Something stops Clay Dover cold as he strolls behind the restaurant’s counter. The CEO of Velvet Taco has been all smiles and high fives since he entered the chain’s location in the Grandscape shopping center, amid the suburban sprawl north of Dallas. But now, staring at a few chicken strips in a bin under a heat lamp, he cuts off his friendly patter midsentence and pulls out one of the little brown hunks. He turns it over in his hand, tears it apart, takes a bite, and throws the rest in the trash with a faint trace of a pucker on his face. He’s not going to call anyone out on the spot, but he’s clearly not pleased.
Dover happens to be one of the world’s leading experts on chicken strips. As a former executive with Raising Cane’s, a Plano-based restaurant chain whose entire menu revolves around chicken strips, he knows instantly whether they’ve been made with tenderloins, a narrow cut found on the underside of the breast—“It’s the filet of chicken,” he says—or from an oversized breast that’s been sliced. He can detect whether a strip is crispy on the outside and moist on the inside or has devolved into a bumpy slab of rubber.
Today the strips in question were too small and too bready, suggesting that the crew had been serving customers the better pieces out of a batch and leaving the remains too long under the heater. The chicken didn’t pull apart with the telltale ease of a fresh tender. “Thirty-five percent of the protein in our tacos has chicken tenders in it,” he explains. “So if it’s not hot and juicy on the inside, if it’s not perfect—if you screw up the chicken, you’re done.”
Velvet Taco, which launched in Dallas thirteen years ago and now runs 46 locations in seven states, numbers among a handful of chains with the potential to redefine what a fast-food taco looks and tastes like. Sixty-plus years after Taco Bell turned a regional staple into a cheesy drive-through treat, there has yet to emerge a serious challenger with national reach, besides Chipotle, where tacos are a menu afterthought. But Velvet faces stiff competition for that prize position, and nowhere more than at home in Texas.
A few days after Dover’s Grandscape chicken-strip discovery and 220 miles south, Mike Rypka pulls on a fashionable knit blazer over his black T-shirt and heads into a conference room at the headquarters of Torchy’s Tacos, in East Austin. It’s headshot day at the chain Rypka founded in an Austin food trailer, in 2006, and which now operates 127 locations in fourteen states. “Sometimes I have to look professional,” he mutters, before stepping in front of the camera and transforming instantly from a 48-year-old tattooed dude into a corporate executive with thousands of employees.
Torchy’s started as the kind of lovably quirky local outfit whose devoted followers treat it like an extension of their personalities. But as the chain conquered city after city, it began to mirror the experience of a beloved local band that signs with a major label and lands a radio hit only to see its fans cry “sellout.” Rypka at one point stepped aside to make room for a seasoned CEO, but then he stepped back in to lead a changed company—one that’s poised to become a household name in every part of the country.
In phrasing that many taqueros might take umbrage at, Velvet’s and Torchy’s offerings have been described as “elevated” takes on the taco. What that means exactly differs quite a bit between the two chains, but each offers creative combinations of ingredients and an irreverent brand identity that trades on hedonism. Both have taken large investments—hundreds of millions of dollars—from coastal private-equity firms aiming to grow them into enormous publicly traded companies.
Mexican restaurants are on a tear in the U.S., recording some $50 billion in sales in 2022 and growing by more than 9 percent annually, far outpacing the overall economy, according to food-service consultancy Technomic. Meanwhile, Latinos have grown into the second-largest ethnic group in the country, accounting for roughly 20 percent of the population (and double that in Texas, where they constitute the largest ethnic group). As the U.S. absorbs the effects of changing demographics, opportunities for multiple national taco chains will only increase.
To be sure, other players are scrambling to claim a piece of that emerging mega industry—call it Big Taco—but Velvet and Torchy’s share an important advantage in being headquartered in Dallas and Austin, two of the best places anywhere for building food brands. “Both companies are expected to grow much faster than their competitive set,” says David Henkes, a senior principal with Technomic. It’s not surprising that the future of the taco business is being invented in Texas, but the reason has less to do with the state’s Mexican heritage and 1,200-mile international border and more to do with its proclivity for shrewd business.
