Rusty Taco Franchise in 2024: Costs, Fee & FDD

Rusty Taco was founded by Rusty and Denise Fenton, along with their partner Steve Dunn, in 2010 in Dallas, Texas. The inspiration for the brand came from Rusty’s love for tacos, sparked by a memorable encounter with a street vendor in Acapulco, Mexico, selling fish ceviche tacos. Rusty’s dream was simple: to create an affordable, neighborhood taco stand that offered authentic flavors and a welcoming atmosphere. His vision of fresh, hand-crafted tacos with a casual, community-focused vibe quickly turned into the first Rusty Taco location, built from a converted gas station. The brand’s emphasis on quality ingredients and a relaxed, friendly dining experience quickly garnered local support.

Rusty Taco’s menu revolves around its namesake – tacos. The core offerings include a variety of tacos made with fresh ingredients and traditional flavors, such as fish, carnitas, and carne asada. The tacos are complemented by a selection of sides, salsas, and chips, as well as signature drinks like margaritas. While the tacos remain the star, Rusty Taco also provides a casual, laid-back dining experience where guests can enjoy good food and good company. The brand caters primarily to taco lovers seeking a quick, flavorful meal in a friendly environment, with a particular appeal to families, young professionals, and anyone looking for a fun, casual dining experience.

Since its first location in Dallas, Rusty Taco has grown steadily. The franchise operates across several states in the U.S., with locations in major metropolitan areas like Austin, Minneapolis, and Phoenix. As of now, the brand has over 20 locations across the country and continues to expand. Rusty Taco’s focus on high-quality, authentic tacos has helped it carve out a niche in the fast-casual dining space, attracting customers who appreciate the brand’s dedication to flavor, freshness, and an inviting atmosphere. Rusty Taco is not yet international but has ambitions to expand further, tapping into markets that value quick, tasty meals with a distinct twist.

Rusty Taco offers robust franchise support for its partners, ensuring that each location delivers the brand’s signature experience. The franchise system provides comprehensive training, which includes everything from food preparation and customer service to restaurant operations and marketing. Franchisees also benefit from ongoing support in areas such as site selection, staff training, and marketing campaigns. Rusty Taco’s dedication to high-quality products and a welcoming atmosphere is reinforced by a strong operational framework that helps franchisees maintain consistency across locations. The brand’s commitment to helping franchisees succeed is an integral part of its continued growth. Additionally, Rusty Taco’s focus on community and culture ensures that franchisees are equipped to build relationships with their customers, making each location feel like a local gathering spot.

Rusty Taco Franchise Insights

1. Rusty Taco is known for its handmade, fresh ingredients, including tacos like their fish ceviche, which was inspired by a street vendor Rusty encountered in Mexico.
2. The brand prides itself on creating a welcoming environment where customers feel like they’re part of the community. Each location embodies Rusty’s vision of a “neighborhood taco stand,” making it a go-to for regulars.
3. Rusty Taco offers a selection of margaritas, making it more than just a taco joint. Their drink menu, which includes signature cocktails, helps to create a fun, casual vibe that appeals to a wide range of customers.
4. The brand’s emphasis on using fresh ingredients daily allows for high-quality products, which helps keep customers coming back. Rusty Taco’s focus on freshness is a major selling point, especially in the highly competitive taco segment.

Rusty Taco Franchise Key indicators

How much does it cost to open a Rusty Taco franchise?

Understanding the potential investment size and capital requirements is crucial when considering opening a Rusty Taco franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.

Min & Max Investment

Opening a Rusty Taco franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). you can see a breakdown of the costs to open a Rusty Taco below from the most recent Item 7 below:

Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.

