WEBVTT - Businessweek Extra - Torchy’s Tacos CEO

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<v Speaker 1>This is Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser.

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<v Speaker 1>Welcome to the Bloomberg Business Week Extra. It's our weekly

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<v Speaker 1>podcast and this is where we give you one of

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<v Speaker 1>our full interviews of the week. This podcast features a

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<v Speaker 1>conversation about Tacos. First, it was a food truck in

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<v Speaker 1>Austin that it was all over Texas, and now Torches

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<v Speaker 1>Tacos is spreading it across the nation with a little

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<v Speaker 1>help from private equity. My co host Jason Kelly had

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<v Speaker 1>a chance to catch up with the company's CEO, g J. Hart.

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<v Speaker 1>All Right, So, GJ, great to be with you. Tell

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<v Speaker 1>me about the opportunity that you saw coming to Torches. Well,

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<v Speaker 1>having been in the restaurant business a long long time

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<v Speaker 1>and having you know, the opportunity to see so many

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<v Speaker 1>restaurant concepts and being a part of growing several concepts.

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<v Speaker 1>When I saw the Torches concept, tried the food, met

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<v Speaker 1>the people, and I think about the opportunity around America,

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<v Speaker 1>I was like, Wow, this is pretty special. I've seen

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<v Speaker 1>lots of things. This is probably the biggest opportunity I've

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<v Speaker 1>seen in a long long time, not just nationally but internationally.

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<v Speaker 1>And why because I mean Texas Road has I mean

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<v Speaker 1>I could go through it. C p K. I mean,

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<v Speaker 1>you've worked at so many big concepts, Tacos is not

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<v Speaker 1>an obvious one necessarily. I love tacos, but you know,

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<v Speaker 1>why is this one so special? That's part of the answer,

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<v Speaker 1>because the no one's really taken tacos and being able

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<v Speaker 1>to take it in a big scale and do it

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<v Speaker 1>with product that is all freshly made from scratch, with

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<v Speaker 1>all those flavor profiles, that's part of the answer. And

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<v Speaker 1>so when I saw that and see, you know, at

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<v Speaker 1>the end of the day, in the restaurant business, it's

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<v Speaker 1>all about food, and forget that many times it's about

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<v Speaker 1>the food at the end of the day. And so

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<v Speaker 1>this food is really really special. And Mike, the original

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<v Speaker 1>chef and founder, is just an incredible guy with does

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<v Speaker 1>an incredible job with flavors. And again, I've seen a

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<v Speaker 1>lot of things. This one's pretty special and I love

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<v Speaker 1>growing things. Yeah, and why hasn't somebody been able to

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<v Speaker 1>do this with tacos? Well, I think the problem is

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<v Speaker 1>the positioning. In my opinion, it's either sort of going

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<v Speaker 1>down to be very value orning or very upscale, and

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<v Speaker 1>we fit a completely different niche. We're sort of edgy

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<v Speaker 1>in our approach. We have we appeal to UM a

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<v Speaker 1>pretty wide demographic and so UM, you know, and we

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<v Speaker 1>fit a price point that somewhere in between. And I

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<v Speaker 1>think that's part of it. And then our fast casual

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<v Speaker 1>environment is one that UM isn't just fast casual because

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<v Speaker 1>we actually have full service bars UM in our newer

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<v Speaker 1>restaurants as well, and so we have what I would

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<v Speaker 1>call fast casual plus, which is another added benefit. And

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<v Speaker 1>so you wrap all that together and I think no

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<v Speaker 1>one's really been m edgy enough to try that. And

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<v Speaker 1>so here we are. There's a couple of smaller players

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<v Speaker 1>that are doing an incredible job. But I hate to

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<v Speaker 1>say it, we're small today, but we're sort of big

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<v Speaker 1>in that space. Yeah, So talk to me about private

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<v Speaker 1>equity because this isn't necessarily a place of growth equity. Really,

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<v Speaker 1>General Atlantic, your owner, uh, sort of presents that. What

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<v Speaker 1>sort of element does that bring in and what was

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<v Speaker 1>the what was your attractiveness or trepidation in going into

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<v Speaker 1>a private equity owned enterprise. Well, in the case of

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<v Speaker 1>General Atlantic, their incredible partner partners, they have a unique

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<v Speaker 1>culture in terms of how they approach investing, in particularly

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<v Speaker 1>growth investing, So that made me very comfortable. I'm fortunate

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<v Speaker 1>enough to have worked with several other great equity private

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<v Speaker 1>equity firms, and you know, I have to say they're

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<v Speaker 1>just the special group. Also, the original five founders are

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<v Speaker 1>still involved in the business with me, and so um,

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<v Speaker 1>you know, you take the mix of those two things.

