there is no other way now I would have to agree with them.) You are one of the lucky ones.

on March 14th, 2008

Just interested

Were you a first generation zee or second or third?

on March 14th, 2008

Have you guys read this article......

Here is the link:
http://www.nrn.com/article.aspx?keyword=&menu_id=-1&id=348092

I find it interesting that TDM just blames all this on a few people out there and really most of the franchisees are doing fine. They also blame the decrease in sales on the small price increase done while ago. Does anyone agree with this? How about the non-stop changing of the different logos, they change in menu boards and menu items? Hey TDM franchisees, how are those Cabo Salads going? Selling a lot of those? Bet you love ordering and prepping that lettuce everyday just to throw the most of it away. You think corporate will ever listen to you? Stick to a menu board that is easy to understand, go back to the food that made you popular, the burritos and fish tacos. Promote the hell out of the freshness and the TDM experience. Not this "delicious is our middle name" crap. Go back to what people loved and should have never been changed, "Find your inner Baja" with the fun commercials that made people laugh. What happened to this company, really sad. This is what caused sales to go down, people couldn't figure out what TDM was about anymore and couldn't relate to the concept. Hopefully things will change, but it is going to take many more franchisees admitting that they are not making it. Do not be ashamed of your store barely skimping by each month, if you don't say anything, before you know it will be too late. Hey, what happened to the TV commercials, sill paying that fee though huh?

on March 14th, 2008

Still considering

U am also considering this franchise.  I am a current Subway franchisee and would have a very low point of entry in a market demographic with no Mexican segment for 8 miles.  I have excellent demographics, car counts and visability.  Does the concept stand a chance if the point of entry is right?  Is the product still good and the price points still reasonable?  Are the true issues distribution, skimming and negociated product pricing?  I would hope with the proper entry point financially and a captive market that the product would be able to sustain the low overhead.  Am I overly optimistic?

Posted by fishhead on March 15th, 2008

Help!!!!!!!!!!!!!!!!!!!!!!!! Up here in Vernon B.C.

Dejavu Were having the same problems up here and have lost our home our credit and are holding on by our finger nails call me at 250-550-5163 if you want to talk more thanks Dewayne Fisher.

on February 18th, 2008

enuff said

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20080217/vancouver_blast_080217/20080217?hub=Canada

on February 18th, 2008

More Truths about Taco Del Mar

Thank you Mr. Blue Maumau,

...Both for addressing copyright issues and for facilitating this discussion. I wish that more former franchisees and Master Developers had seen this thread and read Julie Bennett’s article sooner. Maybe we could have stopped Taco Del Mar Franchising Corp. from hurting anyone else. I was really impressed with Ms. Bennett and the article that she wrote. Thank you for the hard work and research that you put into your article.

Like a lot of other people here I saw the problems that franchisees had with high food costs. But I also met a lot of Master Developers who thought that they were going to open all of these stores, help the franchisees with the initial build out, and then James Schmidt, David Huether, and their wonderful management team would help to manage the ongoing marketing effort and the operations of the stores. Both parties would equally split the royalty fees that the franchisees were paying on their revenues. In fact, Taco Del Mar used to have a Venn diagram in their franchising manuals outlining that concept. We'd all work together and create something truly amazing... or at least “really gnarly” to borrow from the TDM vernacular.

What the MDs and franchisees didn't know was that Taco Del Mar Franchising Corp. and its group of executives receives money from its vendors for every purchase that a franchisee needs to run his or her store. Need to buy new shirts and uniforms for your employees? TDMFC takes a cut. Want to buy a radio, print, or TV ad in your market? TDMFC takes half of the media buyers' fees and all the perks from their ad agency. Of course you need a Wand system for your store. Guess what? TDMFC takes a cut. Have you run out of ground beef and need to order some from Sysco? TDMFC takes a cut. And your Coke fountain... oh yes, TDMFC takes a cut from them too. Some of these vendors, like Coke, provide this money to many of their large restaurant chain customers to help with advertising and promotions for their products. But at Taco Del Mar, executives tell the vendors to give us this money and "we'll take care of it". No one hears about this. Not the franchisees. Not the Master Developers.

