2. 2
Travel Team
Colin Lillibridge
▪ Junior
▪ Finance and
Economics
▪ Duncan Hall
Nathaniel Marti
▪ Junior
▪ Finance and
Med. Studies
▪ The Manor
Timothy Machasio
▪ Sophomore
▪ Finance and
ACMS
▪ O’Neil Hall
Maria Marquez
▪ Freshman
▪ Mechanical
Engineering
▪ Lewis Hall
Jens Munthe-Kaas
▪ Sophomore
▪ Political
Science
▪ Off-Campus
Helen Sheng
▪ Junior
▪ IT Management
▪ Badin Hall
Dan Murphy
▪ Sophomore
▪ Mech. Eng. and
ACMS
▪ Dillon Hall
Rachel Oberst
▪ Sophomore
▪ Finance and
Spanish
▪ Ryan Hall
Chang Woo Jung
▪ Sophomore
▪ ITM and
Chinese
▪ Off-Campus
Edward Murphy
▪ Freshman
▪ Finance and
Economics
▪ Duncan Hall
3. 3
Executive Summary
• Taco Bell is the leading Mexican style fast food
provider in the United States, and a major division
of Yum! Brands
Client
• The company occupies a strong position in the
$220B U.S. fast food market
• “Fast casual” represents a growth concept for Taco
Bell to consider in its short- and long-term business
strategy
Situation
• Taco Bell should enter fast casual as a strategically
aligned opportunity with high profit potential
• It should do so by acquiring a separate brand, to
mitigate against current customer perceptions and
execution risk
Recommendation
4. 4
OBJECTIVE:
TACO BELL GROWTH STRATEGY
Fast Food Industry
Performance & Outlook
Taco Bell Overview and
Position
Fast Casual Industry
Performance & Outlook
RECOMMENDATION:
FAST CASUAL MARKET ENTRY
Feasibility Strategy
Moving Forward
Fast Food Investment
Potential
Fast Casual Investment
Potential
5. 5Source: IBIS World – Fast food market
-4
-2
0
2
4
6
2007 2009 2011 2013 2015 2017 2019 2021
%change
Revenue Employment
• Key drivers: increased costs and expenses, healthy
eating index, and consumer confidence
• Growth will remain flat into the future – the industry
is a matured market
• Stagnant domestic profits will lead to further
expansion into foreign markets
• In response, traditional market players attempt to
shift appeal towards millennials:
• Healthier and more customizable products
• Digitization, including mobile apps
Industry Outlook
McDonalds
16%
Yum
9%
Subway
6%
Wendys
4%
Burger King
4%
Chick-fil-a
2%
Other
59%
• Average profit margin of 5.1% - expected to remain
about the same over the next 5 years
• Purchases expected to become more expensive as
global demand forces produce prices upward
• Industry wage costs consume 25% of revenue,
expected to increase into the future
• Marketing expenses increase as companies attempt to
engage consumers on new platforms like mobile apps
and music streaming websites
• Tough competition in monopolistic competition
environment
Cost Structure Benchmarks
Fast Food: A Stagnant and Fragmented Industry
YOY Revenue and Employment Growth
Competitive Landscape
6. 6
OBJECTIVE:
TACO BELL GROWTH STRATEGY
Fast Food Industry
Performance & Outlook
Taco Bell Overview and
Position
Fast Casual Industry
Performance & Outlook
RECOMMENDATION:
FAST CASUAL MARKET ENTRY
Feasibility Strategy
Moving Forward
Fast Food Investment
Potential
Fast Casual Investment
Potential
7. 7Source: Business Insights; http://www.yum.com/investors/addl_info.asp
Taco Bell occupies a strong strategic position
within the fast food market
1946
Glen opens the
first Taco Bell in
Downey,
California.