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<v Speaker 1>It just attracted me because there's a there's a very

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<v Speaker 1>special dynamic heritage and soul to a growth investor that's

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<v Speaker 1>got a unique and special culture. Those things marry up

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<v Speaker 1>really really well. And for me loving to grow things,

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<v Speaker 1>this was a great opportunity to combine those things and

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<v Speaker 1>quite frankly have an opportunity to do something special. So

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<v Speaker 1>what does growth look like from here? You've you've been

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<v Speaker 1>in the midst of a relatively rap that the expansion

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<v Speaker 1>geographically here in the United States. Tell me where you

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<v Speaker 1>are now, where you're going. So we're in three states today,

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<v Speaker 1>which Texas, Oklahoma, and Colorado. We are opening up Arkansas

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<v Speaker 1>in a very short while. We will then be going

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<v Speaker 1>to Louisiana, Kansas and mushroom out from those markets where

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<v Speaker 1>we are strong today. Our goal over the next five

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<v Speaker 1>years is to open, another hundred restaurants will be in

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<v Speaker 1>seventeen states at that point. Mushroom out. And part of

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<v Speaker 1>that is where a word of mouth, where this cult

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<v Speaker 1>like following with high frequency. We want to continue to

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<v Speaker 1>build that demand as we go into these markets, versus

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<v Speaker 1>a strategy that skips around the country or sort of says, well,

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<v Speaker 1>you know, we're the big boys. Now we can are

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<v Speaker 1>big girls and we can go into this market. And

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<v Speaker 1>so we're looking at it like, let's continue to grow

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<v Speaker 1>out from where we are. So by the time we

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<v Speaker 1>hit urban markets, they'll know and have heard of torches.

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<v Speaker 1>Even though you may have heard of torches. You know,

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<v Speaker 1>here in Manhattan, no one knows the torches. So by

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<v Speaker 1>the time we get here, we'll have people that know

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<v Speaker 1>who we are. So that's the strategy. What worries you

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<v Speaker 1>the most about that expansion strategy is that economic? Is

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<v Speaker 1>it the ability to scale? What is it? Uh? The

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<v Speaker 1>answer is really simple. It's getting the right people doing

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<v Speaker 1>the right things. We have a partnership model, which is unique,

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<v Speaker 1>and so finding restaurant operators that feel apart, have a voice,

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<v Speaker 1>that really have the ability to run their own businesses

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<v Speaker 1>with our support. That's the key to this business and

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<v Speaker 1>so finding those kind of people, creating environments where they

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<v Speaker 1>understand our mission and vision and our overall purpose and

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<v Speaker 1>really taking that ride along. That's my biggest not that

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<v Speaker 1>when you say worry, that's my biggest worry. It's my

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<v Speaker 1>biggest obligation to the brand for it to be able

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<v Speaker 1>to sustain itself and be able to reach full potential.

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<v Speaker 1>So that's I can't control economic conditions, all that kind

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<v Speaker 1>of stuff from a real estate perspective and all those

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<v Speaker 1>other things that you have to do. We've got a

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<v Speaker 1>great team, and the good news is we drive a

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<v Speaker 1>lot of traffic to centers, and so a lot of

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<v Speaker 1>developers are looking forward to us because we'll drive you know,

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<v Speaker 1>six to ten thousand guests a week to a restaurant.

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<v Speaker 1>That's a lot of folks. So you understand the consumer

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<v Speaker 1>very well, especially the restaurant consumer and customer as a

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<v Speaker 1>consumer feeling at this moment, how confident you know? We're

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<v Speaker 1>long into this economic uh cycle, this economic growth cycle.

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<v Speaker 1>How they doing. I think they're doing pretty well. I mean,

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<v Speaker 1>if if our volumes are any indication, they're doing extremely well.

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<v Speaker 1>But I would say that we have a pretty approachable

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<v Speaker 1>price point, So we're value think about a three dollar

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<v Speaker 1>and seventy five cents for a taco. That's a pretty

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<v Speaker 1>good sized taco and pretty much can make a meal.

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<v Speaker 1>That's that has the broad opportunity across many spectrums. So um, again,

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<v Speaker 1>I think just from from our perspective and the feedback

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<v Speaker 1>we're getting there doing, they're they're feeling pretty good. G J. Hart,

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<v Speaker 1>thank you so much. You're quite welcome. That was g J. Hart,

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<v Speaker 1>the CEO of Torchis Tacos. You've been listening to Bloomberg

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<v Speaker 1>Business Week Extra, be sure to tune into Bloomberg Business

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<v Speaker 1>Week Radio Live Monday through Friday at tpm Wall Street Time.

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<v Speaker 1>Right here on Bloomberg Radio. I'm Carol Masser, and this

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<v Speaker 1>is Bloomberg