But, make no illusions, each of these "kickbacks" drive up your costs Mr. and Mrs. Franchisee. It's why the corporate fat cats in Seattle look like they're doing great while everyone else is running a rat race just to stay alive. That includes the Master Developers. They meet every quarter to play "who's opening more stores this meeting" and to talk about how great they’re doing. And if you're not opening new stores then something must be wrong with you. MDs need to keep opening new stores because they can't live off of money from the existing stores. After all, how are existing franchisees supposed to pay their royalties when they have nothing left? It all went to Taco Del Mar Franchising Corp through the vendors. Some of the MDs like it this way because they’re as ruthless as TDMFC and plan on getting out before the house of cards collapses, but many of them follow the pack because most of they money they get to live off of comes from new franchise fees. The Master Developers have already paid Taco Del Mar Franchising Corp. hundreds of thousands, if not millions, of dollars for the rights to their territory and they need to see an ROI too. MDs, do you want your royalty money to help support your franchisees or at least make a living? Then you'd better figure out a way to collect your royalties from franchisees that are drowning in operating costs (a.k.a. payments to TDMFC). Good luck.... oh, and if you do collect them, Taco Del Mar Franchising Corp gets a cut of those royalties too.

Yes, the odds are stacked against all of you. But you'd never know it listening to "franchisees" like Jeff Masterjohn make nice little speeches telling you how much money he made as a multi-unit franchisee. One day you might be like him too. But that's only if you're able to buy into Conrad and Barry, the Delaware holding company that controls Taco Del Mar Franchising Corp. Is there a list of the directors from both of these companies? I’m pretty sure that Jeff was on that list, but I'd double check that fact now. One thing is for sure, there are a few people in the Taco Del Mar world who aren't what they appear to be. But I will say that they make very nice speeches that look great in an article.

So here’s the big question, have any of these people done anything illegal? I don’t know. Have they done anything immoral or unethical? That’s quite likely. But I want to know who’s got some really good attorneys, private investigators, or forensic accountants to look into this further? Maybe we can find out what’s happening and save someone else the trouble of losing their retirement savings, their home equity, their kids’ college funds, or their day job for “the opportunity” to be a Taco Del Mar Franchisee or Master Developer.

on November 1st, 2007

Has Anyone Had A Good TDM Franchise Experience???

The question I would like to ask:

Is anyone a happy TDM Franchisee? Is anyone making money? It is disturbing that I haven't seen one positive post on this website. I have been at it for 3+ years and am about ready to throw in the towel. I have never made money and I have never paid myself a salary. I have lost more money than I care to admit. 3 years of losing thousands of dollars every month. It sounds like this is a common experience by many, especially in new territories.

It is hard to believe that people are still buying new franchises. A few phone calls made to about any place outside Seattle would bring an earful of horror stories.

I would have a lot more respect for Taco Del Mar if they imposed a temporary suspension of selling new franchises until they figured out how to get new franchises TO AT LEAST break-even. The failure rate of new franchises is very, very high. I would guess in some markets it is 50-70%. Of the ones that survive, few are turning a profit. If I was a Taco Del Mar employee or a Master Developer, I could not in good conscious sell a TDM franchise. It is really hard to comprehend that with all the problems with this brand, that they are selling barb-q franchises??

I truly wish we were all happy and making money. I truly wish that we good give great references to prospective TDM franchisees. I truly wish we felt optomistic about the future. I don't even get the sense that Taco Del Mar and it's MDs are optomistic about the future. What a waste.

on December 28th, 2007

Re: Willing to use there name for the Seattle Post-Intelligencer

Hello "Seems pretty shady to me" spend the money to open a TDM.. oh yah then lose all of it and deal with the MD's and James and Co.. then you will see.. even if we did want to sue .. what do they have?? they are all immune from any $$ exposure...the best bet is to keep then from opening more.

on February 18th, 2008

Taco del Mar Uniform Franchise Offering Circular

TACO DEL MAR FRANCHISING CORP Caleasi listing has information you could use to base your story on. http://134.186.208.228/caleasi/search.asp?TASKNAME=xsearchFilings

http://www.ca.gov/

TIF

 