Turning tacos into cash has been a Texas tradition since the late nineteenth century. Though tortillas emerged as far back as 10,000 BC, it wasn’t until the eighteenth century, according to the prevailing theory, that a stuffed tortilla became a “taco”—a word that Mexican silver miners also used to describe the little explosive paper-and-gunpowder wraps that they stuck in rock walls. When a group of women who came to be known as the Chili Queens of San Antonio started selling food from pushcarts and colorful stalls in the city’s plazas in or near the 1880s, they ushered in a blending of Mexican and American flavors that grew into Tex-Mex cuisine. Among the dishes that took off as a result—chili con carne, enchiladas, tamales—the taco was the most convenient.
It took a Californian, though, to build the first big brand around the taco. Into a crisp-fried tortilla, Taco Bell founder Glen Bell essentially stuffed a deconstructed cheeseburger—ground beef, iceberg lettuce, and shredded cheese. It was 1962. McDonald’s had revolutionized restaurants just a few years earlier with a quick-service concept that Bell adopted for his chain. By 1978, Taco Bell had nearly one thousand locations—including stores throughout Texas—thanks to an aggressive franchising model also borrowed from McDonald’s. With Mexican food still considered somewhat exotic in much of the United States, Taco Bell didn’t face as much competition as its burger brethren. But after it helped usher tacos into the mainstream, the differences between its food and that of mom-and-pop taquerias suggested an enormous opportunity to build something fresher and more authentic.
Enter Felix Stehling, the owner of a bar called the Crystal Pistol, who opened the first Taco Cabana in a decommissioned Dairy Queen in San Antonio in 1978. While Taco Bell emphasized assembly-line speed and precooked ingredients, Taco Cabana offered house-made tortillas, sizzling fajita plates, and a salsa bar. Taco Cabana’s success prompted a Minnesota entrepreneur to copy its formula almost exactly, in a Houston-based chain called Two Pesos. The resulting trademark lawsuit went all the way to the U.S. Supreme Court, in 1992. Taco Cabana prevailed and eventually bought Two Pesos. But after Stehling handed the CEO reins to a former Fuddruckers executive, the emphasis on fresh ingredients began to slip, and ultimately, so did sales. The chain, which had at one point expanded to seven states, has 149 locations today, all but six of them in Texas.
As Taco Cabana’s fortunes waned, a new entrant called Chipotle was rising in Colorado with a message about ethically sourced ingredients and an investment from McDonald’s. Chipotle was the first Taco Bell challenger to take a serious bite out of the market. By the time it went public in 2006, the chain had nearly five hundred locations in 21 states. Today it has more than three thousand, compared with Taco Bell’s eight thousand, and hauled in about $10 billion in 2023. By emphasizing the quality and freshness of its food, Chipotle popularized the fast-casual dining concept and ignited an industry revolution, an upscaling of fast food without sacrificing the “fast.” Workers chopped onions and lettuce by hand every day. Customers could see raw chicken being grilled on a flattop in the back of the kitchen. Some Chipotle items—such as carnitas and barbacoa—are prepared in a central kitchen and show up in big plastic bags, but none of it arrives frozen.
Amid the stampede of restaurant concepts that then attempted to re-create the Chipotle phenomenon in countless other formats in the first two decades of this century—burgers, grain bowls, pizzas, salads, sandwiches—Shake Shack stood out. Not only did the chain started by New York fine-dining impresario Danny Meyer create a better burger—a melty pile of guilty pleasures packaged in a spongy potato roll—but it charged two or three times as much as McDonald’s for a meal. While McDonald’s and Chipotle report some $3 million in annual sales per location, Shake Shack pulls in $4 million or more.
Shake Shack also showed how an aggressive private-equity investment could grow a restaurant brand as if it were a tech firm. Leonard Green & Partners, based in Los Angeles, had funded the expansion of other companies, such as the Container Store, based in the Dallas suburb of Coppell. It invested in Shake Shack in 2012, when the company operated only a handful of restaurants, and took it public less than three years later, with 63 locations. By then the goal for investors had shifted from finding the next Chipotle to finding the next Shake Shack—and it did not go unnoticed that in the taco space, there were fewer large competitors than in burgers.
