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[11 comments]

Taco Bell new fast-casual concept zigs where others zag

April 28, 2014

Taco Bell is testing a new concept, U.S. Taco Co., aimed at the fast-casual, Mexican food market — typified by Chipotle and Qdoba Mexican Grill — but with an American flare.

Like the kingpin of premium Mexican, Chipotle, customers order at a counter in a build-your-own-taco mode. An open kitchen allows diners to see meals being made to order. With an edgy Day of the Dead-theme, the décor will feature vibrant colors — red, white and blue — as well as wood tabletops and floors, subway tile and contemporary lighting. A 400-square-foot patio at the first test in Huntington Beach offers outdoor seating.

The big difference is that many ingredients are American rather than Mexican inspired.

A core lineup of 10 tacos includes one with pulled pork and peach jalapeno barbecue sauce. Other fillings include fried chicken with gravy, smoked beef brisket covered in melted Oaxacan cheese, and lobster in garlic butter with red cabbage slaw. The concept will sell milkshakes infused with Guinness and tequila as well as habanero steak fries. Tacos cost $4.00, nearly double those at Taco Bell.

What won't be found are burritos, beans, rice or tortilla chips — typical fare at Chipotle and Taco Bell.

Speaking to Nation's Restaurant News, Jeff Jenkins, senior brand manager at Taco Bell, said, "everyone in fast casual is heading in the direction of burritos." Deciding to "zig while everyone else zagged," the team decided to take "the best of American cuisine and put it into a taco," he said.

The concept promises to capitalize on the "better taco" trend that has been growing out of U.S. cities with large Hispanic populations as well as the experimentation with American classics largely seen within the food truck craze.

"There's a lot of great fusion going on," Mr. Jenkins told Advertising Age.

The concept came after a segmentation study conducted by Taco Bell found that a large demographic of higher-income foodies will spend a little more for higher-quality ingredients and better atmosphere, and were not likely to visit quick-service restaurants at all.

A second location in the Los Angeles area is in the works.

"I would love one day to see 1,000 of these," Taco Bell's CEO Greg Creed told the Orange County Register. "But let's not get that far ahead of ourselves. We're opening a restaurant and seeing what happens."

FINANCIALS:     [NYSE:YUM] [ NYSE:CMG] [ ]

Discussion Questions:

Is a playful American take on the taco a sizeable opportunity in the fast-casual space? What do you think of the rollout potential of U.S. Taco Co.?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How likely is U.S. Taco Co. to succeed?

Comments:

This is not so much a playful American take as it is a step to fulfill the public's desire for different flavors and combinations. Something like this could not be tested in Taco Bell restaurants without hurting the brand. By creating a stand alone, sit-down, casual dining experience, Taco Bell is opening a new revenue stream, without cannibalizing its current business. I look forward to trying US Taco Company when it opens in LA.

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Max Goldberg, President, Max Goldberg & Associates

Love the idea! I've now seen about 100 too many burrito places opening up that are all doing pretty much the same thing.

There's a price to pay for quality and experience ... and a lot of consumers are willing to pay it. Let's just hope they deliver consistently on the quality and experience.

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Kevin Graff, President, Graff Retail

Greg Creed's "opening a restaurant and seeing what happens" quote is the key. This is classic YUM Brands (or Pepsico) style -- fast failure. Throw it out there and see if it lives.

We have a similar concept here in the northern Chicago 'burbs. You see this on food trucks and the Food Network all the time. It's fun for a change of pace -- but I doubt it is a YUM-size chain. Love to try it though!

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Ben Ball, Senior Vice President, Dechert-Hampe

Nice concept. Kudos to Taco Bell for trying new things such as fast casual and breakfast. Now, if consumers are just distracted enough by the new items and flavors not to notice the artery clogging implications of a taco filled with fried chicken and gravy!

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Al McClain, CEO, Founder, RetailWire.com

This is a great way to capitalize on the kitchen research I have performed on the booming space of fast casual/healthy alternative with FLAVORFUL foods.

The question I have for Taco Bell is, are they cannibalizing the existing customer or stealing share from other? I like the approach of a new brand.

Chipotle continues to have lines out the door at every location I visit.

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Robert DiPietro, GVP Product Strategy & Business Development, Affinion Group

Yes, yes, yes!

Tacos are in many ways just like bread rolls. Put on them what you like and away you go.

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Mel Kleiman, President, Humetrics

At the risk of sounding cruel, Taco Bell seems to me like it's the Sears of the fast food industry...even if it's a good idea, I don't have much faith it will be done well. Case and point: what's with the emblem? I realize it's an "edgy Day of the Dead theme," but it looks more like a biker bar; and the spiked milkshakes are sure to upset someone.

'notcom'

It's a good idea and will be a good try. Fun logo. Plus, it's a way to elevate the overall brand and find out things they wouldn't normally be able to find out given the locked-in brand perception around TB.

I can't help but comment on that rendering though; they should get some professional help.

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Lee Peterson, EVP Creative Services, WD Partners

For starters, a whopping 64% of us taking the poll agree that U.S. Taco Co. is "somewhat likely to succeed." It's a novel idea, and let's see if people keep coming back for the fare.

Second, the article notes that "a large demographic of higher-income foodies will spend a little more for higher-quality ingredients and better atmosphere, and were not likely to visit quick-service restaurants at all, so they aren't cannibalizing their own customers.

More power to them.

But, finally, I just don't see why it's so important to put the food on a taco. Seems like any bread would do.

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Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce

Yes, for many, tacos really are a handy way to enjoy many fillings and flavors, and there is an opportunity here for something more fun and less usual. It will likely do well in the right locations, a challenge in a crowded marketplace. A concept definitely worth exploring and developing.

Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions

Branding-wise, it seems to confuse the taco market. But if the menu included a mashup of ingredients from across the ethnic flavored spectrum, and the experience of eating there was similarly themed, they'd have something!

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Jerry Gelsomino, Principal, FutureBest

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