British chains winning battle for Tex Mex market share

British-founded Tex Mex chains have raced ahead of their US counterparts when it comes to dominating the sector in the UK, it has been claimed.

The likes of Benito’s Hat, Wahaca and Tortilla have educated the market on the virtues of Mexican food after US-based operators “struggled” to establish a Tex Mex market in the UK due to lack of marketing and awareness around the genre, the Local Data Company (LDC) said.

The market data firm, which tracks success on the high street, profiled a number of key chains in a bid to identify which names are currently best-positioned in the market.

It found that Wahaca had the highest percentage of Tex-Mex stores out of operators it identified, with 7% of total stores.

“Between their expertly delivered and authentic Oaxacan cuisine, and their continued efforts to be ‘carbon-neutral’, Wahaca has positioned themselves into affluent areas of the UK. Wahaca is operating as if they’re living in 2060, with the rollout of their new ‘Wahaca QuickPay’ app, where you can pay your bill as soon as you’ve placed your order,” LDC said.

US brand Taco Bell first opened in the UK in 1986 in London, but disappeared in the 90s and has only got its UK plans back on track in the last decade following its sale to Yum! Brands. Today, with 25 outlets across Great Britain, Taco Bell has changed tactic to be less city-centric.

LDC explained: “About 50% of their outlets are based on UK high streets. With an average score of five to six out of 10 on LDC’s Health Index – a measure that LDC created in partnership with Morgan Stanley, based on 12 variables such as vacancy rate and the presence of anchor retailers – Taco Bell locations are not faring badly at all. Further to this, 30% of the Taco Bell locations are enjoying improvements.”

The company also looked at Chipotle Mexican Grill, which boasts 408 outlets in California alone. It established its first international restaurant in the UK in 2010 and underwent a rapid period of expansion by opening six sites in quick succession. However, growth has since slowed.

“Based in affluent areas of London, our data shows that Chipotle has chosen locations that rate 10 of 10 with a stable trajectory to remain as such for the foreseeable future. The reason for its slow growth in London is the same as what was reported by Taco Bell – unfamiliarity with the cuisine.”

LDC suggests Chipotle hasn’t been helped by a high-profile E.coli outbreak that affected the chain two years ago. “After giving away six million free burritos and one million free orders of chips and guacamole, the chain has struggled to win back the trust of their customers,” it said.

Estate size for selected Tex-Mex brands across the UK. (Source: LDC)

In terms of its British rivals, Benito’s Hat has also targeted more affluent areas, basing its stores in London locations that rate between nine to 10 on LDC’s chart, with 86% of its locations on a stable trajectory to remain strongly rated, and with 14% projected to improve.

Private equity investor, Calculus Capital, invested £1.4m in the chain several years ago to contribute to rapid expansion along Britain’s high streets, which saw the opening of its first store outside of London, in Oxford. Newly-appointed managing director, Michael Pearson, is expected to oversee further expansion.

Wahaca, meanwhile, boasts 29 venues in total, largely within London, but also in locations such as Manchester, Bristol and Brighton. 62% of its locations have a LDC Health Index rating of above nine out of 10, with 79% of them set to maintain their rating.

LDC said that Tortilla also features highly on its radar. “It continues to show the rest of the market how it’s done by providing quick, fresh and delicious burritos to hungry workers. Tortilla continues to expand and currently has 35 stores, ranging from Glasgow down to Brighton.”

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