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  • Taco Bell is huge in the U.S.

  • with over 7000 restaurants across the country.

  • It's one of the top five restaurant chains in the U.S.

  • based on sales.

  • It's not necessarily known for its quality but believe it or not Taco

  • Bell has been called one the healthiest fast-food chains.

  • In a recent Harris Poll also pointed out America's favorite Mexican restaurant.

  • I mean I love Taco Bell.

  • It's one of those type of restaurants that like, tacos.

  • I really love Taco Bell, I love the variety they have.

  • I would say that my girlfriend ordered about once a week because we just can't get enough of it.

  • Taco Bell has been known for its innovative menu items like

  • Doritos Locos Tacos, Nacho fries and Naked Chicken Chalupas.

  • The company says its commitment of value and innovation is what's

  • driving its continued sales growth.

  • But how many variations of cheap Mexican food can talk about concoct

  • before they run out of ideas?

  • Taco Bell now only competes for fast-food dollars with the likes of

  • McDonald's and Burger King.

  • They're also being challenged by many new fresh Mexican chains like

  • Chipotle, Rubio's, Qdoba and Baha fresh.

  • Taco Bell's rolling out new strategies to stay ahead of the competition.

  • It launched mobile food ordering, added a nationwide delivery and now

  • sells alcohol as some of its restaurants.

  • You can even get hitched at a Las Vegas flagship restaurant which has a chapel and a reception area.

  • Taco Bell has become a player in the breakfast business as well

  • stealing some market share from McDonald's.

  • But the company is also reeling from management shakeups.

  • Much of Taco Bell's recent innovations was initiated under the watch of CEO Brian Niccol.

  • But in 2018, Niccol left the chain to helm one of Taco Bell's biggest competitors:

  • Chipotle.

  • At Taco Bell, he was really kind of the rock star and Chipotle.

  • They got a really great CEO in poaching him from Taco Bell.

  • And now Taco Bell must continue to innovate without Niccol to make

  • sure they don't fall behind the competition.

  • To understand how Taco Bell became one of America's top fast-food

  • chains let's go back to how the brand got its start.

  • Taco Bell has been a pioneer in fast-food since the 1960s.

  • The chain is credited with introducing an Americanized version of Mexican food to the U.S.

  • The "Bell" in Taco Bell is named after this man, Glen William Bell Jr.

  • Glenn Bell was already a fast-food veteran by the time he opened the first Taco Bell.

  • Glenn started with a self-service hamburger stand in 1948 in San Bernardino, California.

  • It was just a few miles away from the spot where Dick and Mac McDonald

  • were making fast-food history with their burger joint.

  • Glenn introduced tacos at his stand in 1951 and claims to have

  • invented ready-made crunchy taco shells which made it possible to

  • prepare tacos as fast as McDonald's was making burgers.

  • For the fast-food industry at that time, speed was of essence.

  • So for Glen Bell to really develop a way to serve the food at a faster

  • rate was really big for his business and was a big piece of his success.

  • Then in March of 1962, Glenn Bell opened the first Taco Bell in Downey, California, just outside Downtown Los Angeles.

  • Early menu boards explained to curious Americans the proper way to

  • pronounce such exotic offerings like tacos and burritos.

  • By 1967, there were a total of 100 Taco Bell's. In 1970, with more

  • than 300 locations, Taco Bell became a publicly traded company.

  • Glen Bell sold 868 Taco Bell restaurants to PepsiCo for 148 million dollars and Pepsi stock.

  • Ultimately, Taco Bell and two other PepsiCo fast-food chains KFC and

  • Pizza Hut spun off and became what is known today as Yum! Brands.

  • That's why you'll see these restaurants partner up in a single location.

  • Since its IPO in 1997, Yum! Brands

  • stock has seen steady growth Yum stock prices climbed by more than

  • 1,700 percent to hover around 99 dollars per share.

  • In that same amount of tim, the S&P 500 has only risen 207 percent.

  • Those stock gains mean that Yum! Brands

  • market value has jumped from roughly 4 billion dollars around the

  • time of its IPO to 30 billion dollars in 2019.

  • As of 2019, there are over 7000 Taco Bell's in the U.S.

  • making it the largest limited service restaurant in the Mexican food category.

  • By comparison Chipotle is the second largest.

  • It has less than half as many restaurants.

  • Right now, Taco Bell has about 93 percent of their stores in the

  • United States with about 7 percent international.

  • So there's still a lot of room for growth for them internationally.

  • And one thing that they've been undertaking in the United States is

  • selling off company owned stores to franchisees.

  • And what this does is it gives them some immediate cash but it also

  • passes off some of the risks and some of the costs on the franchisees

  • rather than the company itself.