1965
1st International
Expansion into
Japan
2007
Re-enters the Mexican
market by positioning
its restaurants as
American fast food
2013
International and U.S.
divisions are
combined; China and
India remain separate
1978
PepsiCo
purchases Taco
Bell
2003
Company opens
its first unit in
China
Timeline
Key Executives
▪ Brian R. Niccol, CEO
▪ Liz Williams, CFO
▪ Melissa Lora, President of Taco Bell International
Current Position
▪ Total Revenue (Franchisee and Corporate): $8.2B
▪ Revenue as a percent of total fast food market:
▪ At the end of 2014, there were 6199 store
worldwide (5921 US & 278 international)
Management Objectives
▪ Become the largest fast food provide of Mexican
style cuisine in emerging markets
▪ Become the most recognizable Mexican food brand
in the world
Mission Statement
“We take pride in making the best Mexican style fast
food providing fast, friendly, & accurate service.”
SWOT Analysis
Management & Current Position & Goals
Strengths
• Cheap and value meal
• Americanized taste
• Fast and convenient
service
Opportunities
• Emerging Markets: Latin
America, Continental
Europe, Russia
Weaknesses
• Obtains nearly all sales
in US – little
international exposure
Threats
• Change in consumer
preferences
• Stagnation in fast food
market growth
Taco Bell leads the U.S. Mexican style fast food segment, with a roughly 3.6% share of the
$221 billion U.S. fast food market
8. 8
Taco Bell is a key part of YUM! Brands, and was
its only profitable division in 2014
$0 B
$1 B
$2 B
$3 B
$4 B
$5 B
$6 B
$7 B
$8 B
2014 2013 2012 2011 2010
Company sales Franchisee sales
CAGR: (6%)
CAGR: 7%
Source: Business Insights; http://www.yum.com/investors/addl_info.asp
One of Three YUM! Divisions
Divisional Restaurant Per Store ProfitTaco Bell – US Sales
2010 2011 2012 2013 2014
Taco Bell has highest profit margin per location,
but its performance is falling due to changing
market trends
It is the smallest division in YUM! by store count,
and has the smallest growth domestically and
internationally
Recently, diminishing margins in Chinese segments
contributed to decreasing operating profit
KFC continues to be the cash cow of YUM!, both
domestically and internationally
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2010 2011 2012 2013 2014
Taco Bell KFC Pizza Hut
Stores CAGR Margins
Taco Bell 6,199 1% 18.90%
KFC 14,197 1% 8.20%
Pizza Hut 13,602 2% 8.20%
9. 9Sources: Business Insights Essentials, Forbes, YUM! Brands Investor Relations, Wall Street Journal, IBIS World
Overall trend line points downward for Taco
Bell, but profit margins increase
Operating profit increased by 5 % in 2014
Sales increased by 7% - driven by 3% unit growth
and 4% same-store sales growth
62 new restaurants; 81% of these new units were
opened by franchisees
Restaurant margin improvement – leverage of G&A
cost
Stabilizing factor in YUM! Brands
Increased capital expenditures as Taco Bell
continues to expand
Positive outlook for 2015
Spin-off from YUM! discussed by analysts
At the end of 2014, of the 6,314 stores worldwide:
5921 in the United States
278 internationally
Key Developments
(in $ mm) 2011 2012 2013 2014 2015
REVENUE $2,119 $2,109 $1,869 $1,863 $1,923
OPERATING PROFIT $384 $435 $456 $480 $520
PROFIT MARGIN 15.3% 18.2% 19.5% 18.9% 21.4%
$0
$500
$1,000
$1,500
$2,000
$2,500
2011 2012 2013 2014 2015
REVENUES OPERATING EXPENSES
Taco Bell Five Year Summary ($m)
10. 10Source: Huffington Post, Mobile Commerce Daily, National Restaurant News, Wall Street Journal
Current efforts for brand modernization
include tech and menu initiatives
While serious concerns still exist about the quality of Taco Bell, the restaurant has taken significant steps to evolve its
brand. Integration of mobile and online ordering, a move to healthier and more humane egg supplies, and increased
