Salad chain Chopt in January purchased Dos Toros Taqueria in a deal designed to enforce the two fast-casual brands and share best practices in a competitive marketplace.
"At Chopt, we've invested heavily over the course of the past five years in consumer-facing assets to make the salad buying experience as convenient as possible," Chopt CEO Nick Marsh told Cheddar. "We'll be able to bring all of that investment over to Dos Toros very swiftly."
The New York City-based companies will join under a new parent company called Founders Table Restaurant Group, but they will maintain their separate brand identities.
"We believe these are great brands in and of themselves, so the focus is not on doing anything too hodgepodge," said Marsh, who will take over leadership of the combined company.
The companies share a similar origin story. They opened their first storefronts near Manhattan's Union Square — a veritable mecca for fast-casual restaurants looking to feed hungry office workers and build up their brand identities in New York City's accelerated marketplace.
One of the first initiatives of the restaurant group will be to expand Dos Toros into the same East Coast footprint as Chopt. The salad chain now operates 66 locations in eight states, and Dos Toros has 21 locations in three states.
"As we grow, we want to bring Dos Toros where Chopt is already established," Marsh said.
That doesn't mean the kind of hybrid restaurants common at gas stations and rest stops, but Marsh said there could be a duel loyalty program.
Both brands have made strides to diversify their business models to keep up with the competition. Chopt in November opened a pickup- and delivery-only restaurant to meet the rising demand in digital orders, which make up 40 percent of the business. Dos Toros has grown its catering business to 10 percent of sales.
"Both of these restaurants are profitable and have been profitable for a very long time," Marsh said. He added that the companies' combined annual revenues are $300 million.
The push to offer expanded delivery and off-premise services has impacted the entire industry. As in-store sales have weakened, fast-casual has seen the biggest jump in delivery sales, according to industry data from Black Box Intelligence.
The monthly average of delivery sales increased from 10.3 percent in August 2018 to 28 percent in August 2019. That's compared to a 7 percent increase for the whole food industry.
The fast-casual segment is increasingly competitive and dominated by major players such as Chipotle, with its 2,500 stores and $4.8 billion in revenues.
Other mid-sized companies have turned to acquisitions as well to keep pace. Chopt rival Sweetgreen in June purchased meal delivery company Galley Foods in Washington, DC. The acquisition gives Sweetgreen access to new expertise in logistics and food storage.
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