2. From it’s famous slogan “Yo Quiero Taco Bell” to the ingenious creation of the “Fourthmeal”, Taco
Bell has found its way into the US culture as the go to Mexican-inspired quick serve restaurant. But
with recent scandals questioning the quality of their products and the growing trend towards
healthier eating have negatively affected the brand’s perception causing a decline in sales. In order
for Taco Bell to survive it needs to refine its positioning to better fit the changing needs of
customers.
Company
Background
Since opening its doors in 1962 as a taco truck in Downey, CA, Taco Bell has grown to the largest
Mexican-style quick serve restaurant chain in the US, with over 5,200 restaurants serving over 35
million customers every week [1]. At the Taco Bell 50th Anniversary celebration in 2012, CEO Greg
Creed, credited the restaurant for bringing Mexican food to the mainstream and claimed that it
feeds half of the US population each month [2].
The restaurant serves “made to order” tacos, burritos, quesadillas, and other Mexican-inspired
specialties. The key benefits of Taco Bell’s products are that they are inexpensive, convenient, and
available late at night. The brand’s personality is young, fun, and outgoing. It’s the fast food
restaurant for “party people”. The imagery used throughout their marketing channels includes
images of young people having fun, usually at night. The colors used are dark and bright, like
blacks, yellows, and purples.
Current Positioning
Since the mid 90s, the brand’s messaging has been focused towards a young, hip, multi-cultural
audience who are looking for a late night meal that’s different. Their campaigns have included
taglines like “Spice Up The Night” in the 90s, “Think Outside The Bun” in the 2000s, and the new
campaign “Live Más” which launched in 2012 [4]. The latest tagline is supposed to position Taco
Bell as a place where food is an experience, rather than just fuel [5].
Problem Areas
Taco Bell is a subsidiary of Yum! Brands, which also owns KFC and Pizza Hut. While Yum! strives to
be “the defining global company that feeds the world” and boasts 13% growth for the eleventh
year in a row and $13 billion in revenues internationally [6], their domestic business has been
described as the “worst performing restaurant business in the US” by JP Morgan analysts[7].Yum!
Brands recognizes that its domestic business requires “dramatic improvements in brand
positioning, consistency and returns”, but it has been focusing its efforts on growing in developing
countries and plans to “stay the course” with the same strategy in the coming year [6].
Although Taco Bell has been the best performing chain domestically in the Yum! portfolio, its
product quality has been questioned several times in the past few years causing major damage to
the brand. In 2011, a lawsuit filed against the brand claimed that the beef used in Taco Bell
products was only 33% meat[8]. The lawsuit made national news and resulted in a 28% decline in
same restaurant sales [7]. While the claims made in the lawsuit turned out to be false and it was
later dismissed by the plaintiff, the damage to Taco Bell had been done. Yum! Brands CEO David
Novak was quoted saying that sales were taking longer than expected to recover and they were
3. expecting slow improvements in coming quarters, while CFO Rick Crucci told analysts to expect
more declines in sales in the next year [7].
In an attempt to recover from the sales loss, Taco Bell released three new product lines in 2012.
The Cantina Bell menu, created by celebrity chef Loran Garcia that uses premium ingredients was
released in select stores. The Doritos Locos Taco, which is a taco with a Doritos shell, was released
nationwide. And the First Meal breakfast menu, which is being tested in select locations and will
be released nationwide in 2014.
The Doritos Locos Taco was a huge success resulting in a record-breaking rise in sales [9] and an
increase in positive brand perception from 19 to 32 on Brand Index’s 100-point scale [10]. While the
product attracted a lot of customers, it was only released for a limited time and did not affect the
sale of other Taco Bell products. After the Doritos Locos promotion, positive brand perception
decreased again to only slightly above the rate it was before the promotion [10].
While the Cantina Bell menu has preformed well [11], it has not had the same sales effects as the
Doritos Locos Taco. In fact, one can argue that a line like this can further damage the perception of
the rest of the brand’s products by implying that the ingredients in the other items are of low
quality.
Just as Taco Bell was beginning to recover from the 2011 lawsuit, traces of horsemeat were found
in the beef of their UK restaurants in March of 2013, resulting in international news headlines and
further brand tarnishing [12].
Category Trends
Scandals about Taco Bell’s quality are coming at a time when serving high quality food is becoming
increasingly important for restaurants. As the general US population is becoming more health
conscious and particular about the quality of products they consume, they are turning away from
traditionally unhealthy fast-food restaurants [13].
Healthier Eating
Although US consumers are spending more on dining out than ever before, with 47% of all food
dollars being spent at restaurants in 2012, they are not spending it on fast-food [14]. A study by the
Center of Disease Control found that US adults are consuming 11.3% less food from fast-food
restaurants as compared to five years ago [15]. Additionally, a study analyzing 21 largest US
restaurant chains found that between 2006 and 2011 sales of high calorie items decreased by
4.2%, while the sale of lower calorie items increased by 2.5% in the same restaurants [16].