Required Capital

To open a Rusty Taco franchise, the required capital involves both the initial investment costs and a net worth requirement set by Rusty Taco. Let’s take a closer look below:

• Total Investment The total investment to open a Rusty Taco franchise ranges from $523,000 to $1.12 million, which includes expenses such as real estate, equipment, build-out costs, signage, and initial marketing efforts. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
• Liquid Assets Typically, fast-casual franchises like Rusty Taco require liquid assets (cash available for immediate use) between $150,000 and $250,000. This ensures that franchisees have the necessary cash flow to cover initial operational costs such as payroll, inventory, and any unexpected expenses during the ramp-up period.
• Net Worth To qualify as a franchisee for a brand like Rusty Taco, the required net worth is generally in the range of $500,000 to $1 million. This reflects the overall financial stability needed to support the franchise’s operations, covering initial investment costs and demonstrating the financial ability to sustain the business over the long term.

How much does a Rusty Taco franchise owner make?

Calculating the salary of a Rusty Taco franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Rusty Taco franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.

Rusty Taco Revenue & Gross Sales

Rusty Taco has demonstrated strong revenue performance, with median gross sales of $1,131,541 across its franchise locations. This figure reflects the brand’s solid position in the fast-casual taco market, highlighting its appeal to customers seeking quality, affordable tacos. The revenue performance is a key indicator of the brand’s consistency and potential profitability, making it an attractive option for potential franchisees.

Which key factors impact the average revenue performance of Rusty Taco franchisees?

The strong performance of U.S. franchisee median gross sales for Rusty Taco can be attributed to several factors. First, the brand’s focus on authentic, fresh ingredients and a unique, flavorful menu sets it apart in the competitive taco market. The casual, neighborhood-centric atmosphere appeals to a wide range of customers, fostering customer loyalty and repeat business. Additionally, Rusty Taco’s strategic locations in major metropolitan areas help capture a steady stream of foot traffic. The brand’s franchisee support system, including training and marketing assistance, plays a significant role in ensuring consistent operations and maintaining high standards across locations. This combination of quality food, strong community ties, and operational support has likely contributed to its impressive sales performance.

Rusty Taco Franchise Operational Costs

When considering opening a Rusty Taco franchise, it’s important to evaluate the key ongoing operational costs that will directly impact the profitability and sustainability of the business. These costs can vary based on location, but here are the primary expenses to keep in mind:

• Labor Costs This includes wages for staff, management salaries, and any benefits offered. Staffing levels will vary depending on the size of the location and hours of operation, but labor is a significant ongoing expense.
• Food and Beverage Inventory Since Rusty Taco prides itself on fresh ingredients, food and beverage inventory management is a critical ongoing cost. This includes the purchase of meats, tortillas, vegetables, beverages, and other ingredients.
• Rent and Utilities Lease payments for the restaurant location, along with utility costs like electricity, water, and gas, are essential operational expenses. Rent costs will depend on the market and property size.
• Supplies and Packaging Costs for disposable items such as packaging, napkins, and to-go containers will add to ongoing expenses, especially if the restaurant offers takeout and delivery services.
• Maintenance and Repairs Regular maintenance for kitchen equipment, HVAC systems, and the restaurant space is necessary to ensure smooth operations and avoid costly repairs down the line.

These operational costs are essential for running a successful Rusty Taco location and should be carefully planned for when budgeting and projecting financial performance.

Rusty Taco Franchise Fees

When evaluating the financials of opening a Rusty Taco franchise, it’s essential to understand the ongoing fees that will impact your profitability. These fees are standard for most franchises and contribute to the brand’s support system, marketing efforts, and overall growth. Here’s a breakdown of the primary ongoing fees you’ll encounter:

• Royalty Fee Rusty Taco charges a 5% royalty fee based on gross sales. This fee supports the overall brand, operational systems, and provides franchisees with continuous support, ensuring access to proprietary recipes and operational guidance.
• Brand Development Fund Contribution Franchisees are required to contribute 1% of their gross sales to the brand development fund. This fee funds national advertising campaigns and promotional efforts, helping Rusty Taco maintain visibility and attract new customers across various markets.
• Additional Fees In addition to the royalty and brand development fees, franchisees may incur additional costs for training programs, technology systems, and other operational tools.

