Food of the Future? : Mexican-Style Restaurants Are Eating Into Markets of Burger and Chicken Chains

“Burgers,” scoffs Kevin Moriarty, president of Del Taco Inc. “That’s your father’s food. Mexican-style is the food of the 1990s.”

With consumers now buying more Mexican-style salsas than ketchup, there’s more than a bit of truth to that rhetoric from Moriarty, whose Costa Mesa company operates the Del Taco and Naugles Mexican-style fast-food restaurants. But condiment sales aren’t the only measure of Mexican-style food’s growing popularity.

Mexican-style restaurants held 21.7% of the Southern California fast-food market in April, up from 19.4% a year earlier, with the gains made partly at the expense of burger and chicken joints, said Robert Sandelman, founder of the marketing company Sandelman & Associates in Brea.

Consumers are also embracing more expensive food found at casual sit-down Mexican-style restaurants, Sandelman said. Nearly 75% of Southern Californians eat at least once a month in Mexican-style sit-down restaurants.

To protect market share, operators of conventional restaurants have added Mexican-style entrees to their menus. The result: About 17% of Mexican-style meals served by Southern California restaurants are at non-Mexican-style eateries.

When it comes to sheer volume, no one serves more Mexican-style meals to Americans than Taco Bell Corp., with 4,000 locations and $3.3 billion in annual revenue. Taco Bell’s ambitious growth plan calls for the creation of a 300-unit sit-down restaurant chain with $1 billion in revenue.

Irvine-based Taco Bell’s Tuesday announcement that it is buying the Chevys restaurant chain is an important first step toward that goal, analysts said. Though Chevys, based in San Francisco, now has just 37 locations, all in California, Taco Bell hopes to use it as the building block for a nationwide chain.

Taco Bell’s move into sit-down restaurants is driven by the need to “follow their consumer base as it starts to age,” said Ron Paul, a restaurant consultant based in Chicago. “The fast-food industry isn’t in trouble, but demographics are working against it. . . . Taco Bell is getting ahead of the curve, which is smart.”

Similarly, Pepsico Inc., Taco Bell’s corporate parent, owns a 50% interest in California Pizza Kitchens, an upscale Los Angeles-based chain that caters to baby boomers who cut their teeth on takeout pizza.

Taco Bell’s sit-down restaurants will feature Mexican-style foods because Taco Bell executives think baby boomers are passing up their parents’ favorites and concentrating on foods introduced to the United States by immigrants from Mexico, Central and South America, the Caribbean and the Pacific Rim.

Americans have historically favored meat-and-potato-based menus, but boomers are exploring foods that “include different flavors . . . mixes and matches of different things,” said Tim Ryan, the newly appointed head of Taco Bell’s full-service dining division.

What better to mix and match, Ryan asked, than Mexican-style food, which incorporates grain products, meat, sauces, cheeses and fresh vegetables?

Chevys’ management, which will remain at the company, has tried to differentiate its restaurants from the pack of Mexican chains with a “Fresh Mex” concept--emphasizing lighter fare and not depending as much on bar sales as do some other regional operators such as Louisville, Ky.-based Chi-Chi’s, with more than 200 restaurants, and El Torito, which is owned by Irvine-based Restaurant Enterprises Group and has about 175 locations.

Executives at Del Taco, which is restructuring its heavy debt load in bankruptcy court, also expect increased consumer demand for Mexican-style food.

“Consumers are looking for unique and different-tasting foods,” said Paul Hitzelberger, Del Taco’s executive vice president. “They want to get out of the hamburger rut.”

Mexican-style restaurants are also benefiting from “the perception that a taco is healthier food than a burger,” Hitzelberger said.

Yet, despite growing popularity, Mexican cuisine still baffles some consumers.

In some Eastern states, Del Taco’s advertising explains menu offerings that many Southern Californians know by heart. One promotion tells consumers that quesadilla is pronounced “kay-sa-dee-ya.” It also explains that a quesadilla includes “grilled flour tortilla, filled with real aged Cheddar cheese and accented with a hint of green sauce.”

Manufacturers of Mexican fare aren’t surprised by Taco Bell’s entrance into Mexican-style sit-down restaurants.

“Taco Bell’s purchase of Chevys shows that mainline companies are looking at the trends in American eating and saying, ‘We want to be there,’ ” said Bruce Galanter, vice president of Festin Foods Corp. The company, based in Carlsbad, is a joint venture of Herdez S.A., a food company in Mexico City, and McCormick & Co., Baltimore-based spice manufacturer.

Festin’s products are purchased almost exclusively by Latino consumers who want very traditional Mexican foods, Galanter said. Though Festin’s salsas and peppers are typically found in specialty food aisles, grocers increasingly are shifting them to aisles that cater to mainstream shoppers, he said.