Taco Bell wants your attention.
The Yum Brands (YUM) – Get Yum! Brands, Inc. report fast-food chain has long been the kid who jumps into the pool and endlessly calls on his or her parents to watch. The only difference is unlike that kid, who’s not really doing anything worth looking up from your phone for, Taco Bell has innovated and then demanded that people watch.
Sometimes that’s bold food innovation (Doritos (PEP) – Get PepsiCo, Inc. report Locos Tacos are an undeniably good idea), while at other times it’s more of a “yeah, we did that” bravado like the chain’s tacos made with a fried chicken shell.
Nothing has been off limits for the “think outside the bun” company, which implores us to “live mas.” The chain has been steadily offering value to its customers, trying a seemingly endless array of value meals and deals designed to grow sales.
That method has been very successful, according to Yum Brands Chief Executive David Gibbs, who spoke on the chain’s first-quarter earnings call.
“Taco Bell is executing on its strategy to inspire and enable the world to live but by remaining relevant, easy and distinctive to its customers,” he said.
“On the relevance front, Taco Bell continued to champion customer value with new offerings to meet all occasions, including the introduction of $2 burritos on the new Cravings Value Menu, adding to Taco Bell’s existing $1 menu offering.
“The combination of Taco Bell’s new Cravings Value Menu with its box and combo offerings positions Taco Bell well to serve the needs of all customers.”
Deals have driven sales, but Gibbs made clear that they were only part of the plan in the past and going forward.
Taco Bell Won’t Stop Innovating on the Menu
Value alone can’t drive Taco Bell’s ongoing strong sales performance, the executive said. That was something made even more evident when ingredient prices have spiked and supply chains are a mess.
“Beyond value, Taco Bell was actively marketing craveable distinctive foods, from its limited-time crispy chicken wings to the return of our fan-favorite nacho fries,” he said,.
Scroll to Continue
“Additionally, the return to the Super Bowl with Doja Cat marked the distinctive cultural moment in the quarter. We’re building on this cultural moment with a long-anticipated and much celebrated upcoming return of the Mexican Pizza, which Doja Cat announced in April .” Doja Cat is the popular Los Angeles rapper and singer.
Taco Bell International system sales grew 37%, driven by 26% unit growth and 12% same-store sales growth.
Value, however, has remained vital to the chain’s success.
“Seventy percent of our US profit, they’ve been leaning in on the Cravings Value Menu, which is $1 and $2 price points,” Gibbs added.
“And that’s working to meet the needs of consumers with less money to spend. But at the same time, they’ve been able to take price across the rest of the menu on their combos and more premium offerings, and that’s working as well. “
Taco Bell will, of course, be bringing back its famed Mexican Pizza, a move its fans have been asking for.
“Saucy fan pleas alone aren’t all it took to get the Mexican Pizza back to menus, as the masterminds in the Taco Bell test kitchen worked to streamline operations and ingredient sourcing and leave a lighter footprint at the same time,” the company shared in the press release.
Taco Bell Wants to Rule the World
While Taco Bell has been a very strong brand in its home market, it has also expanded its reach globally. Chief Financial Officer Chris Turner laid out big plans for global expansion during his remarks on the earnings call.
“Taco Bell remains on track for another record development year with growth in next-gen assets in the US and additional markets reaching scale internationally,” he said.
“On that front, we’re excited to share that Yum China (YUMC) – Get Yum China Holdings, Inc. report has committed to expanding the Taco Bell brand, which will allow even more people to live but as we build our brand identity globally and grow our footprint in that market.”
In addition to the China news, he also spoke of plans for another group of markets.
“On that end, we now expect to have three more markets to cross the critically important scale threshold of 100 units by the end of 2022, joining Spain, which reached that milestone in 2021,” he said.