The Story of California Tortilla: Franchise Review and Fees

Hello! Who are you and what business do you run?

I’m Bob Phillips, president and CEO of California Tortilla. Our brand is a ‘California-style’ fast-casual Mexican restaurant franchise that reimagines what Mexican food can be through chef-driven menu creations made with the freshest ingredients and boldest flavors out there.

While we cater to individual customer needs, we also offer bold and exciting flavor profiles in our signature products that include guacamole, salsa, queso and other sauces made in-house in small batches.

Beyond our top-tier menu though, we dedicate our time to making the Cal Tort customer experience exceptional in every way. We love our customers and every decision we make is in line with our goal of better serving them to bolster the continued success of our franchisees.

Chips, queso, guacamole and salsa from California Tortilla.

Company Snapshot: Franchise Fees / Royalty

  • Founded: 1995
  • Franchising Since: 2003
  • Number of Existing Locations: 40
  • Total Initial Investment: $402,400 to $697,000
  • Initial Franchise Fee: $40,000
  • Ongoing Royalty Fee: 5%
  • Ad Royalty Fee: 2%
  • Net Worth Minimum: $1 million, with $250,000 in liquid assets
  • Agreement Length: 10 years

What’s your backstory?

With my business partner and current California Tortilla COO Keith Goldman, I opened the third-ever California Tortilla 18 years ago. When we first encountered the brand in Bethesda, Maryland in the mid-1990s, we were initially drawn in by the lines out the door. What brought us back again, though, was the restaurant’s sense of humor, wacky promotions and delicious food. 

At that point, we were both seasoned restaurant operators with ample franchising experience, and we recognized the potential of the brand immediately.

After opening our location, we bought a majority stake in the brand from founders Pam Felix and Alan Cohen and shifted California Tortilla’s identity to a food-first brand while still maintaining its fun-loving atmosphere. This meant elevating our menu with freshness and flavor so that our offering was the brand’s most distinct personality trait without sacrificing any other defining characteristics.

Since then, our team has grown Cal Tort to a 40-plus unit brand with a strong presence in the Mid-Atlantic region of the U.S. that is now expanding across the nation through franchising. After opening five new locations in 2018, we’re preparing to open six more locations this year.

Inside of a California Tortilla location.

Tell us about your menu and customer offerings.

Our extensive menu is chef-inspired, pulling inspiration from the global community for both menu staples and rotating options. At many other fast-casual Mexican restaurants, you walk down the line and pick and choose ingredients to build your meal—but at Cal Tort, you can order both signature items or your own creation.

Our dishes are made with ingredients that seem impossible to combine, but before you know it, you’re hooked on flavors like Crunchy BBQ Ranch or Blackened Chicken Caesar.

As evidenced by our avocado logo, guacamole is one of our signature menu items—it’s hand-smashed throughout the day in small batches using only perfectly ripened Hass avocados.

Our salsa is made from fresh Roma tomatoes three times per day, and all queso and sauces are also made daily from scratch. Nothing at Cal Tort is made in advance or frozen, and it never will be.

The California Tortilla Menu.

What makes this opportunity unique?

In the restaurant industry, fast casual is the top-performing sector. Within that, the Mexican food segment is the top-performing subcategory. We exist at the intersection of these consumer preferences, a sweet spot that continues to grow.

At California Tortilla, our commitment to using the freshest, most high-quality ingredients available sets us apart. We prepare more than 25 small-batch recipes in-house from the freshest ingredients possible on a daily basis, and you’ll never see a freezer in a Cal Tort restaurant—instead, produce is received several times a week.

The breadth of our menu and its varied flavor profiles are totally unique. Through the years, we’ve built this trust with our customers that has allowed us to be creative with different flavors. They’re always willing to try our new creations—and them delicious—which has resulted in strong customer culture.

Each of our 40-plus locations also commits to playing hits from the ‘80s and boasts an impressive collection of more than 75 different hot sauces on what’s known as the Wall of Flame.

