Diversified Restaurant Group, a franchisee of 300 Taco Bell restaurants and 29 Arby's, is among the top innovators for both brands. Helmed by S.G. Ellison, president and franchisee for Diversified Restaurant Group, the company is at the forefront of innovation and technology.
Ellison gave the keynote address, "How a Franchisee Innovates with the Taco Bell Brand" at #QSRNext, a day-long event designed for busy QSR executives hosted by QSRweb.com and sponsored by Leasecake.
Diversified Restaurant Group has been testing Taco Bell's latest design, the cantina. They're different from regular Taco Bell locations in that the cantinas serve alcohol, like the popular Twisted Freezes, and are themed for their areas. For example, the cantina concept in Las Vegas has a DJ on weekends and a wedding chapel. Another in Pacifica, California, is on the beach. One in St. Louis is sports themed with 27 indoor and outdoor TVs to watch local teams play. A San Francisco cantina is unique in that it does 90% digital business, pushing $4 million in sales out of just about 1,000 square feet. Currently, Diversified Restaurant Group owns six cantinas.
S.G. Ellison, president of Diversified Restaurant Group. Provided.
"It really pairs this craveable Mexican-inspired food with this really amazing social dining experience where you can get a Twisted Freeze or a Bottom's Up Beer in one of our cantinas," Ellison said.
The cantinas elevate the markets in which they're situated, but more importantly, they bring a great element to their team members and local market operators who are able to get behind an elevated Taco Bell experience.
"All of them have been fairly unique," Ellison said. "We really choose the location based on what's best in the trade area. We'd love to see them in every market that we run in."
Diversified Restaurant Group is about to acquire an existing cantina, its seventh total, and is planning to build one in San Jose, California, just outside a theater. It'll be movie-themed and nostalgic, Ellison said.
As part of Diversified Restaurant Group's commitment to technology, the company is piloting EV charging, and Ellison said many of the customers who pull in to charge their vehicles also buy food from Taco Bell. "We looked at it as a way to utilize some of our parking lots that maybe weren't as utilized as they were pre-pandemic," Ellison said. "A lot more of our business is going through the drive-thru, and some of these bigger parking lots obviously have space. And more importantly, it was an opportunity to do something for the community, to do something for the planet (and) to see how that might work to reduce energy costs."
Everything the company does is to positively impact the lives of Diversified's team members, Ellison added, and the communities they operate in. "We see really good responses from our team members," he added. "People typically want to work either directly in (cantinas) or associated with those locations. It's been very positive."
On the Arby's side, Ellison said the company has great brand recognition from a marketing standpoint. It rates high, with "We Have the Meats" one of the company's most recognizable slogans even in states where Arby's isn't represented.
"There's a lot of growth for Arby's when you look at the number of units relative to other QSRs and the great brand recognition that they have," Ellison said. "They continue to innovate with high-quality food and some very craveable items as well."
Ellison cited Arby's Diablo Dare and Diablo Loaded Fries as two such innovations. The Diablo Dare, so spicy it came with a milkshake to cool the heat, was introduced last year to great results. The brand released a Wagyu Steakhouse Burger earlier this year that was "off the charts," Ellison said. "It had great consumer response and drove transactions.
"Arby's continues to grow AUV and transactions. We are fortunately involved with Inspire Brands. Inspire Brands has a great shared services program — a lot of data, a lot of push towards e-commerce and digital — so we're excited about the growth potential for Arby's."
Ellison said Diversified Restaurant Group was initially in the real estate business until they started working with a Taco Bell franchisee. Company executives fell in love with the franchise business, and the company eventually grew to more 329 restaurants. There's room for more, Ellison said, especially with the cantinas "because we really like to have fun in our businesses, and Taco Bell has been gracious enough to allow us to continue to do that," he said.
Diversified Restaurant Group acquired 75 restaurants last year in Southern California, and there's still room to grow both Arby's and Taco Bell. Two Arby's were built in Fairbanks, Alaska, and have become two of the highest volumes in the country.
"As opportunity presents itself, we're continuing to grow and acquire," Ellison said. "We're continuing to grow organically as well. We see great returns in both of those brands."
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