Bill Phelps Bets on Birria with Mike's Red Tacos Expansion

Bill Phelps, a prominent figure in the restaurant franchising industry, is spearheading a new venture centered around birria tacos through an investment in Mike's Red Tacos, a San Diego-based chain. Founded by Mike Touma in 2021 as a food truck, Mike's Red Tacos has quickly expanded to two brick-and-mortar locations, with plans for a third opening in March 2026. Phelps, alongside partner Andrew Feghali, aims to leverage their experience from scaling Dave's Hot Chicken to establish a national franchising initiative for Mike's, targeting over 200 locations across the United States.

They grew and sold Dave's Hot Chicken. Next up: birria tacosCNBCQSR Magazine

Birria, a traditional Mexican dish typically made from slow-braised beef or goat served with a rich consommé, has gained significant traction in the U.S. food scene. According to Datassential, birria now appears on approximately 4% of restaurant menus, a notable increase from just 0.9% four years ago. Major fast-food chains, including Qdoba, El Pollo Loco, and Taco Bell, have introduced their own versions of birria, indicating its growing popularity. Phelps believes that birria tacos represent a unique niche within the broader Mexican food category, similar to the success of hot chicken in the fast-casual space.

CNBCQSR MagazineThey grew and sold Dave's Hot Chicken. Next up: birria tacos

Phelps and Feghali's investment firm, Four Wall Partners, will not only provide financial backing but also strategic guidance as board members. They plan to replicate the successful franchising strategies employed at Wetzel's Pretzels and Blaze Pizza, focusing on recruiting experienced multi-unit operators to ensure rapid growth. Vincent Montanelli, former CEO of Wetzel's, has been appointed as president of Mike's Red Tacos, further strengthening the leadership team.

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The franchising strategy for Mike's Red Tacos is designed to capitalize on the brand's appeal to a diverse customer base, including families and older demographics. Phelps acknowledges the competitive landscape, stating that while there are numerous national chains and local taco restaurants, Mike's simple menu and quality offerings position it well for success. The chain has already secured development agreements with franchisees tied to established brands, which will facilitate its expansion into markets across California, Texas, and New England.

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Phelps expressed confidence in the potential of Mike's Red Tacos, stating, "We think this can be a winner." The first wave of franchise locations is expected to open later this year, with a corporate-run prototype set to launch in Pasadena, California. This location will serve as a training hub for new franchisees, ensuring they are equipped with the necessary systems and support for successful operations.

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Despite the optimism surrounding the expansion, Phelps recognizes the challenges inherent in rapid growth. He emphasizes the importance of maintaining a grounded approach, stating, "There’s no place for a big ego in this." The team is aware that scaling a restaurant concept comes with risks, and they are committed to navigating these challenges with their extensive experience in the industry.

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• “The taco itself is great, and then when you’re dipping it in the consomé, it’s not only delicious but also fun,” — Bill Phelps, CEO of Four Wall Partners

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• “We think we can carve out that niche and hopefully be the leader in that niche.” — Bill Phelps, CEO of Four Wall Partners

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• “We're going to be very aggressive where we grow with this, because we've seen that we can do that,” — Bill Phelps, CEO of Four Wall Partners

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• “Your growth engine isn’t about marketing. It isn’t about your leadership team. All those things are important, but the driver is the unit economics for the franchisee.” — Bill Phelps, CEO of Four Wall Partners

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The expansion of Mike's Red Tacos under the guidance of experienced investors like Phelps and Feghali marks a significant development in the fast-casual dining sector, particularly as birria continues to rise in popularity across the United States.

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