  • And that could be good for expansion in the future especially because

  • there's so much open space in the international market.

  • Same store sales growth has largely been positive over the years with a few notable hiccups.

  • But even the 2008 financial crisis, didn't keep it down for long.

  • Sales at locations have been open for at least a year sank 5 percent in 2009 but by 2010 they posted positive same store sales growth.

  • But new Mexican chains are popping up across the country like Wahoo's,

  • which has around 50 locations, Baja Fresh with approximately 150,

  • Trejo's Tacos with just under 10 and Chronic Tacos which has just over 50 in the U.S.

  • But in the fourth quarter of 2018 alone Taco Bell opened up nearly as

  • many restaurants as the entire Baja Fresh chain.

  • Internationally, Taco Bell has nearly 500 stores across almost 30 countries.

  • That pales by comparison to some of its biggest competitors.

  • But parent company Yum! Brands is looking to double that number by 2022.

  • But Taco Bell has struggled with international expansion in the past.

  • They've tried and failed in Mexico because well Mexico already has its own good cheap Mexican food.

  • They've also entered and pulled out of Dubai and China.

  • As of 2017, the company is moving back into China with a new menu geared toward local tastes.

  • But here in the U.S.,

  • Taco Bell's version of Mexican has become a cornerstone of American fast-food.

  • It's the best performer in Yum! Brands portfolio.

  • Pizza Hut has struggled domestically as more customers choose delivery from Domino's instead of sitting down at a Pizza Hut.

  • KFC a favorite, China has seen American consumers grow tired of its

  • menu and instead either chicken from rivals like Popeyes or Chic-Fil-A.

  • Yum CEO Greg Creed recently bragged about Taco Bell's sales figures on the company's earnings call.

  • Now I want to talk about where 2018 marked our seventh consecutive

  • year of positive same store sales growth. Once again outpacing the industry a remarkable feat.

  • 93 percent Taco Bell's in the U.S. are franchised, meaning they're owned and operated by franchisees.

  • Taco Bell Corporation helps these franchisees in many ways including marketing and product development.

  • Chipotle, by comparison, does not franchise any of its 2,500 locations

  • which gives management more control over how the restaurants are run.

  • That control makes it easier for Chipotle to experiment like what it's

  • doing with drive-through dining for the first time.

  • Chipotle's version called "Chipot-lanes" is app-based as opposed as

  • traditional drive-through experiences where you have to talk into a microphone on a menu board.

  • This seems like a direct shot at Taco Bell's very successful drive-thru business.

  • Chipotle his new boss knows that approximately 70 percent of Taco

  • Bell's sales happen at the drive-thru.

  • And some Taco Bell's may start looking like Chipotles.

  • The company has opened a new style Taco Bell in urban areas called

  • "In-Line" which features open kitchens unique art on the walls and a hipper design.

  • A similar version of the In-Line concept called Taco Bell Cantinas serves alcohol.

  • They've been popping up in cities like Chicago New York and Newport Beach, California.

  • So we are inside right now the Taco Bell Cantina which is our latest model of our expansion and growth plan.

  • And over the past two years we really developed close to about 50 of

  • these restaurants that are Cantina urban In-Line.

  • So typically when you think of Taco Bell's you think of suburban and rural areas with drive-thru.

  • These are very different. These are in downtown walkable space.

  • No drive-thrus. We want to make sure that they feel like they're

  • part of the community that they're and so people can come in and feel like they have a unique experience.

  • Most fast-food chains have an innovation lab where they come up with new menu items.

  • But Taco Bell has a very "Willy Wonka" like quality to it.

  • The company's creations include wild mash-ups with Doritos Locos Tacos

  • and they've created new Mexican foods that were invented north of the border like Quesalupas.

  • And certainly when they have you know sort of outside the box menu

  • items like say a Waffle Taco or the Nacho Fries you know that's an

  • attempt at grabbing the attention of customers who are like hey

  • that's that's a different That's interesting I've never had that before let's go try that.

  • Taco Bell likes to stress the value they offer to consumers.

  • They battle with other fast-food giants and what QSR Magazine calls

  • the "Value Wars" and price is one area where Chipotle can't compete with Taco Bell.

  • It's dollar cravings menu offers everything from burritos to cinnamon twists.

  • At Chipotle even a side order of tortilla chips is more than a dollar.

  • But with Taco Bell prices so low it could be a concern going forward

  • as many states are increasing the minimum wage in 2019.

  • Taco Bell may need to offset the labor cost increase by pushing bigger

  • ticket items like the five dollar meal boxes and with low prices and

  • value are your bread and butter, you don't want to push those costs onto consumers.

  • That's why companies like Taco Bell have been looking for efficiencies

  • in operations and using new technology to address wage increases.