The Wall of Flame.

What does the future of the business look like?

We’re currently working on two projects we’re particularly excited about: A total upgrade of our current mobile app and the implementation of a revamped service structure.

Our current app has a loyalty feature and online ordering capabilities, but because we’re seeing an influx of sales coming from the platform, we’re investing in improving its functionality and capabilities to better meet the needs of both our customers and our franchisees.

As for our service structure, we’re in the process of making a larger-scale structural upgrade that utilizes a ‘pay last’ model. In our current state, customers order and pay first before receiving their food.

We’ve been studying the fast-casual segment and believe that making the switch to a ‘pay last’ model gives our customers further customization capabilities.

And while most ‘pay last’ concepts are ingredient-based, we’ve created a hybrid model that incorporates curated menu items into this process. As customers go down the line, they can add or remove specific ingredients, resulting in an end product that is exactly what the guest wants.

By reducing the friction in the transaction, we see this as a chance to increase our top line and appeal to the young consumer, above all, while simultaneously adding to our value proposition and giving us pricing power.

Fresh California-inspired food.

What does a typical day look like for a franchisee?

Our franchisees are largely owner-operators who enjoy spending time in their restaurants. They typically determine their own hours, and thrive in the connectedness of California Tortilla’s family-friendly, community-oriented atmosphere. The footprint of our locations isn’t huge, so they don’t have a ton of employees to manage, yet things still stay consistently busy—and profitable.

When they’re not supporting their employees with any and all back-of-house needs, you can catch our franchisees spend time in the front of their stores, connecting with guests and ensuring the customer experience is always top-notch.

We take pride in our stores having present business owners who love connecting with the people inside of their restaurants. 

Is a California Tortilla Franchise in Your Future?

How much can you realistically expect to make?

Our franchisees earn an average gross revenue of $1,023,268. And while the Federal Trade Commission won’t allow us to speak more directly to this. Financing is available to qualified borrowers through third-party lenders. 

What training programs are in place to help franchisees succeed?

Our franchisees engage in four weeks of comprehensive training at our training restaurant in Maryland, as well as two weeks of specialized on-site training during the Grand Opening process. Upon joining the Cal Tort family, franchisees are assigned a dedicated Franchise Business Consultant who helps them navigate the issues that come with getting their new business off the ground.

Our support also includes guiding franchisees through the creation of their local store marketing plan, setting up a budget as well as processes and best practices that will set them up for success and profitability.

What are the characteristics of successful franchisees?

Our most successful franchisees come from a restaurant background. We have great systems in place, but those who have the ability to pick it up with ease are the franchisees that thrive. 

Our best franchisees are also the mayor of their restaurant—they’re involved in their community, both inside and outside of their store. They’re engaged, excited and have the energy and skillset to make connections—extroversion helps tremendously.

That being said, we have introverted franchisees who are studious and excel in technical aspects of the business, but they still have extroverts on their team to get their business out there the way we expect.

Final comments?

Cal Tort is a worthwhile investment for many reasons, but the top two are great unit-level economics and the availability of prime territories. Our menu, service system and buildout are all specifically designed to be profitable, and have generated strong returns for our franchisees as a result. 

Also, since we’ve elected to grow concentrically from our Washington, D.C.-area base, much of the U.S. is still available for development. As an emerging brand poised to break into the Kansas and Tennessee markets later this year, California Tortilla makes for a great potential investment with plenty of room to grow.

Where can we go to learn more?

About Support Staff

Brett Lindenberg is the founder of Food Truck Empire and Food Empire Pro. Brett's mission is help to entrepreneurs start and grow profitable food businesses. Since 2014, Brett has interviewed over 100 entrepreneurs on the Food Empire Pro podcast and written hundreds of blog posts on all aspects of food business. Brett has been quoted in media outlets like Entrepreneur Magazine, CNBC, and The Washington Post.