Taco Bell CEO reveals coming menu moves

Taco Bell is back after Doritos Locos launch

As Taco Bell chief executive Greg Creed said to investors gathered Wednesday at the Morgan Stanley Retail and Restaurant Conference, “what a difference a year can make.”

At this time last year, Taco Bell was fighting its way past the damage a consumer lawsuit caused to its reputation and same-store sales, Creed said.  Now, based largely on the success of its Doritos Locos Tacos rollout — Taco Bell has sold more than 100 million of them in a little over 10 weeks — the brand is projecting second-quarter same-store sales in the high single digits to low double digits. Creed added that the turnaround’s momentum could carry over into several initiatives for 2012 and beyond.

“Taco Bell has an exciting story that is driven out of insights, and the evidence suggests that what happened a year ago is now history,” Creed said. “We’ve rebounded about as well as we could.”

He laid out several strategies Taco Bell plans to implement in the coming years to drive sales, including an expansion of Doritos Locos Tacos, as well as the continued test and eventual rollout of the Cantina Bell menu, the FirstMeal breakfast platform, and a new Happier Hour daypart for snacking.

Crazy for Locos

Several key insights informed the menu moves Taco Bell has made this year, Creed said, including the notion that customers have moved from “food as fuel” to “food as experience.” He added that Taco Bell’s most frequent users wanted the brand to just be better, while light and lapsed users needed the chain to become more relevant.

“To be a better Taco Bell, the obvious solution was the Doritos Locos Tacos,” he said. “People love it, it’s driving frequency among our heavy users, and we’re selling it at a 30-cent premium. … It’s really a platform we can build off, not a one-off LTO, and we can drive it for years to come.”

Of the more than 100 million Doritos Locos Tacos sold since the product’s March 8 launch, about 90 million of those transactions have been incremental, Creed said.

The next version of Doritos Locos Tacos will be a Cool Ranch flavor to complement the Nacho Cheese item, which is now a permanent fixture on Taco Bell’s menu, Creed said. A Hot and Spicy version likely would come later next year, and the fact that Frito-Lay has more than 100 flavors of Doritos around the world speaks to the limitless potential of the product, he said.

Taco Bell hired 15,000 incremental staffers in its system of 6,000 restaurants in the United States to accommodate demand for its “fastball down the middle,” Creed said. Its taco shell suppliers and Frito-Lay will expand their manufacturing capacity to produce more shells.

A better Bell

Creed also disclosed that the Cantina Bell menu currently being tested in Louisville, Ky., and Bakersfield, Calif., would roll out systemwide before the end of the year. Taco Bell will “flip the switch” overnight rather than introduce the higher-end menu incrementally across the country, he said.

The menu, which is intended to elevate the brand’s perceptions of food quality and freshness with items like burrito bowls, whole black beans, and corn and pepper salsa, has increased not only average check and average unit volumes but also guest counts in test marketing.

“What’s interesting is that Cantina Bell has done slightly better in Bakersfield, where there is a bigger presence of Chipotle [Mexican Grill],” Creed said. “Chipotle kind of acts as a context for this menu.”

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