QSR 50 | August 2013 | By Mary Avant

Not Your Parents’ Taco Bell

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Taco Bell CEO Greg Creed is turning the brand into a premium Mexican chain.
Taco Bell CEO Greg Creed has made it his mission to create a more premium Mexican quick serve. taco bell
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“I know there’s been a lot of discussion and dialogue [about] are we taking business from Qdoba and Chipotle, but that’s never been my objective,” he says. “I just think what [Cantina’s] doing is broadening the appeal of Taco Bell, and we do know that Cantina does well in markets where there are Chipotles and Qdobas. That doesn’t mean we’re taking share off them; it just means that in those markets, customers realize they’ve got a choice.”

While priorities, DLT and Cantina Bell aren’t the only menu developments Taco Bell has in the works. The brand is expanding its snacking and beverage platforms (seen through initiatives like its Happier Hour promotion this summer, which offered $1 Loaded Grillers, Freezes, Baja Blasts, and other beverages from 2 to 5 p.m. every day), as well as innovation in the breakfast daypart.

The brand also plans to make at least 20 percent of its menu compliant with government-approved fat- and calorie-content guidelines by 2020. Creed says Taco Bell is in the process of developing a new range of healthy products he believes “will catapult us into a new place and again make us more relevant and make us better.” The items will begin testing later this year or in early 2014.

In addition, the chain plans to redefine value with the new $1 Cravings menu, which is being tested in Sacramento, California, and Kansas City, Missouri. It features 12 menu items for $1 each, including products like the Shredded Chicken Mini Quesadilla, Beefy Cheesy Burrito, Caramel Apple Empanada, and Triple Layer Nachos. Should the tests prove fruitful, the menu will roll out nationwide at a yet-to-be-determined date.

Though certainly a good value, Niccol hesitates to call the $1 Cravings menu a “value menu.” No matter where a customer chooses to access the brand, whether it’s on the Cantina or $1 Cravings end, he says, he wants them to walk away getting more than what they paid for.

“The whole entire menu should be a great value. That’s who Taco Bell is,” he says. “What is great value at a dollar? It’s the $1 Cravings menu. What is great value at five bucks? I think it’s Cantina. For $5, you will not find that quality of food with those fresh ingredients anywhere for that price.”

But Kincheloe says the varying menus, platforms, and price points can seem conflicting and confusing to customers, failing to create a single brand image when it comes to value. On one hand, the chain is pushing a new, premium product and image with the Cantina line, he says. “And then they turn around and just go back into their old roots, which is cheap check averages. You’re conflicting, and it’s not going to get that overall long-term perception of value.”

However, Creed says, having both a dollar menu and the higher-end Cantina options all at once is compatible with the brand’s idea of “living mas” and providing “mas choices.”

“We’re giving people choices. In some cases, we’re giving different people choices and sometimes we’ve giving the same people different choices at different times,” he says.

Despite all of the choices, changes, and enhancements taking place at the brand over the last couple of years, Creed is the first to admit that consumer perception of the brand’s food quality and value isn’t in line with reality.

“There’s still a bit of a hangover of this sort of cheap Taco Bell versus the valuable Taco Bell,” he says. Fortunately, with the help of Cantina, Taco Bell is slowly shedding its cheap, low-quality Mexican eats image.

“It’s just a slow build,” he says. “Us telling them that the quality is better isn’t going to change their opinions. Them coming in, trying it, having a great experience, saying, ‘Wow, I just don’t believe it,’ and then believing it—that’s the true test.”

But good value and premium products aren’t the only things creating a positive consumer perception of the brand. The culture Creed has helped create since joining the brand as chief marketing officer in 2001—one that revolves around emphasizing authentic engagement with guests; being a leader in the market; and creating a positive and supportive environment for franchisees, managers, and employees—has made a difference, too.

Niccol says this last component is the launching pad for all of the brand’s success, both today and going forward.

“If we’re going to be an authentic brand, the first place we have to be authentic is with our team members, because the customer experience will never exceed the team-member experience,” he says. “If we’ve got a strong belief in [our operators and managers], they’ll have a strong belief in the people working in the restaurant, which then translates into our customers.”

But while building the brand and culture over time, Taco Bell will continue to place a major focus on making sales overnight—an approach that’s paying off.

The brand brought in sales of nearly $7.5 billion in 2012, with an AUV of close to $1.4 million, a same-store sales increase of 8 percent, and an additional 25 units.

But that doesn’t scratch the surface of what Creed hopes to do with the company in 10 years’ time: He plans to double the size of the brand, creating a $14 billion fast-food juggernaut. Not only will it add 2,000 units in the next decade, but Taco Bell will also aim to raise existing units’ AUV to $1.8 million.

“One of the really good consequences of that is we’ll need to hire another 100,000 employees in the next 10 years at Taco Bell,” Creed says. This means not only front-line employees, but also general managers and area coaches. The company has already begun putting training programs in place to develop general managers and prepare them to take on larger roles within the brand. “This isn’t about how to make a taco faster,” Creed says. “This is about how to make them better leaders and emotionally connect to the brand.”

And while Creed and Niccol say adding 100,000 employees is the biggest challenge the brand will face in the upcoming decade, they won’t settle for team members who don’t believe in or exemplify the Taco Bell culture.

“I don’t want to relax the culture so I can go hire the 100,000 people,” Niccol says. “I want to make sure the 100,000 people believe in the mission as much as the current 150,000 do.”

In the end, Niccol says, achieving this lofty goal comes down to engagement, both with employees and the brand’s customers.

“It’s all about authentically engaging our brand so that the stores are busy today, but we’re also getting people to not just buy Taco Bell, but buy into the brand,” he says. “Because when they’re buying into the brand, they’re actually buying into the culture. They’re buying into our experience, and they’re ultimately buying into this idea of living mas.”/p>