Posted by Truth in Franchising on September 4th, 2007

You can't sue people for telling their experiences with TDM

I agree that many of the accusations are not backed up very well, posting on here and trying to explain every little detail is difficult. Many people have had terrible experiences with this company and have lost a lot of money. There is nothing untrue about this. You can not sue people or even threaten to sue because people are talking about their experiences. Facts are facts. It is too bad that instead of owners loosing everything they had and more invested in their stores that corporate couldn't have stepped in and helped find buyers or even bought the stores out and assumed ownership until a new owner was found. But, that would mean that it was just the owner that was the problem with the store, maybe that is why this was never done? In corporate's own words, they admitted that some of the problems were that some bad locations were chosen. Last time I checked, corporate was the final say on the location and in many locations had the location picked before they even had a franchisee for the space.

on February 19th, 2008

Taco Del Mar

As the publisher of restaurantchains.net I can attest to the fact they are the fastest grower in the Mexican fast casual segment during the recent year. It's nearly impossible to have hyper-growth without franchisees who stay in business.

on September 4th, 2007

April Taco Del Mar Posting

Someone posted several comments back in April on Taco Del Mar, wanting them labeled as a churner (see our Franchise wikipedia for a definition of churning.) The individual was asked for facts on the accusation but didn't provide much.

In a positive way, Taco Del Mar is one of the few franchisors bold enough to tell buyers what their average earnings are for their units. Most franchisors will not.

Franchisors Who Provide Earnings Claims

Note: The 2003 UFOC registered California (pdf - thanks Bob) does not have an earnings claim but UFOC.com says that Taco Del Mar has one as of 4/26/07.

on September 4th, 2007

I disagree.

Guest quote: "Please do yourself a favor and work for someone else for a living and let the people who know how to run and make money in the restaurant business do our thing."

The point of franchising, IMHO (and i'm sure i'll get flamed for this), is to leverage the branding, operational expertise and proven model of a system so that one doesn't have to have that expertise and "know how to run and make money in the restaurant business" beforehand in order to start and operate the business successfully. For those with the spirit and determination to run their own business but lack the business idea of "what" to own/run, franchising looks like a reasonable hedge-bet -- or so i thought when i was in the stage of investigating a franchise business. I knew beforehand that I was an intelligent individual but lacked the skills/experience to run my own business - partnering with a franchise system provided a level of comfort - or so i thought - knowing that i had experts behind me assisting me along the way.

The premise of franchising as marketed to the masses is that you don't need that "know how" - that is provided as part of the franchise agreement. You do need a brain, of course, and lots of determination. Somehow i doubt that all of those failed TDM zees were lacking both brain/determination. where there is smoke there is fire.

good luck being a successful TDM owner.

regards-
Sleep Tight

on February 20th, 2008

I'm happy for your success!!!

TDM is not the only franchise that is failing. I talked to one zee and listened to his problems. There are good zors and bad zors. If most of the stores are failing the system is not working. In bad franchises they should not only point one finger at the company but all their fingers and toes. Too many bad zors out there. The zee I talked to was a TDM!!! Many sad stories.

on February 20th, 2008

Supply lines, advertising discounts, systems creation and equip

We get NO equipment discounts, done plenty of research on that one. We get charged just as much from Smith and Greene, Bargreen or any place on line. You get the best deals buying on closeout specials on E-bay, backed with warranties and everything. Advertising discounts, ummm... never got any discounts with that one. "System creation"??? "Delicious is our Middle Name" now that is a great slogan, whoever thought of that one deserves a freakin raise!!! Unless they have already been fired or left the company like so many others have. Supply Lines, I suppose you are talking about Sysco. I know other brand restaurant owners who get better pricing for their one location non-franchise concept. In fact, have you looked at Cash and Carry or Costco, same, if not better pricing. Yes, Sysco does deliver to you, how much was that extra deliver charge now??? You are right, I wish I never got involved with TDM, I wish I had left it to the blow hards such as yourself. Hope you continue to have success.

An UNsuccessful TDM Owner.