transparency about beef recipes have begun the process of brand transformation
In November 2015, Taco Bell announced a switch to
cage free eggs by the end of 2016
Taco Bell now leads the race for cage free eggs
Burger King end of 2017
McDonald’s within the next decade
Starbucks and Panera Bread by 2020
Cage Free EggsMobile and Online Ordering
In late 2014, released mobile app for online ordering
Upon release, customers using the app spent
$10+ per visit – 20% more than they spent in
store
With 3.7 million app downloads, users now
spend 30% more than they do in store on
average
In late 2015, Taco Bell launched its new website:
Ta.co
Estimated 5mm unique visits per month
Integration of a loyalty program and DoorDash
delivery
Enhanced customization and menu accessibility
70% of Taco Bell customers customize their
order
Cost in increased ordering time, personalized
suggestions; $0.30+ charged per each add on
Brand Modernization
Integration of
Technology
Use of Higher
Quality
Ingredients
Ingredient
Transparency
Improved
Brand
Perception
In 2011, a lawsuit against Taco Bell brought the
restaurant’s beef under scrutiny
In response, Taco Bell released information on the
content of its beef
88% beef; 12% seasoning, spices, water, and
other ingredients (Called “Signature Recipe”)
In 2014, Taco Bell launched a new beef transparency
module detailing the contents of Taco Bell’s beef
Beef Transparency
11. 11Sources: QSR Web, Mobile Commerce Daily
Breakfast presents an attractive current
investment opportunity for Taco Bell
Breakfast Menu Release
• Breakfast launched on March 27, 2014
• Expansion of customer engagement and brand
loyalty
• Expanding beyond signature Fourth Meal
• Accessing the McDonald’s-dominated QSR breakfast
market
Taco Bell Same-Store Sales Growth
The successful rollout of Taco Bell breakfast menu indicates strong brand loyalty, healthy profit margins, and potential for
future expansion. Given this success, breakfast represents an especially promising current opportunity for the company
• The successful launch of the Taco-Bell breakfast menu
contributed to same-store sales growth
• Strong margins central to initiative profitability
• Notably, gains in same-store sales have declined since
the post-rollout spike
Quick Statistics
• Approximate Margins on
Breakfast
21%
• Breakfast Share of Total
Sales
6%
Sunday, Monday and Tuesday breakfast sales
exceed late-night Fourth Meal -2%
0%
2%
4%
6%
8%
10%
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Breakfast
rollout –
March 2014
Outcomes
12. 12
OBJECTIVE:
TACO BELL GROWTH STRATEGY
Fast Food Industry
Performance & Outlook
Taco Bell Overview and
Position
Fast Casual Industry
Performance & Outlook
RECOMMENDATION:
FAST CASUAL MARKET ENTRY
Feasibility Strategy
Moving Forward
Fast Food Investment
Potential
Fast Casual Investment
Potential
13. 13Taco Bell Franchise, LA Times, The Motley Fool, Yum! Brands Investor Relations, QSR Web, Mobile Commerce Daily
Expanding breakfast as a best option displays some growth
potential within an already crowded segment
5.5% Franchise Royalty
Income
CURRENT RELEVANT MARKET SIZE:
$34.5B FF Breakfast
Market
4.9M Taco Bell
Breakfast Sales
TACO BELL BREAKFAST EXPANSION
ASSUMPTIONS:
Capture 2% of FF
Breakfast Market in next
year
$38M NET PROFIT OPPORTUNITY IN
THE NEXT YEAR
FINANCIAL DATA
• $8.2B in U.S. system wide sales for Taco Bell in 2014
• Breakfast items comprise 6% of Taco Bell sales
• ~$490M in annual breakfast sales
• $34.5B FF breakfast market
• ~1.4% current FF breakfast market share
• 5.5% franchise royalty fee
• 21% margins on breakfast items
FRANCHISING
Although 14.5% of Taco Bell stores are company owned,
the model assumes all stores are owned by franchisees.
