The Message is Clear: On The Border is Back

The world’s largest Mexican casual-dining chain has a new CEO, store design, menu, and much more.

May 12, 2021 Danny Klein

While Tim Ward joined On The Border in June 2020, a period when COVID-19 dominated every restaurant playbook, he wouldn’t call the time inopportune. The 125-unit brand spun the depths of the global crisis like many of its peers did—as a chance to reset.

Ward himself was doing something similar. He arrived at On The Border, along with CFO Bruce Vermilyea, from The Krystal Company. The burger chain declared Chapter 11 in January before agreeing five months later to a $48 million deal with an affiliate of senior lender Fortress Investment Group.

Ward had just assumed his post as president and COO the previous November when CEO Paul Macaluso departed for Another Broken Egg. At the time, Krystal was led by Argonne Capital Group, which purchased it from Port Royal Holdings in 2012. Ward says he helped guide Krystal through bankruptcy, and felt as though “we did as good of a job as we could do with that.”

Yet with the ownership change, Ward began to look for his next role. And there was some synergy on the table— Argonne also owned On The Border. “I recognized quickly, being an operator—I grew up in the business, started out as a dishwasher—that I thought I could add value to the On The Border platform,” he says.

The reason was a core-basics, nuts-and-bolts mantra. Ward knows how to run restaurants.

And what he saw at On The Border was brand drift that had begun to set in. Brinker International acquired On The Border in 1994. It then signed a deal with OTB Acquisition LLC, an affiliate of Golden Gate Capital, to sell the brand in 2010 for an undisclosed amount. Argonne completed its acquisition from Golden Gate Capital in June 2014.

Somewhere along that stretch, the nearly 40-year-old chain bloated offerings and strayed from what made it tick.

Ward hit the road, as much as one could during a pandemic. He visited more than half of the restaurants and took stock of where the gaps had formed. Nothing complex surfaced. “We went straight back to the basics and focused on one thing,” Ward says. “And that was on being guest centric.”

On The Border evolved into the world’s largest Mexican casual-dining chain on the back of a couple of pillars. Great fajitas and margaritas, and a fun, exciting environment that catered both to the bar occasion and to families.

As the store count and menu grew over the decades, complexity flooded the service line and consistency suffered. COVID allowed On The Border a chance to really zero in on its core competencies, Ward says. What’s the best way to identify hallmark traits? Take them away from guests.

So when dining rooms closed and customers sought ways to engage with restaurants they trusted, it shone a bright light on what people missed from On The Border.

The chain pared its menu down and rolled out a lineup with bolder flavors. Not spicier, Ward explains, but more flavorful. This is something that stemmed from loyalty and guest feedback. Customers, for instance, suggested taco meat was a bit bland. On The Border responded.

It also took a hard look at which items weren’t moving. “With someone like myself who’s been in the restaurant industry a long time, it’s easy for us to execute fajitas. It’s easy for us to execute tacos. But when you get that one item that you only sell one or two a day, it really stops the kitchen to a halt,” Ward says. “’Oh, I haven’t seen that in two days. How do you make that again?’”

“We took it as what do our guests want and love from us. And what items are just not selling anymore.”

Insights flowed in during COVID. On The Border didn’t have curbside pickup pre-pandemic. It didn’t offer the ability for guests to alert the restaurant they arrived in a parking spot. All of that changed.

A new online ordering system is in the works, too, as is a fresh rewards program and app that will enable consumers to track points for every visit.

And so understanding On The Border’s selling points wasn’t all that difficult, really. The brand just had to listen.

With those learnings came a new store design.

On The Border

A new-look On the Border with an old-time feel.

On The Border remodeled an Alpharetta, Georgia, unit that paused operations due to COVID challenges. It returned with a palette of white adobe and rustic colors. New chairs, tables, and barstools. On The Border added artwork inspired by the chain’s heritage. It even enlisted the same artist who created the first cowboy painting for On The Border’s original restaurants.

As chief real estate officer Mike Wood put it, “After almost four decades of learning and growing, our company has decided it’s time to go back to what first brought people to our brand—and that includes offering bolder-than-ever Tex-Mex food and pulling together design elements that are inspired by On The Border’s legacy.”

The best way to describe it is that On the Border’s updated prototype looks a lot more like its first locations, but with some modern fixes. The store improved signage for to-go orders and upgraded the bar with 10 TVs.

Ward says On The Border could retrofit throughout the system. It’s still analyzing assets. But every single store will eventually do “some sort of transformation,” he says, in the next five to seven years. “However fast we can get it done,” Ward says.

Echoing Wood’s sentiment, he adds, “And really make the world know that On The Border is not only back, but we’re better than ever.”

Some things you should expect to see: Many of On The Border’s older bars have mirrors, and they’re old, rustic, with wooden tables and metal chairs that don’t exactly portray comfort.

In redesigns, the chain stripped the mirrors and flushed the space with TVs (like the Georgia unit). It then added cushioned cottage chairs.

A lot of On The Border’s locations are “quite large,” Ward says. And there are divider walls to separate the bar and dining room. This allows it to imagine the space with a family-oriented section and a bar-centric area with louder music or sound when a big game is on.

“What we’re going to do,” Ward says, “is bring the communities and families together. They asked us for happy hour and for us to be a place to meet their partner or friends to have a drink with.”