Taco Bell delivered lower annual sales per location—about $1.6 million—than burger chains. And as much as Chipotle had changed the game, its menu emphasized burritos, not tacos. Meanwhile tacos were becoming a national obsession, with tiny trailers turning out Mexican-style street tacos, Netflix commissioning taco shows, and one storied magazine even
hiring a dedicated taco editor (ahem, Texas Monthly; ahem, the James Beard Award–winning José R. Ralat).
The door was open for a new taco giant—if it had a novel concept.
There may be no metro area in America with more headquarters of mass-market restaurant chains than Dallas–Fort Worth (though Orlando offers stiff competition). It only makes sense, considering DFW’s low $7.25 minimum wage and dearth of natural or political barriers to suburban development. Chili’s, Cici’s, Which Wich, Wingstop—Big D dining concepts go on and on, their towering signs punctuating the view from North Texas highways while mirrored office buildings just beyond house their executive suites. Before Clay Dover took over as the CEO of Velvet Taco, the company was run by its founder, Randy DeWitt, among the most prolific Dallas restaurateurs.
A former commercial real estate salesman who developed strip centers around Walmarts and other national retailers, DeWitt has arguably passed even the late, legendary Norman Brinker as a restaurant savant. (Brinker brought the world Bennigan’s and Steak and Ale—brands that not only created the casual-dining category and established Dallas’s dominance but also ushered in lasting innovations, such as the salad bar.)
DeWitt, 65 years old with an eye-crinkling smile and a flourishing head of politician hair, first fell in love with restaurants as a bartender in Waco while he was a student at Baylor University. He got his start in Dallas in the nineties with a coffee bar and then a seafood chain called Rockfish, whose expansion was financially backed by Brinker’s company, Brinker International. In 2005, DeWitt came up with the concept for a racy sports bar called Twin Peaks. The now infamous chain, he says, unapologetically, would “do everything better” than breastaurant pioneer Hooters, from its double entendre menu items to the acreage of skin displayed by its all-female waitstaff to the not-so-subtle innuendo in the brand name.
By 2013, Bloomberg described Twin Peaks as the fastest-growing chain in America, and DeWitt was an abundantly wealthy man. He moved a few years ago from exurban Frisco to exclusive Highland Park, where he rebuilt a home to include underground parking, a turret, and various Spanish-inspired architectural details that match those of the glittering Highland Park Village shopping plaza a few steps away.
As his empire took shape, DeWitt determined that his strengths lay in spinning up new restaurant concepts and getting them started, not in operating vast chains. So he built his company, Front Burner Restaurants, as a kind of incubator aimed at selling its creations once they proved viable. At the Ranch at Las Colinas, a Texas-themed restaurant he’d opened in Irving in 2008, he noticed the line cooks were experimenting with tacos at the end of each week, combining unexpected ingredients and feeding the staff. DeWitt began looking forward to tasting their latest creations: a rotisserie chicken taco one night, a shrimp-and-grits taco the next.
Light bulb. He’d seen plenty of new and old taquerias that focused on traditional street tacos or Tex-Mex flavors. But what if he could build a restaurant around the idea of the “liberated taco”? He originally planned to call the chain Taco Libre, but when that name turned out to have been taken by a caterer in California, he settled on Velvet Taco—“implying this is luxury and refined and something more upscale,” he says now. On the menu: a fried-oyster taco (since discontinued), a chicken tikka taco (still the chain’s best-seller), and a smashburger taco that one-ups Taco Bell’s deconstructed cheeseburger by reconstructing it.
For the logo, DeWitt chose a design that evoked a royal medallion. Or perhaps both the name and image slyly evoke a part of the female anatomy that Twin Peaks hadn’t. He has a hard time denying that. “We like playful names,” he says with a shrug, before insisting that any innuendo is accidental.
Clay Dover, boyish at 52, has the ambiguous logo embroidered into nearly every piece of clothing he owns, including shirts he wears out for date nights with his wife. He joined Velvet Taco in 2017, when it operated just four locations—in Dallas, Fort Worth, Houston, and Chicago. DeWitt had just sold a majority stake to a private equity group called L. Catterton that’s based in Greenwich, Connecticut, and affiliated with the family of Bernard Arnault, the French luxury kingpin who runs the LVMH conglomerate and regularly trades places with Elon Musk and Jeff Bezos as the world’s wealthiest person.
