Taco Bell franchisee Pacific Bells continues to expand east

PacBells has locations in Oregon, Washington, California, Alabama, Arkansas, Mississippi, Tennessee, Ohio and Wisconsin. | Photo: Shutterstock

If Pacific Bells opens restaurants further east, it may have to consider a name change.

Giant franchisee Taco Bell began operations in 1986 with the opening of a branch in Tualatin, Oregon, and has locations in Washington and California. But it’s also opening locations in definitely non-Pacific states like Wisconsin and Alabama.

“It’s kind of an ebb and flow, but ultimately our desire is just to continue to grow,” Scott Shepherd, president of Pacific Bells, said in an interview. “Today we are in nine states. We have an opportunity to really grow in these nine states.”

This development may include a ghost kitchen. Pacific Bells, or PacBells as it is often called, continues to build more units in Wisconsin, including a recent opening in Greenville, southwest of Green Bay. The franchisee first entered the market five years ago, purchasing 24 locations in the state. Currently, it has 37 of them and plans to add more.

One of these new locations next year is expected to be at the CloudKitchens facility in Milwaukee, which will be the second such ghost kitchen in the Taco Bell system. Operator’s goal: To offload some of the digital and delivery activities at its locations in the city.

“Our existing stores in this area are very digital,” Shepherd said. “Well over 40% of our total revenue at stores near downtown Milwaukee is purely digital, believe it or not.”

This is a big change, he said. “It’s really amazing because five years ago the percentage of digital was probably in the single digits. But the post-pandemic world has changed.”

PacBells has had multiple conversations with Taco Bell about locating a ghost kitchen. Franchisees typically must obtain company approval before opening a new site.

Taco Bell is one of the more experimental franchisors in the US, a brand ready to allow franchisees to implement new and different ideas.

The franchisor “was very open and wanted to hear our perspective on the issue, did their own research, and finally came back and said, ‘Hey, let’s move on,'” Shepherd said.

According to Franchise Times, PacBells is the eighth largest franchisee in the country.

The company has grown largely through acquisitions, although it prefers to build. “We would probably like to build more stores if we can find a place to put them every year,” Shepherd said.

The market for Taco Bell takeovers has traditionally been difficult because they don’t come up for sale very often and there are usually plenty of buyers given the chain’s strengths. Taco Bell has no real domestic competitor and has consistently increased sales.

“The market is good,” Shepherd said. “It’s a great brand and a great model. Taco Bell is simply a great marketing machine and it’s a brand worth being a part of.”

“There aren’t many people looking to sell their Taco Bells, right?” he added. “Or there are a lot of people who want to take over Taco Bells. So I think that probably says it all.

PacBells has a team dedicated to finding sites, and the company will set up locations where they can find them. Shepherd said it’s currently harder to find locations in the Northwest due to various complicating factors, such as the number of existing Taco Bell restaurants operated by other franchisees.

However, the company is working on opening in the Northwest. Shepherd also said PacBells plans to continue opening locations in California despite the state’s $20 fast food wage.

Shepherd compared the situation to Seattle in 2015, when the city raised its minimum wage to $15 an hour, an unusual amount at the time that had an impact on businesses far beyond the city.

“We are taking a look at our business and figuring out how we can continue to operate,” Shepherd said. “People still come to Taco Bell in California. It certainly posed some challenge on the margins. So we have to work on it creatively. But we are still happy to be in the state of California.”

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Restaurant Industry Editor-in-Chief Jonathan Maze is a long-time industry journalist writing about restaurant finances, mergers and acquisitions, and the economy, with a particular focus on fast-food restaurants.

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