Franchisees pay a 5.5% royalty on all sales
SENSITIVITY
Within one year, we assume Taco Bell can expand its
share of the FF breakfast market to X%.
• 1.4% of market would yield $27M in annual profits
• 2.0% of market would yield $38M in annual profits
• 2.6% of market would yield $49M in annual profits
KEY ASSUMPTIONS IN BREAKFAST
EXPANSION MODEL
1.4% FF Breakfast Market Share
PROFIT POTENTIAL OF TACO BELL
BREAKFAST EXPANSION
14. 14
OBJECTIVE:
TACO BELL GROWTH STRATEGY
Fast Food Industry
Performance & Outlook
Taco Bell Overview and
Position
Fast Casual Industry
Performance & Outlook
RECOMMENDATION:
FAST CASUAL MARKET ENTRY
Feasibility Strategy
Moving Forward
Fast Food Investment
Potential
Fast Casual Investment
Potential
15. 15
While comparatively small, fast casual industry is
characterized by quick expansion
QSR Magazine; National Restaurant Association
0
10
20
30
40
50
Sales($bn)
Best Case Base Case Worst Case
Fast Casual
$30bn market size (revenue)
Delivering fresh food
Provide a high level of customization
Balance price and experience
Cultivate high level of customization
• 550 % growth since 1999; 10x the growth of
fast food
YOY Change in Consumer Traffic Forecasted Industry Sales for Fast Casual
-4%
-2%
0%
2%
4%
6%
8%
10%
2009 2010 2011 2012 2013
Quick Service Restaurants (Excluding Retail and Casual)
Retail
Fast Casual
Consumer preference for Mexican FC:
Mexican 28 %
Hamburger 25 %
Other sandwich 23 %
Chicken 13 %
Pizza 10 %
Bakery and café 1 %
Segmentation of fast casual by concept
16. 16Statista; Washinton Post; Wall Street Journal; Scarborough Research
Millennials are “perceptionists”—and fast casual
is characterized by image and experience
Perception & image are two of the most important
factors in the establishment of fast casual chains.
Existing fast casual customers are more likely to
refer to fast food as “gross” or “unappealing.”
Related to status
Overall Trends:
- Generational shift in consumer trends
has opened up market for increased
quality proposition
- Fast casual chains are running out of
white space; overseas expansion
imminent?
- Average check between $8-9; fast
food chains average $5.3
- Concerns about impact of increasing
meat prices and labor costs
- Answer from the fast food industry
has been increased customization;
McDonalds build-your-own-burger •Fast food chains
pride themselves
on efficiency;
fast casual is an
experience
•High level of
customization;
are you expected
to customize?
•Fresh and
healthy options;
i.e. can you see
the process?
•Locally sourced
foods; related to
perception
Local Healthy
ExperienceVaried
Educated
Urban
lifestyle
Health
conscious
Aged 20-40
Infrequent
fast food
consumers
17. Shifting perceptions translate to restaurant
segment growth differentials
Source: IBIS World
Overall, today’s restaurant industry is in a
mature market stage. Total revenue
remains about the same, while profit
generation requires extra investment on
non-price factors like new customer
trends
U.S RESTAURANT INDUSTRY
Segment Avg. Operating
Profit (’14)
Market Share
Fast food 11 - 13 % 31 %
Fast casual 6 – 7 % 9 %
Casual dining 4 – 5.5 % 24 %
Family dining 6.5 – 8.1 % 21 %
Casual
Dining
Segment
•1.8 %
Fast-food
segment
•3.5 %
Fast-casual
segment
•9.5 %
Increased costs of ingredients add industry pressure
Consumer trend of preferring healthier options
Purchase not rooted in calories, but brand perception
Increased labor costs add pressure to franchises
Distress levels are at record low
17
Segment GrowthKey Industry Comparisons
18. 18Business Insights, Yum! Brands Investor Relations, QSR Magazine
Among all quick service restaurants, fast casual presents
an increasing threat to fast food industry health
McDonald's
32%
Subway
11%
Panera Bread
Starbucks
1%
Burger King
8%
Dunkin' Donuts
6%
Chipotle
3%
Wendy's
8%
Taco Bell
7%
Pizza Hut
5%
KFC
4%
Carl's Jr./
Hardee's
Sonic Drive-In
3%
Domno's Pizza
3%
Chick-fil-A
5%
QSR Magazine Rankings
• QSR 50 Ranking#6
• Mexican Segment
Rank#1
Taco Bell has a strong position within the Fast Food industry, specifically the Mexican segment. Chipotle, however, has
made gains in the Mexican QSR space. Increase in healthy eating habits threatens the fast-food industry as a whole
Quick Service Restaurant Market Breakdown:
• Revenues have declined and remained
relatively flat in the past four years.
