Tempest in a Taco

Three look-alike restaurant chains slug it out to see who will be número uno in Mexican fast food.

You’re giving away the store!” yells Mike Stehling as he supervises my work assembling tacos at the double drive-through window at TaCasita #1 in San Antonio. “You’re putting too much cheese on those tacos.” Mike watches nervously as I get in the way of the four quick-fingered girls who process more than five hundred take-out orders a day in an average of ninety seconds an order. “You weren’t supposed to put guacamole on those chicken fajitas,” Mike says with a sigh. “Let’s go sit down before you drive away all of my customers.”

Mike had invited me to spend a few minutes bungling orders at his Mexican-food emporium to show me the ingredients that go into the success of patio dining. One of the hottest concepts in the $60-billion-a-year fast-food industry. The term “patio dining” may not be in your active vocabulary, but you have almost certainly eaten at or at least caught a glimpse of a patio restaurant. Their candy-pink or turquoise paint jobs glowing, these relentlessly cheery dining establishments stand out amid battalions of competitors. They have brought genuine Tex-Mex cooking to fast-food land, combining cafeteria convenience, margaritas, and a fantasy south-of-the-border atmosphere in a package that customers find irresistible.

If anyone should know about patio dining, it is Mike Stehling, because he and his brother Felix pioneered the idea. Their success, though, has been a mixed blessing. It has brought the Stehlings financial gain, but it has also attracted both the welcome and unwelcome attention of Texas’ savviest restaurateurs. In addition, it has generated two lawsuits having to do with copying and restraint of trade. Mike Stehling isn’t involved in the legal combat, but he does know how it all started.

Mike and Felix came into the Mexican-food business by way of investment, not ancestry. The brothers grew up in Fredericksburg, two of eleven children born to German Catholic parents who operated a men’s clothing store. A handful of Stehling children moved to San Antonio to attend St. Mary’s University and settled down to live in the Alamo City. In 1978 Mike and Felix decided to start a restaurant on the site on an old Dairy Queen at Hildebrand and San Pedro, north of downtown. After interviewing a number of cooks and sampling their wares, the two brothers chose Margie Lopez Abonce, a pleasant, heavy-set woman who at the time had fifteen years’ experience in the San Antonio restaurant business. “I just prepared food for Mike and Felix like I made for my family,” Margie explained. “Enchiladas, carne guisada—and they liked it.”

Others in San Antonio liked Margie’s recipes as well. The restaurant, which Mike and Felix named Taco Cabana, became successful beyond the Stehlings’ most optimistic projections, as students from Trinity University, truck drivers, families, off-duty policemen, and late-night partiers filled the wooden picnic tables in the unornamented semi-enclosed patio 24 hours a day. Some came for the enchiladas, the spicy borracho beans, and the weekend menudo, while others ordered food as an excuse to indulge in massive amounts of freshly made pico de gallo, the restaurant’s hallmark. With all dinner plates priced under $4 and bean-and-cheese tacos for 69 cents, Mexican-food fanatics could afford to come back to the restaurant again and again—and bring the family.

About three years after opening the restaurant, the brothers opened a second, at the corner of Bandera and Wurzback. This one built on the formidable success of the original by incorporating the relaxed, beer-drinking comfort of a San Antonio icehouse. In contrast to the forgettable wood paneling of the original restaurant, pink paint and neon trim decorated the building. A glass-and-wood entrance flowed comfortably to the country, which offered customers a display of iced-down bottled drinks while they consulted the hand-painted menu board listing the numbered food items—with lowest priced items first. The brightly tiled kitchen area was open to show workers fixing homemade tortillas and cooking fajitas on the huge grill as others busily prepared take-out orders for the double drive-through windows.

After customers placed their orders and picked up their drinks, which in the new restaurant included beer and margaritas, they made their way to a freestanding condiment bar piled high with chopped cilantro, onions, peppers, and salsa. Piñatas, puppets, and pastoral murals of campesinos set a festive mood inside, and glass doors painted with palm trees and taco-munching monkeys led to the outdoor seating areas. The doors replaced the canvas sheeting of the first Taco Cabana and had the advantage of being weathertight. The exterior patio area was expanded and semi-shielded from the busy intersection by strategically placed shrubbery. “We were the first ones to build a dining area like this,” says Mike, drinking coffee under the cedar-pole roof of the enclosed patio. “People really seemed to like the fiesta-ish colors.”

The Stehling brothers replicated the formula of the second restaurant in seven other locations in San Antonio, Houston, and Austin over the next three years. Taco Cabana’s success continued as sales at each outlet averaged well in excess of $1 million per year, a figure comparable with sales at a typical McDonald’s, the top-grossing fast-food chain in America.

It wasn’t long before others in the notoriously competitive restaurant business noticed Taco Cabana. In 1984 Houston restaurant developer Marno McDermott, the founder of Chi-Chi’s and then the chairman of the board of Fuddruckers, approached the Stehlings with and offer to take Taco Cabana nationwide. McDermott had a reputation in the restaurant business as a manager with a sharp eye for a good concept and the financial muscle to act quickly on his business hunches. But the Stehling brothers did not feel ready at that point to go national, and they refused McDermott’s proposition.

The idea of creating a national chain wasn’t completely devoid of appeal, though, especially to Felix Stehling. As soft-spoken Mike explains, “It seemed like Felix wanted to open up a thousand restaurants or something. It was just a little too much for me.” The brothers decided to go their own ways in the fall of 1986. Felix kept five restaurants

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