Fuzzy’s Taco Shop Is ‘Dynamic’ Addition to Dine Brands Portfolio

For its first acquisition in about 15 years, Dine Brands wanted to find a franchise in a “dynamic and fast-growing” category, CEO John Peyton said. The Applebee’s and IHOP parent found its perfect match in Fuzzy’s Taco Shop.

Dine acquired the 140-unit, fast-casual taco franchise late last year for $80 million from Experiential Brands, an NRD Holdings subsidiary. The acquisition is the company’s first since buying Applebee’s in 2007.

Dine’s existing brands are much larger than Fuzzy’s—Applebee’s has more than 1,600 stores and IHOP has more than 1,700.

The fast-casual and Mexican sectors each fit Dine’s requirements. The company also wanted a brand with a couple hundred units at most, and a strong management team already in place. On paper, Fuzzy’s checked all the boxes.

Peyton was hooked right away, he said. “When you walk into the restaurant, you’re just immersed in a place that feels different and special,” he said, referencing some of Fuzzy’s quirks. The franchise has a hot sauce it calls “butt-burnin’ sauce” and refers to itself as “sassy” and “badass.” “As a marketing guy, I love the brand,” Peyton said.

The food matches the brand’s energy, he said. Fuzzy’s hosted the Dine board of directors in Colorado for lunch so they could try the menu. “They had the same reaction I did when they walked in, which is they had just a huge smile on their face,” Peyton said. “They loved the food. … That was a real emotional moment for us when the board really had the moment to say, ‘Oh, I get it now.’”

In his career in marketing and operations, Peyton learned you’re not only investing in the brand, but also its team. “It was clear to us, as we concluded due diligence, that Paul and his team would be a great fit in Dine, a great addition to us and the way we think,” Peyton said.

When Fuzzy’s was up for sale, Dine made the “best emotional connection,” President Paul Damico said. “We got the sense that they felt really good about us.” Damico is a seasoned restaurant executive, with previous roles at Focus Brands, Naf Naf Grill and Global Franchise Group.

Restaurateur Paul Willis founded Fuzzy’s in Fort Worth, Texas, in 2001, and sold the brand in 2003 to Alan and Chuck Bush. The father-son duo has since exited the brand. Willis died in 2013 at the age of 48.

Fuzzy’s, which is 99 percent franchised, is already seeing benefits from the acquisition, Damico said, namely through Dine’s technology resources and expertise.