• With increasing margins, and strong sales
growth, Taco Bell remains a major player in the
QSR restaurant.
• Taco Bell still dominates the Quick Service
Restaurant Mexican Segment.
• Chipotle (QSR 50 Ranking #15) is showing
strong growth in the Mexican Segment with a
#2 Ranking
19. 19
OBJECTIVE:
TACO BELL GROWTH STRATEGY
Fast Food Industry
Performance & Outlook
Taco Bell Overview and
Position
Fast Casual Industry
Performance & Outlook
RECOMMENDATION:
FAST CASUAL MARKET ENTRY
Feasibility Strategy
Moving Forward
Fast Food Investment
Potential
Fast Casual Investment
Potential
20. 20
FC option shows significant profit potential, but financial
and customer experience cost factors are key
Achieve ~7% margin
based on industry
standard
CURRENT RELEVANT MARKET SIZE:
$30B in total FC sales 23% Mexican Concept
TACO BELL FC ENTRY SCENARIO
ASSUMPTIONS:
Capture ~10% of FC
Mexican Concept
$48.3M NET PROFIT OPPORTUNITY
RE-BRANDING & ADVERTISEMENT
Studies on millennial generation’s spending habits and
restaurant preferences indicate that a thorough process
of changing brand perception is necessary in order to
penetrate the market. Such rebranding could require
additional expenditure on advertisement and promotion.
NEW STORE vs. REMODELING
U.S. Taco Co was a $500,000 investment during its year
in business. Wendy’s previously launched incentive-
program for existing franchise owners to remodel their
stores as estimates indicated a potential increase of 5-
10 % in restaurant sales.
CANNIBALIZATION
Although fast-casual restaurant customers spend about
40 % more per visit, the adjusted amount of money
spent is difficult to assess as there are no companies
that have recorded the full effect of a switch. There is
a danger of cannibalization.
ADDITIONAL COST FACTORS IN FAST
CASUAL SWITCH
$6.9B Potential Market Share
ESTIMATED PROFIT POTENTIAL OF TACO
BELL FAST CASUAL
Sources: QSR Web, Mobile Commerce Daily, Business Insights
21. 21
OBJECTIVE:
TACO BELL GROWTH STRATEGY
Fast Food Industry
Performance & Outlook
Taco Bell Overview and
Position
Fast Casual Industry
Performance & Outlook
RECOMMENDATION:
FAST CASUAL MARKET ENTRY
Feasibility Strategy
Moving Forward
Fast Food Investment
Potential
Fast Casual Investment
Potential
22. 22Source: Mintel
Market
Penetration
1
Product
Penetration
2
Market
Development
3
Diversification
4
New ProductSame Product
New
Customers
Same
Customers
Why an acquisition
• Growth of 26.7% is predicted from 2013-
18, reaching $38 billion in 2018
• US social trend toward eating healthy
• Taco Bell’s current image will detract
from its effectiveness in the fast casual
market
• Entering fast casual under a different
name gives substantial risk mitigation;
core brand will not suffer negative
externalities
Alternative ways of entering fast casual
1. Develop FC internally and launch a new
brand
2. Develop FC internally and introduce
under current brand
3. Expand in untapped markets to target
new customer segments
4. Inorganic entry, through acquisition
Counterarguments to address
• Competitors and case studies include
failures
• Barrier perceptions surrounding Taco Bell
are too strong and negative
• Strong competitors in Mexican fast casual
• Lower profit margins; increasing costs
• Fast food market is still much larger than
fast casual
• Execution/startup risk (will Taco Bell
deliver a good product?)
