With more than a half dozen industry-leading quick-service and casual dining brands, Guillermo Perales has built one of the world’s largest restaurant portfolios.
The founder and CEO of Sun Holdings is now counting on a smaller Texas-based Mexican chain to help his business keep growing.
Sun Holdings purchased Freebirds and its 64 locations across Texas from the Travistock Restaurants after winning a bidding war with a number of other unnamed investors for an undisclosed amount. Sun Holdings is already the second largest operator on the Franchise Times Restaurant 200 with more than 1,000 Arby’s, Papa John’s, Popeyes Louisiana Kitchen, Burger King, Applebee’s, McAlister’s Deli, Golden Corral and IHOP locations that did $2 billion in total sales last year.
Perales’ company also owns Taco Bueno, another Mexican chain, which it acquired out of bankruptcy in 2019 and has since grown to 30 units in Texas, Oklahoma and Kansas. And it’s a franchisee of T-Mobile and GNC.
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Perales said his short-term plan with Freebirds is to expand its menu and improve its profitability over the next year. His long-term goal is to franchise the brand, possibly as early as next year, to accelerate growth outside of Texas.
Guillermo Perales, the founder and CEO of Sun Holdings, is the second largest operator on the Franchise Times Top 200 with more than 1,000 quick-service and casual-dining restaurant locations that did $2 billion in total sales last year.
“I’ve had my eye on Freebirds for some time now and to expand in the Mexican segment. It is one of the areas I don’t have any non-competes with,” Perales said.
“We were able to convince the private equity firm who owned them that we were the right fit because most of our business is in Texas and we’ve done well in that market,” he said. “I told them we can easily double our stores just in Texas and then take the brand national by franchising outside of Texas.”
Up first is to improve the average unit volume for Freebirds, with restaurants now doing “between $1.3 million and $1.7 million” in sales. “I want to get them closer $2 million,” he said.
“Chipotle pretty much owns the burrito space right now, but we see a lot of room to grow in that space with Freebirds,” Perales said. “The first thing we need to do is innovate the menu and add more choices. The next thing we need to do is improve the efficiencies of the restaurants and look at reducing their sizes from 2,800 square feet to maybe 1,800 square feet.”
With Freebirds, Perales takes over a chain that has experienced its share of ups and downs. The company was founded by Mark Orfalea and Pierre Dube in 1987 in Santa Barbara, California, and was relocated to Austin, Texas, in 2016. Orlando, Florida-based Travistock, whose portfolio of restaurants consists mainly of upscale eateries, acquired Freebirds in 2007. It grew the brand to 100-plus locations across Texas at one point before closing a number of units after the pandemic.
Prior to its acquisition by Sun Holdings, Freebirds, which specializes in burritos, tacos, nachos, quesadillas, bowls and salads, tried a number of promotions to increase sales. In July, it offered prime rib as a protein for a limited time and in March the chain served up Texas smoked brisket for a limited time in another promotion.
Like a lot of other fast-casual chains this year, Freebirds entered the value wars. The chain announced a series of daily discounts throughout the summer for its loyalty members and offered burrito bowls for $7 in Texas as part of a one-day promotion last month. Those bowls normally go for $16.78, while burritos cost $11.39.
Despite its rocky history, Perales sees a lot of opportunity to grow Freebirds, which has a loyal following throughout Central and Eastern Texas, from San Antonio to the Dallas and Fort Worth area to Austin.
“We love the brand. It’s very small, tiny compared to Taco Bell, but it’s much fresher food and it has this hip, fun atmosphere about it that the young people in Texas especially go for,” Perales said.
The multi-unit franchisee said he’s looking forward to having the autonomy to play around with his own restaurant brand.
“With the big franchised brands, you have to pretty much play by their rules and follow their playbook. The beauty of owning your own brand is that you decide what you want to do with it. You build the road you want to follow,” he said.
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