on February 21st, 2008

Give me a call

For 5 months I have heard about kickbacks going to me or others at TDM corporate. And to date not one person has called to tell me who and when this has ever happened. Some of these nameless writers say that I would take action against a franchisee that comes forward, but there has never been a case of me taking action against any franchisee. So this is all just name calling, and your attempt to hurt TDM and the people that are still working hard to make it successful, for as many of the franchisees as possible. You through out terms like ethical recruiting, and kickbacks as if we have done un-ethical recruiting or taken kickbacks, but what are the examples of this? And your pathetic attacks of Jeff Masterjohn as if he has done something wrong or unethical, he is one of the most dedicated franchisees we have and works with anyone that reaches out to him for help for nothing except for his good nature, he has done more for the franchisees that you claim to be trying to help then any of these comments from you or many of the nameless commenter’s below. You have no shame, and I can guess why you failed at Taco Del Mar, but because you have no facts you will not call me and I will never be able to prove to you TDM is a good business run by dedicated people and there are risk to any investment, but the more you put into it in positive energy the more you get out of it. So go on and tell me how I don’t know what I am talking about but remember one thing you read the risk factors in the UFOC and thought you could make a go of it, and it didn’t work but that does not mean someone stole your money, it might mean that this time the risk for you was a bad one, but most people are making money and that is why we are opening more stores. So good luck in your efforts to convince people that we are crooks but remember not many people believe people that make nameless accusations. Get a life or at least an fact or two.

For the rest of you, if you want change or questions answered, just asked. Pick up the phone and call me. I return all my calls or e-mails, but you have nothing to state only empty accusations that are meaningless and chip away at a life hundreds of people are trying to make successful, please don’t waste my time or others, but I am here for serious discussions.

James Schmidt
CEO
Taco Del Mar
206-624-7060

on January 3rd, 2008

Kickbacks or "marketing money"

I think that the issue with the kickbacks is that TDM corporate calls it "marketing fund money". It is widely known that Sysco and Coke both give kickbacks. After speaking with other concept owners and Sysco Reps, they all say that giving kickbacks is common practice, usually anywhere from 5% to 10%, usually paid monthly or annually for the amount that had been ordered. Many times there are sports tickets and often airline tickets included too. So is this money that is given back to corporate the franchisee's money? I think that maybe this should be up to the franchisee's to decide. After being with other concepts where at the end of the year I recieved a check, sometimes close to 10 grand, I would have to say that most franchisees would rather have that in their hands, not in corporates. Imagine if all you franchisees had that money to do with what you wanted at the end of each year. Advertising, rent, christmas bonus, NEW EQUIPMENT, you name it. The franchisees are the ones spending the money, when you fall behind on payment, where does Sysco come knocking? This is money that should be delegated back to the individual franchisee. Corporate tells us that their books are open, that no one profits from that money. My question is, where or when was it decided that it would be handled that way, and can that be changed?

on January 4th, 2008

Company responses

The Internet has created a new PR environment, and one which is difficult for many companies to navigate. But you should hire a good firm which knows something about franchising, and let them earn their keep.

Pretending to post as a "Guest" who is "excited about the possibility" of being a franchisee in your system is a bit cheesy. But if you are going to do that, you should at least use the spell-check feature on your word processor.

on January 11th, 2008

ROI & Risk

I generally agree with your comments. I love the TDM concept as well, but you should be aware of the risks. If you are going to open one in Washington/Oregon, your chances for success are probably not bad. I would look into buying an existing store with a good location. If somebody is anxious to get out, you can buy a franchise for half of what it would cost to build one.

A TDM franchise outside of the Northwest is a whole different story. I would look at how many have failed in remote areas as a percentage of how many opened. If you fail, you lose your original investment plus you are on the hook for loans as well as the remaining term of your lease. Most of the contracts you sign will require personal guarantees, so that means your landlord can go after your house.

If you do decide to go ahead, make sure you have a LOT of working capital. My advice, be prepared to lose $4K per month per store for at least 2 years. You could break-even sooner or it may take longer. Typically, TDM stores have done well in the first 6 months and then sales cave.

Do yourself and your family a favor, talk to a lot of different franchisees. Depart from the TDM "gold" reference list and talk to franchisees in several different states. Talk to ones that have left the system.

Quite honestly, considering the time and money I have lost, I would not do it again. Many of us have had high hopes for Taco Del Mar that haven't been realized. Many of us have been killed financially.

Getting back to your comments. Yes TDM is a risk. I guess many of us didn't realize how big of a risk it was. I hope you do.

on January 11th, 2008

James' comments about this.