CONCLUSION:
Taco Bell should enter fast casual market through
an acquisition
Recommendation: Taco Bell should enter the
fast casual industry through acquisition
23. 23
OBJECTIVE:
TACO BELL GROWTH STRATEGY
Fast Food Industry
Performance & Outlook
Taco Bell Overview and
Position
Fast Casual Industry
Performance & Outlook
RECOMMENDATION:
FAST CASUAL MARKET ENTRY
Feasibility Strategy
Moving Forward
Fast Food Investment
Potential
Fast Casual Investment
Potential
24. 24
Negative brand perceptions are barrier to be
addressed in fast casual entry
CHEAP VALUE MEAL
AMERICANIZED TASTE
FAST & CONVENIENT
UNHEALTHY & LOW QUALITY
Positive Reaction Negative Reaction
Sources: Armitage, Brand Audit for Taco Bell
NO ATHENTICITY
• Traditional “Quick Service Restaurant” (QSR)
• Offers “Fourth meal,” enables order after
midnight
• Drive thru, Taco Bell mobile application
• Majority of sales based on take-out
• Relatively low investment into store interior
• Minimum or no in-store dining service and
workforce
CHEAP & BAD DINE-IN
• Menu variety includes tacos, burritos, etc.
• “Americanized,” or “Tex-Mex-Style” food
• American adoption of popular Mexican foods
like the Cantina Bowl
• Bad choice for authentic Mexican food
• Relatively small amount of vegetables
• Ingredients substituted according to price
and Taco Bell’s own recipe
• Nationwide restaurant distribution
• Relatively low prices
• Promotional value meal deals like Big Box
• Cheap price and quick service imply low
quality food, fail to attract older customers
• Growing concerns about healthy eating
damage Taco Bell’s brand image
NBC News
25. 25Business Insider
Comparable cases present compelling argument for brand
departure when entering the fast casual market
Super Chix Company Overview
• An exploratory venture by YUM! Brands; started in
2014
• Company Slogan:
“The Last True Chicken Sandwich”
Menu
Outcome
• Scored 4 out of 5 stars on Yelp.
• Opened 3 locations within 1 year
• Recognized as top competitor with Chick Fil-A
• Sold company to Christophe P., Nick O. & Jeff. S.
• Straightforward food options: nuggets, salads,
sandwiches
• Emphasis on high quality ingredients prepared with
integrity
• “We only use the highest quality potatoes”
• In accordance with growing trend against genetically
modified ingredients.
• Madagascar Bourbon Vanilla Beans
KFC 11 Company Overview
Menu
• KFC’s Fast Casual Counterpart, opened August 2013
in Louisville, Kentucky
• Encourages slow paced
dining that is convenient.