Before his seven years at Raising Cane’s, Dover led a Dallas restaurant group that owned a passel of once successful chains that had lost their edge—Norm Brinker creations Bennigan’s and Steak and Ale, along with steakhouse rivals Bonanza and Ponderosa. He’d met DeWitt, and they’d talked about working together (though not at Twin Peaks—“My wife would kill me,” Dover says), so he’d watched the early growth of Velvet Taco with great interest. The idea was fresh. It reflected a changing Dallas—and a changing country. The restaurant kept its purple neon lights on until four in the morning, to serve revelers in need of taco therapy before calling it a night. Dover spent a full day and night watching the scene at the Fort Worth location before he agreed to join. “It’s a rockin’ place,” he concluded.
Private equity investors tend to come in two flavors: the ones that strip a company for parts and sell them off and the ones that help a promising brand grow to the next stage before selling it to an industry giant or taking it public. Catterton is the latter, and in the five years that it was the majority owner of Velvet Taco, it expanded the chain from 4 locations to 31—before selling it in late 2021 to another private equity company, Leonard Green & Partners—the same $70 billion fund that took Shake Shack public in 2015.
Velvet’s headquarters occupies 10,000 square feet on the second floor of a building overlooking the Dallas North Tollway. There Dover oversees a staff of several dozen who work on everything from marketing campaigns to real estate development. The business end of a taco brand that aims to conquer the world looks more like a 2010s-era tech startup than your typical taqueria. In the Velvet office, a Ping-Pong table stands amid a row of cubicles near a mural of Marie Antoinette sensually eating a slice of the brand’s signature red velvet cake.
When Dover joined Velvet, he was the sole corporate-level employee; everyone else worked at one of the restaurants. Rather than tinkering with the menu, he took his first year to “understand the brand and what it means to consumers”—which involved developing a kind of handbook of catchy slogans meant to encapsulate the culture and principles of the workplace and the food the company hoped to offer. Out went “temple of the liberated taco,” for instance, and in came “tacos without borders,” a more sensitive phrasing that avoided the suggestion that the taco’s Mexican heritage was somehow holding it back.
Today the corporate team’s priorities are more tangible, including how to maintain quality standards at Velvet’s first airport outpost at Houston Hobby. Self-service touchscreen-order kiosks are another priority, but where to place them in a restaurant is a big debate. It’s one thing to figure out where they’ll get the most use, but will cost savings on labor come with trade-offs? How will average order size change? Will diners be more or less likely to explore the menu?
Perhaps most important, there’s the matter of where to expand. Dover plans for eight more locations in 2024, and then a growth acceleration in 2025. In September, Velvet opened its first restaurant in Florida—in Fort Lauderdale. Arizona is next. At some point they’ll likely expand to Southern California, home to the headquarters of both Chipotle and Taco Bell, along with a million tiny taco stands that measure up just fine against their Texas counterparts.
A team from Velvet that included DeWitt recently spent several days scouting SoCal locations and testing tacos from local chains. One restaurant served “almost exactly the same taco” as Velvet’s popular chicken tikka, DeWitt says with a nervy grin. “We know they were inspired by Velvet Taco. But what are you going to do? I came away reassured that if and when we go to that market—” he stops himself. “I shouldn’t say ‘if.’ When we go to that market, we are going to be very successful.”
On a busy weeknight near the southern end of the hypergentrified South Congress shopping district, in Austin, a steady stream of families and teenagers and a single pair of old South Austin hippie types fill the tables of an architecturally ambitious Torchy’s location designed to evoke a fifties roadside attraction. With a ridged metal roof and a series of bright red X-shaped support structures lining the front, the restaurant functions as something like a flagship location for Torchy’s—its most distinctive building, on Austin’s most iconic avenue. Runners scurry about delivering trays of tacos with names such as the Democrat (brisket, avocado, and onions on a corn tortilla), the Republican (jalapeño-cheddar sausage and pico on flour), the Tipsy Chick, and the Trailer Park, along with beers and ranch waters.
If Velvet Taco is the consummate Dallas chain—from its flashy branding to its corporate lineage—Torchy’s is as Austin as it gets. Rypka’s original Torchy’s trailer anchored a gravel lot just a few blocks from today’s flagship, on a then-scruffy stretch of South First Street across from a ramshackle botanica.
