SG Ellison loves Taco Bell’s “coolness factor,” and the president of Diversified Restaurant Group said embracing new ideas and being at the forefront of development with inventive design formats plus technology is essential for continued growth.
Last year, the Las Vegas-based franchisee and operator of 300 Taco Bells started working with ChargeNet Stations to install electric vehicle chargers in its restaurant parking lots, with the aim of eventually adding them to 155 locations in California. 2022 also saw DRG open the first Taco Bell Go Mobile restaurant. The North Las Vegas store, with two drive-thru lanes, one fully dedicated to accommodating mobile orders and delivery drivers, gives DRG more exposure to delivery in an area with high demand, Ellison said.
“It was an opportunity for us to put a location in a more saturated area where we have more Taco Bells,” said Ellison, and capture customers wanting to order ahead online or through third-party delivery. The store even hosted a driver preview day where DoorDash drivers could redeem a free combo meal of their choosing; more than 200 drivers showed up to check out the drive-thru.
“We like to pilot and test innovative strategies with the brand,” said Ellison, who with David Grieve acquired 85 Taco Bells in 2014 to enter the system and has been buying and building ever since. Most of its Taco Bells are in California, with others in Nevada, Kansas, Missouri and Alaska. The company is also an Arby’s franchisee with about 30 units.
SG Ellison is president of Diversified Restaurant Group, which operates 300 Taco Bells.
Continued development of Taco Bell’s cantina model, which corporate introduced in Chicago in 2015, is another opportunity to “showcase the brand beyond just the craveable food,” said Ellison. Diversified was the first franchisee to open a cantina when it debuted its SoMa location in September 2015, in the shadow of the San Francisco Giants baseball stadium. Cantinas serve alcohol, usually have a more polished or upscale design, and offer an experiential element unique to the area.
DRG’s cantina in San Ramon, California, is entirely digital and features an Xbox gaming theater. Six miles to the north, the Danville cantina is the first with drive-thru and has a large outdoor patio with firepit and lawn games to go along with its full bar. Perhaps the most well-known cantina is DRG’s two-story Las Vegas strip location, complete with a wedding chapel.
“In certain locations, it takes Taco Bell’s amazing brand recognition and propensity for having that cool factor and takes it to a new customer experience,” said Ellison. “It integrates that coolness factor.”
Sales are another attractive feature of the cantina model. “Las Vegas, we almost quadruple the average volume of a Taco Bell,” said Ellison. “Taking out Las Vegas, because that’s a little bit of an anomaly, most of our cantinas perform about 25 percent greater in terms of top line than the average drive-thru.”
Taco Bell reported $13.28 billion in systemwide sales in 2021, according to Franchise Times Top 500 data. Dividing those sales by its 7,791 total units (domestic and international) gives an average of $1.7 million; Taco Bell doesn’t list financial performance information in its Item 19.
DRG’s flagship Taco Bell Cantina opened in Las Vegas in 2016 and serves customizable Twisted Freezers with vodka, tequila or rum.
Diversified operates seven cantinas after acquiring last year the location in Newport Beach, California, which it’s in the process of upgrading. Two more are in the pipeline in Southern California over the next two years. Buildout costs for a cantina are “relatively similar” to a typical Taco Bell that DRG would open, said Ellison. “Maybe we’re not building a parking lot and a drive-thru, so even when adding the experiential elements, on a total cost scale it’s about the same.”
DRG and Taco Bell corporate “have a very symbiotic relationship in that we’re both trying to bring new experiences to customers,” noted Ellison. “Taco Bell recognizes we’re willing to invest capital and invest time.”
The company made another investment when it opened its new headquarters and support center last year in the Summerlin area of Las Vegas. The 20,000-square-foot office “pays homage to the brands we’re in, the markets that we’re in,” said Ellison, and includes a restaurant training center.
“We wanted to build a place people would appreciate and want to come to,” he continued. “We’ve just had a really great response from the team in how it underpins the culture.”
Will DRG’s next experiential store take it to double-decker territory? “The Englers and Border Foods are right there with us in innovating and investing capital,” said Ellison of brothers Lee and Jeff Engler, the Minnesota-based franchisees who opened the first Taco Bell Defy, a 3,000-square-foot, two-story restaurant with four drive-thru lanes.
“I would love to follow in their footsteps if I can find a location in my market.”