Mike's Red Tacos opens the first corporate location. Let the wave of franchise growth begin

The much-anticipated first corporate location of Mike’s Red Tacos is making its debut in Pasadena, California, this week.

This is the latest franchise brand to be developed by Bill Phelps, who is the mastermind behind Wetzel’s Pretzels, Blaze Pizza and Dave’s Hot Chicken. For Mike’s Red Tacos, the plan is to apply the now well-honed playbook for young brands. Phelps and his team, after all, grew Dave’s from a parking lot popup to one of the fastest-growing restaurant chains in only eight years before selling it to Roark Capital in a deal valued at $1 billion.

These things are not exactly “rinse and repeat,” but there are common elements.

For example, like some of Phelps’ earlier brands, Mike’s Red Tacos has won an investment from NBA superstar LeBron James.

The Taco Tuesday-endorsing athlete wasn’t at the soft-opening red-carpet party (something about needing to be in Philadelphia for some reason), but the Mike’s team had met him and were thrilled for his support.

At the soft opening, the room was filled with various restaurant chain veterans from the Phelps-o-sphere, people who have worked with or franchised brands that Phelps has backed. Once people are in the Phelps-o-sphere, they tend to stay — because they have built trust, perhaps, but also because they have had success.

Jim Bitticks, for example, the CEO of Dave’s Hot Chicken, was there (he’s also an investor in Mike’s). So was Arman Oganesyan, Dave’s co-founder (who’s working on something new that will be revealed later).

There was Vincent Montanelli, who previously worked with Wetzel’s Pretzels. He is now president and COO of Mike’s Red Tacos. Steve Jennings, previously of Ruby’s Diner and Marie Callender’s, is serving as CFO. A new supply chain chief, who worked with Jack in the Box and Yum Brands previously, will soon be announced.

And, of course, Mike Touma, the founder of Mike’s Red Tacos, was there.

Mike’s Red Tacos was founded in San Diego in 2021, and Touma operates three units there, with another four planned for that market. Touma plans to operate as a franchisee, but he’s also chief brand officer to ensure standards are maintained as the brand grows.

The Pasadena location, which is about 3,000-square-feet in the heart of a shopping district, will serve as a training center for franchisees. So it’s a bit bigger than most. The prototype is about 2,400-square feet.

CEO Andrew Feghali, who helped Touma get the brand from food truck to brick-and-mortar, said Mike’s Red Tacos has sold development rights for roughly 350 units across the country across about 12 states so far.

Almost all of California and Arizona are sold, for example, along with the Northeast, much of Florida, central Texas, Michigan, Minnesota, and Illinois.

And the franchisees buying in are largely established multi-concept operators of brands like Jersey Mike’s, Little Caesars, Dunkin’ and, of course, Dave’s Hot Chicken.

Mike’s Red Tacos is something a bit different.

This brand is very focused on birria tacos, served with a cup of rich consomé, which is produced as the beef is braised and shredded for the taco. The corn tortillas are fried in the oil that is skimmed from the braising liquid, giving the crisp shells a red tinge.

The idea is to dip the beef-and-onion stuffed taco into the rich consomé with every bite. A “Mike’s Meal” with two large tacos, a cup of consomé, and chips is about $15. There’s a fresh self-serve salsa bar.

Also on the menu is a variation inspired by Taco Bell’s Crunchwrap, except this version is thick with braised beef ($13.99).

That beef also appears in Birria Ramen form ($13.99), and in a giant quesadilla ($13.99).

There are loaded fries and nachos, guacamole and queso. For dessert, sharable churros topped with fresh strawberries and cream.

The beef-heavy menu comes at a time of soaring prices, however. Feghali said the unit economics still work. The company is, however, toying with the notion of adding a chicken birria alternative, he said, perhaps more to please those who don’t eat red meat. But that has yet to be decided.

There are still things to learn about growing this brand, he added.

Feghali was Dave’s Hot Chicken’s first franchisee, and he also operated Little Caesars. He is also partnered with Phelps in Four Wall Partners, the investment company designed to build young brands from only a handful of units.

There’s another brand they plan to invest in, though they won’t say yet what it is.

But as Mike’s Red Tacos scales, and lessons are learned, the playbook will become that much stronger.

“Our mission is to find small brands with huge potential, and to do this exact same thing,” said Feghali, gesturing toward the packed dining room at the soft opening. “Concepts with one to five units where we believe they deserve the right to be scaled and franchised responsibly.”

Lisa Jennings is a veteran restaurant industry reporter and editor who covers the fast-casual sector, independent restaurants and emerging chain concepts.