The future looks green for Mike’s Red Tacos.
The San Diego-based taco restaurant currently has only two locations, but it has caught the attention of the restaurant investors who made Dave’s Hot Chicken a scorching success.
This week, the restaurant announced that it has secured franchise development agreements for more than 200 new locations around the country. Mike’s Red Tacos was founded as a food truck in 2021 by Mike Touma, followed by a brick-and-mortar location in 2022.
The brand is gaining a fast-growing following on social media following—and now it’s primed for nationwide expansion.
Fast casual with a taco twist
Mike’s Red Tacos specializes in birria—a traditional, slow-cooked Mexican stew dish that’s typically made from beef, lamb, or goat—which has exploded in popularity in recent years, largely due to social media trends.
It can now be found, in various forms, on menus at numerous Mexican chains, including Taco Bell, Del Taco, and others.
Mike’s Red Tacos is receiving support from early-stage investors and advisors Bill Phelps and Andrew Feghali.
Phelps is executive chairman of Dave’s Hot Chicken, cofounder of Wetzel’s Pretzels, and a founding investor in Blaze Pizza. He tells Fast Company that very few restaurants catch his eye, but Mike’s ticked all the boxes.
“I love entrepreneur-started businesses, and guys that have figured things out,” Phelps says. “The product is just amazing. It’s so good, it’s like a breakthrough within a category.”
He adds that in the strata of Mexican chains, Mike’s sits in the fast-casual lane, closer to a chain like Chipotle, rather than a fast-food chain like Taco Bell.
“We’ve learned over the years how to do the model for a fast-casual rollout in the franchise world, so we were able to put a team together very quickly of people we worked with before.”
‘There’s a lot of competition’
Phelps says that he first walked into a Mike’s Red Tacos around a year ago, and immediately saw the potential. That’s a relatively rare occurrence.
“It’s been once every five years we see something that looks really great and then we go for it,” Phelps says. “We like founder-created businesses that have incredible quality, but don’t know how to scale them—that’s what we bring to the party. We make a deal that is a great for the founder and for us (investors).”
He knows success isn’t guaranteed, of course.
“You need to leave your ego at the door,” he says. “There’s a lot of competition. A lot of work to do. You need to work your ass off.”
A lot of that work will fall on Vincent Montanelli, a seasoned industry executive, who was named the company’s president. Previously, he held various leadership roles at Wetzel’s Pretzels.
All told, the 200 or so Mike’s Red Tacos locations will be spread across 25 markets around the country, including Seattle, Phoenix, Las Vegas, Austin, Dallas, Chicago, Miami, Boston, and other locations around Southern California.
The first new location is expected to open in San Diego in March, with a new, corporate-run location opening in Pasadena later this spring.