A company created by the founders of the Subway sandwich chain has won the Seattle-based Taco Del Mar Mexican quick-service brand in a bankruptcy auction.
The Milford, Conn.-based Franchise Brands LLC, which a spokesman said was established to help Subway franchisees diversify their portfolios, made the winning bid of $3.3 million for the 200-unit Taco Del Mar brand.
Taco Del Mar filed for Chapter 11 bankruptcy protection in January. The auction was held Sept. 30 in Seattle.
Subject to approval by the court, the acquisition would mark a first for Franchise Brands, which also holds an interest in other franchised concepts, including Mama DeLuca’s Pizza Now, a pizza operator; HomeVestors, a real estate company; and Personal Training Institute, a fitness company.
Les Winograd, a spokesman for both Subway and Franchise Brands, said it was premature to discuss plans for Taco Del Mar until after the sale was approved by the bankruptcy court.
The acquisition of Taco Del Mar’s assets would include franchising rights to the chain, as well as 22 company-operated units.
The bankruptcy did not include the chain’s franchisees.
Taco Del Mar was founded in 1992 by brothers James and John Schmidt. Their company, Conrad & Barry Investments, decided to franchise the brand in 1996, creating Taco Del Mar Franchise Corp., and the units operated by Conrad & Barry Investments were later sold to franchisees.
According to court filings, Taco Del Mar in 2002 had 70 units in the Pacific Northwest and was operating “at nearly break even.” The following year, the company launched a master developer program to expand the brand across the United States and Canada. Currently, the company has 58 master developers.
Taco Del Mar saw rapid growth over the next five years, growing to as many as 270 units in 2008. Revenues grew from $950,000 in 2002 to about $5.4 million in 2005, according to filings, but the next four years were more challenging.
By 2009, the company had accumulated losses of $2.8 million, and about 200 units between 2005 and 2009 had closed due to poor franchisee or site selection.
Contact Lisa Jennings at [email protected].