Well, I will tell you this. If all you say is true. It is truly a shame. I really do love TDM. I enjoy eating there with my family. My friends eat there. It scares me to death to think that I (I say I because this is my idea not my partners) could loose our entire savings account and all that we have worked so hard to achieve on a restaurant I simply enjoy eating at.
I guess what I have going for me is a great corporate attorney that will guide me in the best possible way. Plus your insight. I wasn't saying I wasn't hearing what you were saying but I guess that just puts it in a new perspective for me. I guess that answers my specific questions.
I would wonder what James' answer to all of this would be? And why you have not taken this with the exact experience to him for his reaction, if in fact you have not done so? This is after all his concept. His baby, if you will. I would think he would want and desire it to continue to grow and do well in all regions. He is, obviously the only one that can do so.
If the kickbacks need to be stopped them stop them. If the prices of the food needs to be negotiated then negotiate them. These do not seem that hard of issues to over come. Am I wrong? I would say as a restaurant they are doing a lot right. I know a ton of people that love TDM and eat there often. If what you are saying is true then it would seem there existence is at risk. Is it not?

on January 11th, 2008

Look at how many stores closed in Washington......

This is their home state and there have been mny stores closing in Washington. That should not be happening!!! Go talk to the ones selling, there is a real reason why they are. They might not ever tell you that since you are a possible buyer. Other concepts I have been a part of have never had such a huge amount of them that are on the verge of closing and bankruptcy. I would say that if your store is under $40k per month, you most likey are not making it. There are WAY more than just 6 angry franchisees. Do your research by calling as many of the stores as you can, not just the ones on the list they provide. It really makes me mad, as well as others I am sure when you say to just move on. This has destoyed many of us financially and been very hard on our families and people around us. Many of us are still dealing with the aftermath of things. It doesn't just end, it goes on and on! Your taking a risk, and when you fail, I will try to hold back the "We told you so". It is hard to sit back and watch corporate out there selling to more and more uninformed families that most likely will end up going through the same hell we have gone through.

on January 14th, 2008

This is just funny.....

I have looked at the list of names, I know I am not on it, wonder why?

"Does work need to be done on negotiating the price that TDM pays for food or are the kickbacks the real issue?" Ummmm... yeah! I get better prices at Costco and Cash and Carry!! Something a little wrong there? We have to charge what we do cause the food costs so much! TDM thinks if we just lower our prices, then all of a sudden the places will fill with happy customers, ha. Good luck getting them to "negociate" better prices. They wouldn't be able to get there money they need for advertising.

on January 14th, 2008

Re: A little chuckle

Do Yourself a Favor....

If I had to do it over again and I really wanted to do something in food, I would go with a proven concept. Subway for example, knows what they are doing. You will have a huge advantage on everything from lease negotiation to equipment cost to food cost. Build out Subway is usually significantly less than TDM. Per previous "Guest" comments, make a lot of calls and then judge for yourself. Call TDM and ask them how many stores have closed and then publish that number on this blog. I'm curious if they will answer truthfully or give you a B.S. line.

on January 18th, 2008

Taco Del Mar Experiences in Dallas/Fort Worth Area

I'm Darryl A. Thompson from Fort Worth, Texas. I opened a Taco Del Mar franchise in October 2006. The location was billed as being the best free standing site in all of Taco Del Mar at the time by a visiting TDM executive. I was located in the same building with a new Star Bucks at the entrance to a new Wal-Mart Super Center and Sam's and Lowes.

I closed the store after nine months of operation. I had to put an average of $5,000 a month into the store just to meet payroll and pay food costs and other bills. This was after an initial investment of approximately $270,000. I worked in the store 50-60 hours a week with no pay. My wife and I spent another 20 hours a week at home (again no pay) or in the community doing marketing or employee scheduling, paying bills, verifying hours for our payroll provider etc. I advertised in local newspapers, performed local store marketing, and held a burrito eating contest between local fire departments. These activities promoted the store and increased community awareness. I was on the front page of a local newspaper with distribution of over 30,000 twice.

In spite of these intense efforts to be successful the store was a failure. The food costs were close to 40% or higher. Other stores in the Dallas market had similiar food costs. Also, approximately 15-20 items were special order items. I was not informed of this until a week or two prior to opening. These items changed from month to month and had to be ordered from Sysco Seattle at increased costs and long lead times. The tracking process for these orders was largely manual and a source of frustration to obtain status and keep inventory levels adequate to support the store. As a result of long and unreliable lead times I had to maintain several weeks of stock at increased costs. These stocks had to be kept at home since there was limited space in the store. I took the lead in arranging several telecons among all the local franchisees and TDM corporate about this problem. We were repeatedly promised that the local Sysco Foods would start stocking these items when more stores came on line in the area. This never happened.