Speaking of that, back in July, On The Border launched an elevated Happy Hour menu with $5 appetizers and an all-new offering—Queso Sampler—as well as discounted Dos Equis beers. For an additional $1, customers could upgrade to a grande Dos Equis draft or a grande House Margarita or try a grande Strawberrita or grande Mango Tango for $5.

An interesting COVID kickback, Ward explains, has been the shift of the lunch daypart. Before, lunch ran from about 11:30 a.m. to 1:30 p.m. Lately, likely thanks to remote work, people are showing up closer to 12:30 p.m., and service is running all the way into Happy Hour. In some cases, lunch and Happy Hour are one and the same for customers.

“It’s just really changing the way we’re doing business,” Ward says. “People want to come and enjoy our margaritas and fajitas at any time. And it’s different and it’s fun.”

Meanwhile, dinner dine-in sales continue to climb and have hiked in volume and comp over the last 60–75 days or so. To-go dinner business, surprisingly, has hardly dropped off. “Which has really shocked us,” Ward says.

“We thought we would trade to-go off for dine-in,” he adds. “Now, that is the opposite for lunch. We did a lot of catering to businesses and we did a lot of lunch for businesses. And that’s just not come back strong. And that’s where we’re still lagging behind a little bit because we were so heavy into that before. But if that comes back anywhere near where our dinner is doing, we will be extremely happy.”

On The Border

Happy Hour has taken on new meaning of late.

Clearly, On The Border is trying to court the energy and legacy of its brand affinity. It’s something that had to begin internally before it could ever work for guests, Ward says.

Ward hangs his hat on being an operator. He doesn’t have an office phone, he likes to say. Every employee in the organization has Ward’s cell. He’ll send corporate emails to individual restaurants. When Ward shows up, he talks to every employee he can wrangle.

“I meet with the cooks and the dishwashers. And I ask them, ‘what makes your job hard?’” he says.

Ward’s goal is to not have employees ask themselves, and each other, “who made this dumb decision? And why?”

He wants to be known as the guy who fixes it. “Tell me what I can do to make your life easier. And they love that. And they start believing in me and trusting me,” Ward says.

“I am available to every employee, every general manager, every area director,” he continues. “Any time they have good, bad, or just feedback they want to give me to help this brand, I love it. I’m passionate enough that I’m willing to listen, and I not only want to hear it, I put it back in their court. I expect them to tell me what we can do better.”

In today’s labor climate, where restaurants increasingly lament the ability to find workers, Ward says the GM is where the truck unlock lies. “I tell every single person that works for me. Great GM, great restaurant. Bad GM, bad restaurant. No matter how you look at it,” he says. “You can give a great GM a bad restaurant and he’ll fix it really quick. You can give a bad GM a great restaurant and he’ll make it bad really quick.”

According to recent Bureau of Labor Statistics data, 187,000 new restaurant jobs were added in April. Yet while the industry tacked on close to 650,000 new jobs since the beginning of the year, there are still about 1.7 million pre-pandemic jobs that have yet to return.

While staffing cuts were initially intentional in response to the labor crisis caused COVID, Black Box Intelligence said in its weekly report for May 10, there has been little movement in recent months. “This suggests that the data reflects what many restaurant operators have been very vocal about. It is extremely hard to find employees to work at restaurants,” the company said.

On The Border’s GMs and area directors, and Ward himself, traveled to stores and sat down with frontline workers. They asked not just what they need, but also if they had any friends they knew who wanted a job.

It created $250–$500 sign-on bonuses (depending on the title and need of the restaurant). It also made sure, to Ward’s earlier point, GMs were taken care of. As important as they were during the depths of COVID’s skeleton crews, they’re equally vital now in retaining and recruiting, and also just making sure stores can run with less when needed. Ward says more than 70 percent of GMs are hitting or maxing bonuses. “And we’ve got a culture of winning and telling them thank you by saying, we know you’re working hard, so here’s s a little extra money,” he says.

On The Border did that during COVID as well. It found a way to give every GM a thank you bonus at the end of the quarter.

The “we’re back” vibe is getting notice from more than guests and employees.

In the U.S., On The Border currently has six franchise locations and 117 corporate stores. About a month ago, the chain announced it signed its first new franchisee in more than 10 years.

Perspective Hospitality is set to open a store in South Padre Island, Texas, this summer in a Hilton Garden Inn. “Our franchise model has really picked up in the last 60 to 90 days as people are seeing On The Border is back and something is changing and they’re wanting to get in on the ground floor,” Ward says.

He adds Perspective Hospitality has already asked On The Border to scope out a potential second hotel location.

On the corporate side, a couple of LOIs were signed in recent weeks, and Ward believes the chain can open two to three of those a year, “at least,” in the foreseeable future.

Part of this growth will come with a smaller footprint. More in the 2,800–3,000 square-foot range. The larger unit will still flex for bigger areas.

But having some agility is key, Ward says. One thing about On The Border is that it’s hardly saturated. Its 125 locations are in 29 states. And 36 of those are in Texas.

“So that tells you we have multiple states that have one restaurant or none,” Ward says. “And in those states, like Ohio, we do wonderful in our one restaurant. We need to be more dense. There’s a ton of whitespace for us, we can easily grow in a lot of areas.”

The brand is expanding retail offerings, too. Soon customers will be able to pick up margaritas at stores like Total Wine. Frozen meal kits are being added to restaurants.

“We will continue to win in all of those ways,” Ward says. “But it all starts with us delivering great food with guest-centric employees and making our customers want to come back. We have to never forget that.”