• Global Cuisine- flavors like Sweet Orange Ginger,
Caribbean Tango and Southwestern Baja
• Salad, Flatbreads, “Crispy Bites”, Rice Bowls
• Emphasis on fresh, healthy, and sophisticated
options
• Mashed potatoes: “Now they're "smashed"
and infused with garlic”
• Items not available: fried chicken bucket and KFC
signature biscuits
• Entrée Prices: $4.99-$6.99
Outcome
• Closed after a year
• Scored 3 out of 5 stars on Yelp
26. 26
OBJECTIVE:
TACO BELL GROWTH STRATEGY
Fast Food Industry
Performance & Outlook
Taco Bell Overview and
Position
Fast Casual Industry
Performance & Outlook
RECOMMENDATION:
FAST CASUAL MARKET ENTRY
Feasibility Strategy
Moving Forward
Fast Food Investment
Potential
Fast Casual Investment
Potential
27. Important factors to consider in acquisition
• Scalability –
e.g., from
regional to
national
• Expertise in fast
casual
• Cultural alignment
• Product quality
• Customer
loyalty
• Fair multiple
• Cost,
distribution, or
sourcing
synergies
Attractive
Price
Brand
Strength
Expansion
Potential
Effective
Management
27
29. Conclusion: Taco Bell should look to enter the fast
casual market through acquisition
Given these findings, and taking into account the company’s current
investment opportunities and management objectives within fast food, we
believe a fast casual market entry presents high upside potential and makes
long-term strategic sense for Taco Bell
Ultimately
Strategic Rationale
Feasibility and Execution
Overall market saturation of Fast Food industry
Continuing market growth of Fast Casual industry
Growth story and consumer trends drive compelling profit potential
Strategic alignment demonstrated in past attempts to introduce fast
casual concepts
Inorganic entry represents a feasible option in response to barrier
perceptions concern and execution risk
31. 31Sources: Taco Bell, Business Insider, Nation’s Restaurant News
A Case Study: Taco Bell Cantina demonstrates
management’s interest in a fast casual entry
Taco Bell Cantina opened in Chicago’s Wicker Park
neighborhood on Tuesday September 22, 2015
San Francisco location will open later this month
Taco Bell Cantina serves alcoholic beverages
Alcoholic beverages retain Taco Bell branding
Twisted Freezes (Similar to Baja Blast)
Twisted Freezes range from $6.19 to $7.19
depending on the choice of alcohol
Large increase in price point
Taco Bell is currently experimenting with a fast casual restaurant concept that places itself in direct competition with the
likes of Chipotle and Qdoba. This initiative reflects its plans to expand, as well as the stresses put on the brand by new
initiatives such as the Taco Bell Cantina restaurant. The success of Taco Bell Cantina depends on its ability to adapt its brand.
Urbanization Localization
Green Transparency
Digitization
5 Consumer TrendsNew Taco Bell Fast Casual Restaurant
▪ Taco Bell’s new Cantina restaurant integrates the
preceding five consumer trends into the existing
brand
▪ Drive thru window replaced by walkup window
▪ New Taco Bell units have lower costs
▪ Reduced square footage
▪ Recycled materials
▪ Open kitchen design increases transparency
▪ Fresher ingredients are used in food
▪ Base menu stays same with Taco Bell classics
32. 32Mobile Commerce Daily, National Restaurant News
In Absence of Fast Casual: Alternative investment
options for Taco Bell
Taco Bell has already made efforts at menu expansion and improvement, digitization, delivery and customization, and brand
redevelopment. These initiatives have improved Taco Bell’s performance. However, costs of these initiatives, potential for
limited impact, and possible loss of customers lead us to recommend an entry into Fast Casual through acquisition.
Menu
Expansion and
Upscaling
Delivery and
Customization
Digitization
Marketing and
Brand
Redevelopment
Entry into Fast
Casual
Menu Expansion and Upgrade
Expansion of successful offerings
Further capitalization on breakfast menu success
Continued development and release of new products
Potentially high costs of development
Diminishing impact of continued menu development
Marketing expenditures on new product lines
Digitization
Release of mobile app and website (Ta.co)
3.7 million app downloads and 5 million monthly
visitors to website
Mobile and web customers spend more than average
in-store customer
Digitization already in process
Delivery and Customization
Integration of DoorDash delivery with website and app
Online ordering enhances customization options
70% of Taco Bell customers customize their order
Higher labor and ingredient costs associated with less
uniform orders
Limited impact on the business with small investment
Marketing and Brand Redevelopment
Taco Bell is currently improving brand image with
quality ingredient initiatives
Upscale brand showcased in Taco Bell Cantina
Deeply ingrained negative perceptions and stream of
undesirable publicity surrounding Taco Bell
Risk of alienating loyal customers and losing sales in
lower quality fast-food segment