Taco Cabana

Taco Cabana was founded by Felix Stehling in September 1978 with its first restaurant at the corner of San Pedro and Hildebrand Avenue in Midtown San Antonio.[3] Stehling purchased a vacant Dairy Queen because the family needed additional parking space for their popular bar across the street, the Crystal Pistol. Stehling decided to open a taco stand. The open-air design of the existing structure led to the "patio cafe" concept that defined the chain's subsequent locations. Felix Stehling's wife, Billie Jo Stehling, created the décor and interior theme for the restaurant chain. After finding all of the patio furniture stolen following the first night of business, Stehling decided to keep the place open 24 hours.[4]

The original Mexican patio cafe

The restaurant focused on fresh foods, rather than pre-packaged or pre-prepared foods. The restaurant served beer and margaritas, staying open 24-7 and allowing takeout orders. As the business grew, Stehling asked his two brothers to help expand the chain throughout San Antonio. It soon grew to nine restaurants. In 1986 the brothers left the company, after differences in opinion on how to manage the business.[5]

In 1990, Taco Cabana began expansion into neighboring states and continued its growth throughout Texas. Richard Cervera became president of the company in 1990, implementing a plan to franchise the brand.[5]

In the late 1980s and early 1990s, the success of Taco Cabana encouraged imitators such as Two Pesos. In January 1987 Taco Cabana filed a suit against Two Pesos for allegedly duplicating Taco Cabana's branding style. Two Pesos lost the case and appealed, and in 1992 the Supreme Court ruled in favor of Taco Cabana and awarded the company $3.7 million in damages.[5]

In 1992 Taco Cabana went public with its first stock offering, and ended the year with 17 restaurants.[5] In January 1993 Taco Cabana announced that it was purchasing cash-strapped Two Pesos' restaurant assets in exchange for 940,000 shares of Taco Cabana stock, valued at approximately $22 million.[6] For $30 million, the sale[7] included all 30 San Antonio restaurants of Two Pesos.[5] Taco Cabana converted most Two Pesos locations into Taco Cabana restaurants, closed others and sold the associated Shortstop Hamburger chain.

Taco Cabana sales hit a high in 1994 at $127 million. That year, Stehling decided to resign as chairman and was succeeded by Cervera. Despite the rise in revenues the company saw while Cervera was in charge, stock prices for Taco Cabana drastically dropped, and Cervera resigned in 1995 and was replaced by Stephen Clark.[5]

In 1995 Cervera resigned as president for a position with the House of Blues,[5] remaining chairman and CEO.

Stephen Clark was appointed both COO and president. Clark began evaluating of Taco Cabana's operations with his own management team. He closed several of the company-owned restaurants, restructured some of the franchisee debt, sold assets not related to restaurants, and slowed the expansion. In 1996, Taco Cabana introduced a new type of restaurant to the Dallas-Fort Worth area, reminiscent of an old Mexican cafe. It featured a rounded front, clay tile roofing, aged wood paneling and stainless steel counter tops. Customer visits and profits increased, with plans to extend the designs to new restaurants.[5]

Taco Cabana had spent around $30 million on brand image by 2000, and while profits had grown, stock price remained low. Clark began looking at sale options. In 2001 the company became privately held as a wholly owned subsidiary of Carrols Restaurant Group. After the acquisition, Clark left the company[5] and was succeeded by Mike Biviano.

In 2001 it introduced its Mexican grill concept, including made-to-order grilled beef, chicken, pork and shrimp. Throughout 2002, the franchise closed seven stores in the Phoenix, Arizona area, but Taco Cabana proved profitable. In 2003 Taco Cabana began creating a new restaurant prototype with an eight-foot char-grill.[5] That year Taco Cabana opened nine new restaurants. In 2004, it marketed the concept of fresh food and San Antonio heritage. From 2004 through 2005 Taco Cabana added five more restaurants.

The franchise operated 120 restaurants in 2005.[5]

A Taco Cabana location in Dallas, Texas.

In 2012, Taco Cabana began renovating their restaurants in San Antonio and Houston. The new design featured decorative metal "estrella" (star) lights hanging from the ceiling, papel picado accents throughout and large street-life photos from Mexico decorating the walls.[8] As of October 1, 2012, it operated 160 restaurants and was a subsidiary of Fiesta Restaurant Group.[9] Later that year, the founder, Felix Stehling, died at the age of 87.[10] In December 2012, Fiesta announced that would be moving the location of their headquarters to Addison, Texas, with plans to grow substantially over the next 2 years.[11]

In January 2016, Fiesta had 162 company-owned and six franchised Taco Cabana restaurants. In February 2016, there were plans to open up to 10 new Taco Cabana restaurants in Texas, adding to the 164 company-owned stores and 7 franchised ones.[12] In 2017, the store saw some declines in sales in the second quarter, which Fiesta attributed to less marketing. As of July 2017, it had 176 Taco Cabana stores.[2] On January 14, 2020, it was announced that Fiesta Restaurant Group will be closing 19 Texas Taco Cabanas immediately, citing - “eliminate all stores with significant losses".[13]

In 2008, Taco Cabana rolled out the “Cabana Cares” program to elicit guest feedback, followed by the “Welcome to the Great State of Cabana” passport loyalty program that summer.

In San Antonio, Taco Cabana is involved with several local military organizations, offering discounts for those in the military.[20] For a number of years has supported the Warrior and Family Support Center (WFSC) at the Brooke Army Medical Center.[9] Since 2010 Taco Cabana has hosted Taco Treat fundraisers for the WFSC.[21]