Taco Cabana

Taco Cabana is an American fast casual restaurant chain that serves Tex-Mex cuisine. It is a wholly owned subsidiary of YTC Enterprises LLC, and headquartered in San Antonio, Texas. Taco Cabana is recognized for its "pink" color scheme and semi-enclosed patio dining areas. Many menu items are handmade daily on-site, in open-display cooking areas.

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. Stehling purchased a vacant Dairy Queen because the family needed additional parking space for their 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.

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.

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.

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.

In 1992 Taco Cabana went public with its first stock offering, and ended the year with 17 restaurants. 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. For $30 million, the sale included all 30 San Antonio restaurants of Two Pesos. 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 resigned as chairman and was succeeded by Richard 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.

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