  • Another major and ongoing concern for Taco Bell and its competitors food safety and quality.

  • Chipotle is still reeling from an E. coli outbreak in 2015 which sent the stock tumbling.

  • They hadn't recovered until the company poached Taco Bell CEO Brian Niccol in 2018; since then the stock prices nearly doubled.

  • They tried to start some national advertising campaigns to get their

  • brand recognition back out there.

  • They went through a lot of product giveaways and promotions and spent

  • millions of dollars trying to regain the customer loyalty that they had lost.

  • Taco Bell dealt with similar problems in 2006 which affected sales for almost a year.

  • Sales at Taco Bell locations that have been open for at least a year

  • declined by 5 percent in 2007, especially in the Northeast where these problems started.

  • Taco Bell didn't release the same source sales in 2006, but when they did in 2007 they were down 5 percent.

  • Then in 2011, an Alabama law firm filed a class action lawsuit against

  • Taco Bell alleging the beef on their menu wasn't actually beef.

  • Same store sales again declined by dropping two percent that year just

  • as the company was recovering from the financial crisis.

  • But talk about cheeky response helps explain how they managed to navigate PR nightmares.

  • They took out a full page ad in the newspapers to say "thank you for suing us."

  • The ad also explain what's actually in their beef.

  • According to the ad the meat is 80 percent beef and twelve percent

  • seek a recipe which Taco Bell claims keeps it from being boring.

  • It's that voice that Taco Bell engages with its customers in unique ways.

  • Taco Bell's TV commercial taglines have become popular catchphrases

  • like "Run for the border" yo quiero Taco Bell" and "Drop the chalupa."

  • You're looking at Taco Bell with 7000 restaurants almost 11 billion in

  • sales generating about 460 million dollars of

  • the advertising budget that they say can spend annually.

  • That is three times the size of what Chipotle spends.

  • So there's a lot of marketing and advertising muscle Taco Bell to

  • continue to drive home their message and Taco Bell and able to be in

  • every medium from TV to radio.

  • Chipotle has to do a little bit more picking and choosing.

  • Customer engagement cross digital is an important growth driver for

  • Taco Bell accordingly Yum! Brands CEO.

  • The company added a senior leadership role who will focus on digital and technology strategy.

  • Taco Bell has even offered mobile ordering and payment on its app since 2014.

  • They added a customer loyalty program to the app in 2015 but the competition is catching on.

  • Several Mexican chains also started app based rewards programs like a Qdoba and Moe's.

  • In 2018, Chipotle also started testing a loyalty program which they expanded nationwide in March of 2019.

  • Its digital sales grew almost 66 percent in the fourth quarter of 2018.

  • Those sales account for 12.9 percent of its sales.

  • Another growth driver for Taco Bell is delivery.

  • In 2018, Taco Bell made a 200 million dollar investment in the digital food ordering and delivery platform, GrubHub.

  • According to the company,

  • Taco Bell spent nearly a year integrating its systems to create seamless ordering and delivery experience.

  • In February of 2019, Taco Bell rolled out nationwide delivery through the GrubHub partnership.

  • But despite its popularity Taco Bell is facing struggles in its C-Suite.

  • Some of that is due to the departure of the former CEO Brian Niccol.

  • Now that is gone some wonder if the company's momentum can continue.

  • Once Niccol defected, he relocated Chipotle's Denver Colorado headquarters to Newport Beach, California.

  • Right in Taco Bell's backyard.

  • Some say it made it easier for Niccol to poach Taco Bell's top talent;

  • a process that looks already to be underway.

  • Taco Bell executives Chris Brandt and Tressie Lieberman have both left

  • Taco Bell and joined Chipotle way since Nicole's departure.

  • But when you talk about some a company like Chipotle, I think Brian

  • Niccol will have to play certainly growing in the years ahead.

  • They're going to open a lot more restaurants they're going to their sales will continue to climb.

  • But I just I don't ever think that Chipotle they will surpass Taco

  • Bell as being this Mexican experience that Americans love because

  • they're just both going to occupy their own different corner of the industry and that's going to work out for both of them.

  • CNBC reached out to Taco Bell about Nichols departure and the 2006 E. coli outbreak.

  • The company declined to comment.

  • Even with Niccol gone, sales still look good but the pressure is on

  • talk about to stay consistent as KFC and Pizza Hut struggle find a

  • solid footing in the restaurant industry remains worried about the rising labor and commodity costs.

  • Taco Bell's trajectory seems to be up but only time will tell if the

  • Mexican-American chain is ready to tackle the challenges ahead.

Taco Bell is huge in the U.S.

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Why Americans Love Taco Bell

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    詹士緯   に公開 2019 年 07 月 24 日
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