Rypka grew up in the Washington, D.C., suburbs amid the eighties punk scene—an only child of divorce whose dad, a celebrated photojournalist, was living on another continent. He picked up drugs and alcohol by age eight, developed a crack habit by fourteen, and spent two years in and out of rehab before getting clean at seventeen. Less than a year into community college, where he’d hoped to train to become a drug and alcohol counselor, Rypka woke up one night with a bolt of inspiration to drop out and become a chef.
By the time he finished culinary school a couple of years later, he knew all too well how rampant substance abuse was in professional kitchens, so he sought a straitlaced job with a company that ran in-house dining halls for large corporations. He started at the World Bank, in D.C., before working at Enron, in Houston (“I literally served the last supper there,” he says), and then at Dell, where he fell in love with Austin and decided to stay. Then an opportunity arose to repurpose a friend’s old barbecue trailer.
In 2006 food trucks were still a novel concept, but Rypka envisioned a path from those humble beginnings to a proper restaurant or even a small chain. He just needed the kind of bold flavors that make a lasting impression. From his World Bank days, where he’d run a food court with stations representing various global regions, he’d developed a wide palette of preparations to experiment with. And when he took a tour of Texas taco joints to assess the competition—in San Antonio, in the Rio Grande Valley, in Houston and Dallas and the east side of Austin—he saw his opportunity. “They were all good, but they were kind of in the same genre,” he says. “They weren’t doing anything to sort of flip it on its head.”
Authenticity wasn’t what he was after; he was a suburban East Coast white guy with a creative streak, so he built a menu accordingly. “Not everybody in the world uses serrano peppers the same way they use them in Central America,” he says, “so you can take ingredients like that and do fun things with them. Our playground is kind of limitless when it comes to food.” Each month Torchy’s offers a different limited-time special. Its first was the Trailer Park, which put hunks of fried chicken in the starring role, alongside pico de gallo and green chiles. Ordering it “trashy” style meant dousing it in queso, turning it into a celebration of gluttony that would make Guy Fieri proud. It was a home run that soon joined the regular menu.
The early years of Torchy’s coincided with the peak of Austin’s capitalizing on its “weird” image. The city hadn’t fully succumbed to the forces of Big Tech, and it still represented a kind of laid-back lifestyle mecca, even if the old-timers were already fearing a corporate takeover. Torchy’s fit right in, with graffiti-inspired bubble letters in the logo and a little red devil mascot flanked by the words “Damn Good.” Austin was a party town, and this was indulgent party food. With taco names like the since-discontinued Dirty Sanchez (a reference to . . . well, you can look it up), it also flirted with the bounds of decency (or gleefully trampled right over them).
After the taco trailer took off, Rypka opened a brick-and-mortar shop down the street, and then another location, and another, and by 2010 the chain had expanded to Dallas. Torchy’s hadn’t just drafted on Austin’s vibe; it had become something of an Austin icon itself, popular enough that even then-president Obama stopped at the South First restaurant on his way downtown from the airport before attending an event in 2016. The company had just opened its first location outside Texas, in Denver. The world awaited.
Rypka, who shaves his head and road trips in a lowrider Volkswagen bus, tells his story in a hexagonal sitting room that juts off the back of his three-story home built into the side of a steep slope above Lake Austin. In the past decade plus, the start-up boom that accompanied Austin’s explosive growth transcended tech and began to turn out trendy new consumer brands. Some of these have blown up into international icons—Kendra Scott, Tecovas, Yeti—but most of the restaurant chains born in the capital—including another beloved taco shop, Tacodeli—have remained local or regional cult phenomena.
In the far more populous Dallas–Fort Worth area, by contrast, where new chain eateries can draw from a large pool of back-office talent with deep industry experience, growing quickly by running a proven playbook is more readily achievable, even if the results don’t always inspire a passionate following.
As Torchy’s began to expand beyond Texas and exceeded forty restaurants, it needed money to fund its next phase. General Atlantic, a New York–based private equity group, bought “a significant minority stake” in 2017—and three years later added to its stake with a $400 million second investment. Among the first moves when GA came on board was to bring in the professionals—big-time executives with big-time experience who could turn Rypka’s promising little project into a global giant.