There was no routine site operational support and no routine monitoring and inspection of the store by TDM as I was informed there would be. Only after intense effort and negotiations with TDM did I finally obtain help from a TDM master developer from the Austin market. This was after I had been open over 6 months. As it turns out my operations were sound according to this expert and the store just needed a few minor tweakings such as keeping cups and other paperware products off the back counter. No help was provided on controlling food costs.

After several months of informing TDM Seattle and the Business Developer of my problems they finally provided help increasing my prices. I did the local market survey with our direct competitors and used TDM's belatedly developed ideal food costs software (this software was promised when I first opened) to increase my prices. Even with increased prices my food costs were still 35% to 36% and higher because Sysco prices increased as well as those from my local providers. I used local cheaper markets for much of my produce and used Sam's for proprietary paper products and cleaning supplies and a local Tortilla Company for much cheaper tortillas. Still my food costs were excessive.

The following stores have closed in the Dallas/Fort Worth market.

Hawk's Creek
520 Alta Mere Drive
Fort Worth, Tx 76108

Rockwall Town Center
2931 Ridge Road
Suite 130
Rockwall, TX

Ross Avenue
1001 Ross Avenue
Dallas, TX

Town Center
240 Denton Tap Road
Coppell, TX

Parkside Center
13901 Midway Road
Farmer's Branch, TX

Firewheel
5129 North Garland Avenue
Garland, TX

Wheaton, TX store was first one to open. I don't have address.

I don't have the details specific details on store closures nationwide but I estimate there have been 40 or more stores closed.

Thanks for asking for this information.

My phone number is 817 475 9557 cell.

Darryl A. Thompson

on October 5th, 2007

Responsible for Your Own Actions?

First posted at: http://www.bluemaumau.org/top_5_landmark_lawsuits_affecting_franchisees_2007

Will you ever understand that you are personally responsible for your actions?

The Truth Shall Set You Free!
TIF

on January 30th, 2008

Master Developer Program

Taco Del Mar has some good people in the organization and the basis of a decent concept. I have alway felt I have been treated fair by TDM and they are generally approachable and responsive. However, judging by the high rate of store failures and dismal sales (especially in new markets) their development strategy and Master Developer program has been unsuccessful. Rather than develop a concentration of stores in a regional fashion where franchisees could benefit from concentrated advertising and other economies of scale, TDM has chosen to sell franchises scattered throughout North America.

Also their selection of Master Developers has been poor. They have sold Master Developers agreements to people with no or limited food experience. They have also sold Master Developer agreements to people that were unfamiliar with their territories so that had no idea of the markets or development costs. Taco Del Mar also has provided little or no supervision of Master Developers or their franchisees. One of the biggest reason for store failures is that Master Developers selected sites that had no chance of succeeding. Master Developers also have provided no or limited supervision of their stores in many cases, leading to substandard stores that have affected the brand in the surrounding area.

So why has TDM and their Master Developers have had such a cavalier approach to selecting franchisees and sites? Because they have no risk. The franchisee puts the capital at risk, eats the negative cash flow, and assumes personal liability on the loans and leases. If a store fails, a franchisees life is ruined but TDM and the MDs feel very little pain. Someone has to have enough brains to realize that this is, at best, a short term strategy. To date, the UFOCs have shown decent growth and modest store closures/transfers, but the next UFOC??? Also, the references outside of the Northwest??

on October 15th, 2007

The posting is fulled with lies

No one lost money in Boston but me, so you can correct that fact. There is no proof to the kickbacks, that are listed above, a media buyer that took half the fees for buying media give me a break, who and when? or just shut up about it. You have no shame. If you really want to help, quit posting lies and start working together to raise sales at TDM stores, because that is the only way this company or MD's get paid is from Royalties and fees so we are all in the same boat. There has not been one credible example of kickbacks ever brought to the attention of an attorney, posted here or any one else, that has come to my attention. If we were getting kickbacks and it was proven then franchisees would get money back, we disclose we do not get kickback so if we took them, then prove it and money will be returned, and then you could really be helping instead of just a posting liar. But you being this way helps me understand why you fail as a business owner. You work hard and tell the truth and you have a chance in this life, you spend your time lying and complaining and we can see where it has taken you.

If you want to call me and discuses this further please do.

