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United Plates of America: A review of the Tex-Mex market in the UK.

19 September 2018 by Katie Flanigan

This week, we continue our American food series with the Tex-Mex genre. Tex-Mex is a relatively new cuisine for the UK, so using LDC data, I'm going to look at how this market has evolved and the brands that are leading the pack. 

Beginning with the brands that originated in the US, let’s look at Taco Bell.

Firstly, a bit of history: Taco Bell first opened in the UK in 1986 on Coventry Street in London, which was then followed by Earl’s Court and Uxbridge. From this point, they planned to expand, but only opened one additional store in the University of Birmingham. All outlets closed in the mid-1990’s aside from two, both of which were located on US military bases, effectively exiting Taco Bell from the UK market.

Taco Bell’s first return in the UK began when Yum! Brands - who also own fast food giants, KFC and Pizza Hut - acquired them during the early 2000’s. In 2009, they established themselves in every corner of the country with stores in Southampton, Basildon and Sheffield, to name a few. They believed the reason that Taco Bell’s first attempt to break the UK was a lack of awareness of Mexican cuisine and, with the right marketing, it could be a  market ripe for expansion in the United Kingdom. 

Taco Bell estateFigure 1: Taco Bell's GB estate. (Source: LDC)

Today, with 25 outlets across Great Britain, Taco Bell have changed tactic to be less city-centric. 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.

Taco Bell-1 Figure 2: Health Index scores for Taco Bell's GB estate. (Source: LDC)

Chipotle Mexican Grill

Our next US brand is Chipotle Mexican Grill, which boasts 408 outlets in California alone. It established its first international restaurant in the UK in 2010. The fast casual dining experience provides customers with easily customisable food options in a flash with its assembly-line formula, which has been the selling point that catapulted it to the top of the Tex-Mex market in the US.

Expansion for Chipotle in the UK was fast, 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. However, it has been five years since this claim, (and I speak for the entire LDC office when we say we know what Tex-Mex is) so what is preventing them from growing now? It might be down to their outbreak in E coli back in 2016. After giving away 6 million free burritos and 1 million free orders of chips and guacamole, the chain has struggled to win back the trust of their customers.  

ChipoltleFigure 3: Chipotle's GB estate. (Source: LDC)

So, we know that apparently, British consumers have been slow to warm up to Tex-Mex, leaving the size of the market smaller than other food genres. But who is breaking through and leading the way to show us Brits what they’re missing? Let’s now look at some British Tex-Mex competitors:

Benito's Hat

Benito’s Hat was established in 2008 by founders Ben Fordham and Felipe Fuentes Cruz. The restaurant's namesake is Mexico’s first Zapotec president, Benito Juarez, a native to Mexico’s southern region, Oaxaca. Whether the Mexican president had a penchant for wearing silly hats or not remains to be seen, but the success of Benito’s Hat is undeniable. Fordham and Fuentez Cruz's strategy was to make Benito’s Hat more than a lunch option, offering margaritas to create a desirable evening dining experience as well. Similar to Chipotle, Benito’s Hat has targeted more affluent areas, basing their stores in London locations that rate between nine to ten, with 86% of their locations on a stable trajectory to remain strongly rated, and with 14% projected to improve.

Benitos HatFigure 4: Benito’s Hat GB estate. (Source: LDC)

So, are they going to remain as city centric as they have been? In 2014, private equity investor, Calculus Capital invested £1.4 million in the chain to contribute to rapid expansion along Britain’s high streets, which saw the opening of their first store outside of London, in Oxford. Their newly appointed Managing Director, Michael Pearson, is expected to oversee their expansion. It’ll be important for Benito’s hat to use data to intelligently consider where the best locations are for their expansion. So, Mr Pearson… if you’re reading this, give us a call!

Wahaca

Founding Wahaca in 2006, Thomasina “Tommi” Miers, is a native to the UK and is well known for her culinary debut on Master Chef. She has also written several cook books, such as: Cook: Smart Seasonal Recipes for Hungry People, The Wild Gourmets: Adventures in Food and Freedom, and Mexican Food Made Simple. She regularly travels back to the city of Oaxaca, where the concept of Wahaca was inspired, to research new dishes for her menu. As a culinary expert in love with Mexican food, it’s no surprise that the chain has bloomed to be so successful, the restaurant has now won several awards, such as the Best Multiple Restaurant for 2015, the International Interior Design award for 2012, and the Sustainable Restaurant Group of the year for 2012 and 2013.

WahacaFigure 5: Wahaca's GB estate. (Source: LDC) 

Boasting 29 venues in total, Wahaca is based largely within London, but has branched out to locations such as Manchester, Bristol, and Brighton, to name a few. 62% of their locations have a LDC Health Index rating of above nine out of 10, with 79% of them set to maintain their rating.

Wahaca

Figure 6: Health Index for Wahaca (Source: LDC)

We couldn't finish without mentioning Tortilla, who often feature on LDC's lunchtime rosta. Tortilla came in at number five on our Top Fast Food brands of 2017 list so they continue to show the rest of the market how its done by providing quick, fresh and delicious burritos to the hungry workers. Tortilla continue to expand and currently have 35 stores, ranging from Glasgow down to Brighton.

Conclusion

Pitching the US against the UK, who’s done it better? As mentioned earlier, it seems the US restaurants struggled to establish a Tex Mex market in the UK with a need for marketing and awareness of the genre. The British Tex Mex founders however were not going to wait around for the states to come to them. Benito’s Hat recently celebrated its 10th birthday with a fiesta and Wahaca has been operating since 2006, with both brands leading the way and educating the British market to how delicious Mexican food really is.

If we look at all these brands’ portfolios – who seems to have the best grip on the UK Tex Mex market?

Tex-Mex brands across GBFigure 5: Estate size for selected Tex-Mex brands across GB. (Source: LDC)

Wahaca has the highest percentage of Tex-Mex stores out of the four retailers we’ve looked at, 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.

I think the results are obvious: With both of our UK competitors appearing to do well for themselves and only one US retailer keeping pace in our selection, the UK wins this edition of United Plates of America! And with that, I’m off to get a Burrito! Hasta Luego!

Download the 2015 Scottish Retail Report

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