Rypka stepped aside, while G. J. Hart, who had most recently served as the CEO of California Pizza Kitchen, took over. Hart had made his name in the industry overseeing the expansion of Texas Roadhouse from $63 million to more than $1 billion in annual revenue. (Texas Roadhouse, alas, is not a Texas brand; it’s based in Louisville, Kentucky.) During Hart’s four years in charge, the Torchy’s restaurant count shot up from 45 to 96, even though the COVID-19 pandemic decimated the office lunch rush and dine-in traffic in general.
Meanwhile, Rypka, who had been eager for a break from the business, grew frustrated by what he regarded as the new management’s unforced errors. Some of the new expansion cities, he felt, were questionable choices. “They’d pick markets where Roadhouse did well,” he says. Shreveport, Louisiana. Wichita, Kansas. “But we’re not at all the same customer as Roadhouse—which is a pretty blue-collar, red-state type of deal. I mean, I’m not afraid to say that we’re a f—ing liberal brand. You know what I mean?”
The corporate playbook that might make sense when Torchy’s has hundreds of locations didn’t work for a brand that was still relatively unknown outside Texas and Colorado, Rypka reasoned. Bloomberg reported in early 2021 that the chain was exploring an initial public offering that would value it at $1 billion in its stock market debut. But by the end of that year, the IPO had failed to materialize, some of the new locations were underperforming, and the staff at headquarters had ballooned to nearly two hundred. Hart stepped down.
Tired of what he terms “farting around at the lake,” Rypka returned as CEO with a newfound energy and focus. The company needed to get scrappy and entrepreneurial again, and that was his comfort zone. “I always do better when things are a little bit on fire,” he says. He laid off 65 employees at headquarters, closed three restaurants (including the two in Wichita), and started upgrading some ingredients— making fresh tortillas in the restaurants, for example. Now, from a one-story, metal-sided headquarters building in East Austin, he’s back to fanning out across the country, this time aiming to expand to cities such as Atlanta, Chicago, Nashville—and his old haunt, D.C.
It’s hard not to notice that the founders of both Torchy’s and Velvet Taco are non-Hispanic white men. So are the industry-veteran CEOs each company hired. So was the founder of Taco Bell. And the founders of two long-established, Texas-based Taco Bell copycats: Abilene-born Taco Bueno and Fort Worth’s Taco Casa. And the founder of Irving-based Fuzzy’s Taco Shop, a fast-growing franchise that’s aimed at a lower-priced tier of the market than Torchy’s and Velvet. Add Chipotle and California-based Del Taco to the list, for that matter, and on down through the ranks of Big Taco giants and aspirants.
Even the founder of San Antonio–born Taco Cabana fit the Anglo profile—and if there’s one large city in Texas that ought to be the birthplace of a Latino-founded taco giant, it’s San Antonio. Taco Palenque, which began in Laredo and has started to spread north into other parts of Texas, is an exception [see sidebar], but so far, it’s still a regional play. (Its founder, Juan Francisco Ochoa Sr., also started California-based El Pollo Loco.)
The taco has become as much an American staple as pizza, so it’s not surprising that its mass-market brands reflect corporate America’s boardrooms more than the culture that gave rise to the food in the first place. As Texas Monthly’s taco editor, José R. Ralat, puts it, “I’m not going to say that so-and-so shouldn’t open a business because it might represent cultural appropriation. But it’s worth noting that a popular food is always going to attract the type of entrepreneurs who already have the wealth or connections to gain access to investor meetings or consultants. And who is that? Not an immigrant.”
Ralat notes that Taco Cabana might be the one chain that historically “got it right”—by which he means emphasizing fresh ingredients, at least at first. Some of its locations still do an excellent job, he maintains, such as the one near where he lives, in the Oak Cliff section of Dallas. But the chain’s history is a cautionary tale, as it eventually prioritized growth over maintaining its standards. It became a publicly traded company, beholden to shareholders above all. Then it was acquired by a large New York–based restaurant group, then spun off into another outfit, the Dallas-based Fiesta Restaurant Group. Over the past several years, Taco Cabana’s sales plunged 20 percent, and the chain closed 23 restaurants. Now it’s poised to grow again, but with a new risk factor.
