U.S. Markets closed
  • S&P 500

    +11.90 (+0.34%)
  • Dow 30

    -28.09 (-0.10%)
  • Nasdaq

    +42.28 (+0.37%)
  • Russell 2000

    +10.25 (+0.63%)
  • Crude Oil

    -0.86 (-2.12%)
  • Gold

    -1.20 (-0.06%)
  • Silver

    -0.01 (-0.04%)

    +0.0042 (+0.3560%)
  • 10-Yr Bond

    -0.0070 (-0.83%)
  • Vix

    -0.56 (-1.99%)

    -0.0042 (-0.3207%)

    -0.1200 (-0.1145%)

    +204.82 (+1.59%)
  • CMC Crypto 200

    -1.40 (-0.54%)
  • FTSE 100

    +74.63 (+1.29%)
  • Nikkei 225

    +42.32 (+0.18%)

Torchy's Tacos CEO on pivoting their business model over COVID-19 uncertainty

Torchy’s Tacos CEO GJ Hart joins Yahoo Finance’s On The Move panel to discuss how the company is successfully expanding during the pandemic as well as break down how the coronavirus has impacted U.S. restaurant chains.

Video Transcript

JULIE HYMAN: Let's talk about what the restaurant industry has been doing amidst this pandemic in order to adapt and still try to grow at this time. I want to bring in CJ Hart. He is the CEO of Torchy's Tacos. And the chains has 82 locations in seven states. And CJ, you guys are planning on opening more by the end of the year. How, talk to me [AUDIO OUT] that plan and the growth plan [AUDIO OUT] seen this pandemic and the challenges that have come with it.

CJ HART: Well, first, thanks. It's great to be with you this afternoon. Look, at the end of the day, the uncertainty that happened mid-March with the pandemic, certainly we went through all the thought process and the uncertainness that everybody else has. And fortunately for us, we were able to pivot pretty significantly and really find a way to attract our guests to 100% off premise. And since that time, we've continued to move forward and grow sales and really pay attention to get creative around what we do.

And our managing partner program, which is our single unit operator program, I give a lot of credit, because they're essentially partners in the business. And so we've come through this as well as can be expected. And to show that, we've actually opened eight restaurants during the pandemic as well. So we've opened up three new markets. And those markets have received us extremely well. And our team members have done an incredible job getting those restaurants open. So yes, we do have one more restaurant to open yet this year. So we'll finish the year at 83 restaurants.

ADAM SHAPIRO: I'm curious, and before I get to ask you what's the secret to good guacamole, have you had difficulty because of the pandemic getting the supplies? I mean, it was early on in the pandemic, the problems at some of the meat processing plants, and I was just curious if the supply chain has held up for you.

CJ HART: It was, and we've got great supply chain partners. And we were very fortunate that we were not impacted in any way, shape or form. Even getting PPE equipment and all those things from a safety perspective, while it was difficult, we were able to get through that as well.

DAN HOWLEY: I just want to ask how you've been seeing customers visit restaurants. Is it a lot of still indoor dining? Is it still a lot of outdoor dining? And are you seeing kind of the differential between outdoor dining and indoor dining as something that hurts?

CJ HART: Well, in our case, one of the things we have been working on prior to COVID, is a strategy where we needed to have Torchy's available where guests wanted it. So where they want it, when they want it, how they want it. And so we've been working extremely hard on all of our off premise channels, and to grow those, while our in restaurant dining is still a big part of our business.

So going into COVID, we were 2/3 dine in, 1/3 off premise. And obviously, in mid-March, that went to 100% off premise. And we had to makeshift drive-throughs, we had makeshift curbside, because it wasn't in our DNA. It has started to becoming in our DNA, but it wasn't throughout the system. So we started to migrate. And no, the restaurant dining rooms have been limited in Texas and our other markets that we're in as well.

So we fortunately, have patios in most all of our restaurants, so outdoor dining became a big part of what we do. And candidly, it's consumers cautiousness around the uncertainty around the pandemic. So at this point, we did everything possible to be able to bring Torchy's where they wanted it. So there's no question, our off premise business continues to grow. But at the same time, now as we've gone through this, we're seeing our in restaurant dining go up significantly.

SIBILE MARCELLUS: And give us a sense of how you interacted with the Paycheck Protection Program. Did you guys actually get a loan, need a loan? And also, what are your thoughts on basically another round of fiscal stimulus being stuck in Washington as the election bears down?

CJ HART: Well, with all the uncertainty back in March and the initial PPP, we did, for the safety and for the benefit of our team members, and we did take some PPP money. And in fact, we did exactly that. We brought back over 1,500 team members and we've stayed current with our landlords and we paid our vendors. So we feel good about being able to do that for our team members.

In terms of additional stimulus, I think that the industry is really struggling. I'm not sure that people really understand the effects of how bad people are hurting. Not every brand has the ability to pivot as much as we have. And so from my perspective, it isn't something necessarily Torchy's needs, but it's certainly I think something that would be helpful to our industry. When you start seeing the kind of closures that we're seeing, it's only going to get worse if it doesn't happen.

JULIE HYMAN: And speaking of which, CJ, the company of which you were formerly head, California Pizza Kitchen, you were CEO there, and that's a company that has filed for chapter 11. What do you think, I mean, it's so tough right now to say that the company can or can't manage through the pandemic. Do you think that companies do have control? Or is it kind of out of their hands in some cases?

CJ HART: Well, in many ways, if your situation is where you really have limitations around the real estate and you don't have patios and you don't have the ability, if you're in the case of CPK, malls, you have those things that you can't change. So with the limitations that the government has put on the restaurant industry, it becomes very problematic.

And then you add, layer on states like California, if you've got a heavy concentration, it's been much slower to reopen. And I think it's almost impossible. So as good as you are and sad as it is to see, there's just a lot of great brands and a lot of great restaurants that are going to suffer, no fault of their own.