206.624.7060

James Schmidt

on January 31st, 2008

Rebranding of Taco Del Mar

You sure have a lot of inside information which is great; but, what do you think about Taco Del Mar's rebranding effects?? This month, they are rolling out a new name change from Taco Del Mar to Mondo's...

Also, I think Kevin Hanson is a great guy; however, James' and David blame a lot of the store closures on "bad" locations, which you and I know that there were other issues as well, but all of these locations were approved by Kevin Hansen since he was VP of Store Development....I am at a loss, if he was unsuccessful in this capacity, he sure will struggle as the new president and COO of Taco Del Mar or Mondos!

They still have a long way to go.....but I am willing to bet that 60 stores will close in 08'..

on December 11th, 2007

The truth about Taco Del Mar...

... at least in my opinion.

You won't get a name from me, but I saw enough "of the inside" of the company to decide that I really didn't like what was happening any more than the current franchisees who e-mailed you, Dan. Can you share with us what claims have come up so far so that I can give you information that is relevant to the story that you are writing? I think that enough people have been burned by this company that my comments are reasonably anonymous here.

Looking back on my time with Taco Del Mar makes me wonder how the Enron people felt before that whole situation became public. I don't know if some of the people at TDM are as bad as Ken Lay and Jeff Fastow so maybe that's not the best analogy. But reading some of the postings on this bulletin board about franchisees who have lost so much money makes me really sick. I can't tell you how ashamed I am to have been a part of Taco Del Mar. I really hope that somehow helping you with this article is some kind of way to apologize to the franchisees.

So, Dan, what do you want to know?

on October 20th, 2007

help

someone please do something about food cost.

we just got a message today that Sysco is going to start charging a fee based on order size. $75 for orders between $500 - $700 and $50 for orders between $700 and $899.

That means on Jan 1 my food cost will increase 10%. I know most others fall into the same window since we all have similar sales.

The only thing that matters in the process is food cost. Mr Nelson (a former Sysco employee) needs to work some overtime to offset this cost. The entire TDM system is broken. Stores can't operate with 45% food cost (if we are lucky) and 4K a week in sales.

I'm going to have to start picking up my own food at will call to save money. I'll probably have to start charging $10 per burrito to hit numbers. Please tell me that my franchisor is doing something about this.

on December 13th, 2007

The wrong wat to close at Taco Del Mar

I want to know how you are "WATCHING" TDM corp executives pocket tens of thousands of dollars? If you have a way proving it to the rest of us, please enlighten us. If not, quit making false accusations. Stand up for your lack of business expierence and let the blame fall where it should, on the person that chose to get into a business they must have not know enought about. I would guess with the amount of complaining that goes on on this website, if it wasn't TDM, it would been what ever company you chose to invest in. As a successful franchisee I am tired of hearing about the "10 hour days, 7 days a week and still failing" comments I hear. Have you ever thought that the problem with the restaurant isn't the company 1000's of miles away but the operator that is in it 70 hours a week? In some cases it is the owner who is running the customers away with thier lack of personality in pure inability to operate and restaurant. I have closed locations in the past with TDM and other companies and not once thought of blaming the franchisor for the location "I" chose to open in or the fact that the company wasn't well known and therefore didn't stand much chance of competing with local well know establishments. Come on people, look inside and quit being bitter with you lack of sound business choices.

on February 14th, 2008

This is getting ridiculous

To the Stockholders of Taco Del Mar:

I think that this has gone beyond a few pissed off franchisees. You need to figure out how franchisees can make a profit (or at least break even). Any prospective franchisee who does a google search and sees all the negative feedback from this and other websites is going to erase Taco Del Mar off their list of possible investments and go with Subway or another proven concept.

It is a good step getting rid of rats like Neal Hollingsworth, who lied to me and several other franchisees.

on December 17th, 2007

Thin margins

Guest writes: TDM only take’s 7% of the gross sales with ad contribution, you take the rest. So take all the blame yourself for your failures excluding that 7% and move on.

Leaving aside chain-specific discussion, it is important to remember that in the restaurant business margins are razor-thin. So a concept which may be profitable as an independent operation may not be profitable as a franchised operation.

As with any franchise, the question is whether payment of the initial and ongoing fees result in a positive return on investment.

In other words: is the franchisor earning its keep?

The thinner the margin, the more important this question becomes.

on March 13th, 2008