Taco Cabana was purchased in 2021 by a company called Yadav Enterprises, a Northern California–based operator of hundreds of franchise locations of Denny’s, Jack in the Box, TGI Fridays, and a few other brands. Franchising is a risky business model but a common one in the fast-food industry. It can enable rapid expansion because the franchisees—independent operators who buy the rights to open locations—take on the financial burden of building out new markets. But no matter how stringent a chain makes the process and guidelines for its franchisees, it inevitably loses some control over quality and branding.
Franchising tends to work best with the simplest operations, such as Taco Bell—or more recently, Fuzzy’s, where a whopping 98 percent of its more than one hundred locations are franchises. Anil Yadav, the owner of Taco Cabana’s new parent company, announced that he hoped to expand the chain to one thousand locations all over the country—naturally, by franchising.
Both Velvet Taco’s Clay Dover and Torchy’s founder Mike Rypka say they understand the hard realities of the franchise model and vow to keep their chains growing at a more measured pace, with the companies owning every location they open—much as Shake Shack and Chipotle have done. “We’re going to keep it real tight and ‘core’ because we want to maintain the control,” Dover explains. “The details, the quality of the ingredients, the prep that goes into things ahead of time—it’s hard to go, ‘Hey, we’re just going to whip out fifty of these.’ ”
As Torchy’s and Velvet continue their national expansions, they will bump up against other challengers. Ohio-based Condado, for instance, has locations in several Midwest and Southeast states, with a creative-tacos concept that sits roughly at the culinary midpoint between those of Torchy’s and Velvet, with Korean gochujang sauce and Thai chiles mixed in among more traditional Mexican American flavors. Florida-based Capital Taco has begun selling franchises to operators in other states eager to serve its self-described “Tex-Mex” menu that oddly includes a cheesesteak taco and something called the South Beach Hot Chicken.
At some point, the word “taco” can become a questionable description of the items on these menus. Velvet, for instance, serves a chicken-and-waffle taco that involves fried chicken wrapped in, you guessed it, a waffle, topped with maple syrup; it makes Taco Bell’s Doritos Cheesy Gordita Crunch taco look like a Oaxacan street-food classic. “The tortilla is just the vessel,” Dover told me one afternoon over a tableful of his tacos. “You can do anything you want”—including, apparently, replacing the tortilla.
In any case, the caliber of investors and number of dollars that have backed Torchy’s and Velvet make it obvious to anyone in the restaurant industry that they’re onto something big. “Tacos Are Poised to Take Over Fast Casual,” the trade publication Restaurant Business declared last year. Can Torchy’s or Velvet ever equal Taco Bell’s 8,000 stores? Not a chance, say the leaders of both companies. The menus are simply too complicated to work in that many locations, because lower-traffic spots just wouldn’t be able to turn a profit—whereas Chipotle and Taco Bell can because they require far fewer ingredients and employees. But 1,000 Torchy’s restaurants, or 1,500? “That’s the fully mature version, yeah,” Rypka says.
Early in a restaurant chain’s growth, the executives will choose expansion locations based largely on gut instinct and what’s available. But at a certain point, companies begin to rely on real estate consultants who weigh a complicated matrix of factors. A Taco Cabana might make sense in a Walmart parking lot, for instance, whereas a Torchy’s or Velvet works better in the shadow of a Target. They look at satellite images to understand whether an area’s crowds coincide with a chain’s top selling hours. They look at cellular data to profile demographics that match a chain’s strong suits. At Velvet Taco, a concentration of Indian Americans is a positive indicator—perhaps explaining the popularity of the chicken tikka taco, Dover suggests.
When all of those factors come together, sometimes the result is a Torchy’s and a Velvet sharing the same parking lot. In Lubbock, in a shopping center one short block from the campus of Texas Tech University, the two direct competitors sit not one hundred yards apart, with nothing but a Potbelly Sandwich Shop between them. In North Dallas, Torchy’s and Velvet occupy kitty-corner strip malls at the intersection of Preston Road and Forest Lane. The future of Big Taco might not be Torchy’s or Velvet, but both.
This article originally appeared in the May 2024 issue of Texas Monthly with the headline “Big Taco.” Subscribe today.