These ongoing fees contribute to the support structure that keeps Rusty Taco franchises running smoothly and growing successfully.

Rusty Taco Franchise Earnings

The earnings of a Rusty Taco franchise owner can vary depending on several factors such as location, sales volume, operational efficiency, and effective cost management. On average, based on the latest data, the median gross sales for a Rusty Taco franchise is approximately $1,131,541. For an owner-operator who actively manages the day-to-day operations, estimated earnings can reach around $170,000, reflecting an operating profit margin of 15%.

These figures indicate the potential for strong profitability, especially for franchise owners who take a hands-on approach to running the business. By maintaining operational efficiency, optimizing costs, and driving sales, owner-operators can see substantial returns on their investment. The success of a Rusty Taco franchise largely depends on the owner’s dedication and involvement, making it a lucrative opportunity for those committed to managing the business actively.

How to Open a Rusty Taco Franchise

Becoming a franchisee with Rusty Taco involves several key steps that help ensure both you and the franchisor are well-prepared for a successful partnership.

1. Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
2. Franchise Application You’ll fill out an application form providing basic details about your background, financials, and experience to determine if you are a good fit for the brand.
3. Franchise Interview and Evaluation After reviewing the FDD, you may have a series of interviews with the franchise development team. These discussions focus on your business goals, experience, and ability to manage a franchise. This step helps both parties ensure a good fit.
4. Approval and Franchise Agreement If you are selected as a franchisee, you will sign a franchise agreement outlining the terms of the partnership, including financial obligations, territory rights, and other important conditions. Once the agreement is signed, you’re ready to proceed.
5. Site Selection and Lease Negotiation With support from Rusty Taco, you will select an ideal location for your restaurant. The franchisor will guide you through the process of finding a site that meets brand standards and securing the lease for the property.
6. Training and Setup Before opening your franchise, you will complete a comprehensive training program that covers everything from operational procedures to customer service. Rusty Taco also assists with the setup of your restaurant, ensuring it’s equipped with everything needed for operations.
7. Grand Opening and Ongoing Support Once everything is in place, your location will officially open. Rusty Taco provides continued support in marketing, operations, and training to help ensure your business gets off to a successful start and continues to thrive.

Pros & Cons

Pros

Strong Brand Recognition: Rusty Taco is a well-established brand with a loyal customer base, known for its casual, welcoming atmosphere and high-quality, flavorful tacos. This can make it easier to attract customers from day one.

Proven Business Model: The franchise has a strong track record of profitability with solid median gross sales, providing a clear roadmap for potential franchisees. The brand’s system for operations and marketing is well-defined, which can help you minimize risk and set up for success.

Flexible Operational Model: With a focus on simple, fresh ingredients and a casual dining atmosphere, the Rusty Taco concept can be easier to manage than more complex food service franchises. This simplicity can also lead to better cost control.

Growing Popularity of Fast-Casual Dining: Fast-casual dining, especially with a focus on tacos and fresh ingredients, is a rapidly growing segment in the U.S. This growing demand can provide long-term growth opportunities for franchisees.

Cons

Competition in the Taco Market: While Rusty Taco has a strong brand, the taco and Mexican food segment is highly competitive. You’ll face direct competition from other taco chains, local restaurants, and national fast-casual chains offering similar menu options.

Location Sensitivity: The success of a Rusty Taco franchise depends heavily on location. While the brand is widely loved, not every market will be ideal for this specific concept, and choosing the right site is critical to ensuring strong foot traffic and consistent sales.

Labor Management: As with many restaurant franchises, labor costs and employee turnover can be a challenge. Ensuring consistent, high-quality service and managing staffing needs efficiently can be an ongoing concern, particularly in a high-turnover industry like food service.