Los Angeles - 23 May, 2005 -

Despite struggles with an identity crisis, upscale quick-service chain Tacone is moving out of food courts and into the crowded fast-casual segment. Founded in 1996, the all-franchised chain of 21 outlets is known for its wraps, salads and grilled sandwiches with wide-ranging global flavors as well as its signature sweet-potato fries. Tacone's pace of growth has picked up in the past year, resulting in signed leases for 13 new franchised units that are expected to open by year-end. Franchisees are said to be looking at in-line and freestanding locations. Company officials say they have commitments for another 74 Tacone units over the next three years. Tacone founders Craig Albert and Michael Bernstein also have created a parent company, Flavor Firm, based in Los Angeles, to hold two more brands in their franchise mix. Last year Flavor Firm began seeking to sell franchising rights for its 3-year-old City Kitchen, a catering operation in downtown Los Angeles. City Kitchen, with a completely different menu than that of Tacone, focuses on business-and-industry catering, with options for retail express-takeout units or sit-down cafes. And earlier this month Flavor Firm signed on to serve as franchisor of an 18-month-old casual-dining restaurant concept called The Counter, whose hip, build-your-own-burger prototype outlet is in Santa Monica, Calif. The 60-seat restaurant - featuring $6.50 beef, turkey, chicken or veggie burgers - was founded by first-time restaurateur Jeff Weinstein and is said to be on track to top $1.8 million in annual sales. However, Flavor Firm, which projects systemwide sales of $15 million this year, will stay focused on Tacone as the core brand, Albert said. That flagship concept had an inauspicious beginning. Originally the signature product was a "taco in a cone" - hence the name Tacone. It was a cone-shaped corn tortilla with exotic, savory fillings, such as turkey, mashed potatoes and yams with cranberry-pineapple salsa, or Chinese chicken salad and cellophane noodles. The original menu was developed in consultation with acclaimed chef-restaurateur Joachim Splichal, founder of the Los Angeles-based Patina Group of upscale restaurants and cultural-institution catering venues. But within months of opening the first unit in an upscale Los Angeles food court, it was clear that Albert and Bernstein's pet item had problems. "The cone fell apart," Albert said. "It was unwieldy. We fell flat on our faces." Albert and Bernstein deemphasized the tacone, instead featuring freshly made gourmet wraps, salads and smoothies and later adding grilled panini sandwiches. They continued to use global flavors, ranging from a Cuban-style "Mambo" wrap to the "Thai Cone" wrap with grilled chicken, jasmine rice, spicy peanut sauce and cucumber salad. The company emphasizes premium ingredients, such as grilled "filet mignon" in steak sandwiches. The steak actually is tenderloin tails, a byproduct of the filet mignon cut, but the meat is more tender than the flatiron steaks used previously, said Ken Brown, Flavor Firm's corporate executive chef. To clear up confusion about the name, however, Brown is working on bringing back the original taco-in-a-cone, only the new and improved version would be offered as an appetizer with a sampling of cones served in a dish designed to hold them upright. "We have struggled a little with brand identity," Brown said. Tacone grew to nine outlets before Albert and Bernstein decided to franchise the concept in 2000, selling their units to franchisees while continuing with research and development and training. Tacone, now with an average ticket of $8.50 and annual average-unit volumes of $670,000, is looking to move out of food courts, where the potential for the brand's new emphasis on catering is somewhat limited. "For the average franchisee, the ability to do catering takes you from breaking even to making money," corporate chef Brown said. And with malls demanding high rents despite declines in shoppers, it makes more sense to move into in-line and freestanding units, said Bernstein, who is Flavor Firm's chairman and director of real estate. However, he said the company will continue to look at high-end mall locations. Meanwhile, John Brandt, Tacone's regional director for Arizona, is looking for in-line locations for Tacone outlets there that would use dinnerware and stainless-steel flatware instead of disposables. The Arizona outposts also would provide table delivery of orders made at the counter. The company sees the fast-casual concept "as a scaled-down restaurant rather than a fast-food place," said Brandt, whose Southwest Franchise Systems Inc. is in Gilbert, Ariz. Demand for catering sparked the idea for City Kitchen, whose Los Angeles commissary neared $2 million in sales last year, Albert said. Rights for City Kitchen have been sold to operators in Dallas/Fort Worth, Phoenix and Orange County, Calif., he added. City Kitchen features contemporary dishes that are delivered to corporate clients by uniformed staff members. A sit-down cafe attached to the Los Angeles commissary also draws a lunch crowd. The company plans to open a City Kitchen Express unit in a Santa Monica office complex. For more information about Tacone , call 213 236 0950. email: info@tacone.com

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