Restaurants that offered more low calorie options experienced a 10.9% increase in customer
traffic and 8.9% increase in overall meal sales, where as restaurants that only offered high calorie
options experienced a 14.7% decrease in traffic and 16.3% decrease in sales [17].
Ingredient Specific Diets
While in the past being health conscious meant consuming less calories, in recent years consumers
are becoming more focused on the ingredients of their meals, rather than the calorie count.
Several articles in prominent healthy and fitness magazines have highlighted the importance of
4. eating more natural foods with more calories, rather than chemically processed low calorie foods
[18,19]. In relation to the same trend, ingredient specific diets, such as vegetarian, vegan, raw, locally
grown, seasonal only, clean eating, paleo, and gluten free are becoming increasingly popular,
especially among consumers between the ages of 18-34. National Restaurant Association names
locally grown, gluten free, whole grain, and farm branded as some of the top 10 trends for
restaurants in 2013 [20]. Consumers are also purchasing more fruits and vegetables [13] and organic
items [21], rather than processed foods.
Federal Legislation Requiring Calorie Posting On Menus
A federal health care bill taking effect this year will require all restaurants with over 20 locations to
display calories on their menus. Margo Wootan, director of nutrition at the Center for Science in
the Public Interest stated that she hopes the new bill will not only educate consumers about the
food they’re eating, but will also “shame” restaurants into serving healthier items [22].
Use Of Technology
The National Restaurant Association lists the increased use of technology in the restaurant
business as one of the top trends for the coming year. In a survey of over 1,800 restaurants, 27%
said they use tablet computers for menus, 25% use smartphone apps for ordering and menus, and
19% use mobile or wireless payment options [20].
Customer Trends
Taco Bell’s consumers are “young, hip, and multi-cultural”[5], and fall into the millennial category.
Size estimates for this demographic group range anywhere from 59 million to 80 million [33]. They
are confident, self-expressive, liberal, upbeat and open to change. They are more ethnically
diverse than older adults, and are the most educated generation in American history [23].
Technologically Savvy
When asked “What makes your generation unique?” in a research study, most millennials
answered “technology use” [23]. Almost all of them are connected to the internet and “treat their
multi-tasking hand-held gadgets almost like a body part”[23]. They believe that the main purpose of
technology is to make life easier. More than 40% of them have used their smartphone to make a
purchase [24].
Customization
Millennials expect variety, customization and the ability to personalize their food experience [33].
This group was introduced to “just for me” products early on, and they expect to have control over
their purchases [25]. They also have varied diets, such as vegetarian, vegan, or gluten free and they
expect food options that can be customized to meet their dietary needs.
Ethnically Diverse Variety
Growing up in a world full of choices, millennials look for ethnically diverse options in their food.
They are less likely to frequent traditional burger chains, and prefer trying food from different
parts of the world [33]. The National Restaurant Association has seen a rising trend in customers
expecting more specific cuisine options. For example, consumers no longer view Mexican food as
their only option for something south of the border; they expect authentic Argentinian, Peruvian,
5. or Brazilian options and know the difference between them [26]. The most important thing they
value in ethnic foods is authenticity. However, they are also fans of food that mixes cuisines from
different parts of the world, such as Sushirritos (sushi wrapped like a burrito), naanwiches
(sandwiches on Indian naan bread), Korean barbecue tacos, or Mexican dumplings [27].
Socially Responsible
Millennials have a strong desire to help change the world. They prefer brands that care about
social change [33]. Higher value is placed on attributes like social responsibility, sustainability,
locally grown, organic, grass-fed and hormone free offers when it comes to dining out [28].
Eating Habits
This generation is more likely to eat smaller portion rather than full meals, 53% of the meals they
consume are snacks [29]. On average they eat out 4 times a week, which is higher than any other
generation [24]. They are health conscious but are prone to decadent fits of eating extravagant,
high calorie meals [27].
Competitors
Two of Taco Bell’s are trying to reach millennials by reacting to the healthy eating trend in
completely different ways. While McDonalds has tried to adapt to the health food trend, CKE
Foods has gone in the completely opposite direction by adding more indulgent items to their
menu.
CKE Foods
Positioning: Premium products that are indulgent and decedent
CKE Foods, which owns the Carl’s Jr, Hardees, Green Burrito, and Red Burrito chains, has
positioned itself as a provider of premium quality burgers and Mexican fare at a quick-serve
restaurant. According to CEO Andy Puzder, healthy options are not a part of their personality, and
they won’t become a part of their personality any time soon. CKE’s products are meant to be
“indulgent and decedent” [30]. With the tagline “Eat Like You Mean It”, CKE restaurants offer
products like the 960 calorie Jim Beam Bourbon Six Dollar Burger, and the 1000 calorie Double
Western Bacon Cheeseburger [31]. Their marketing efforts are geared towards “young, hungry
dudes” [32] and feature bold imagery, bright, highly saturated colors, and scantily clad beautiful
women eating juicy burgers. CKE Foods does not apologize for being high calorie, they are proud
of it. According to Puzder, they sell 20 times as many 740 calorie Western Bacon Cheeseburgers
than they do 390 calorie BBQ Chicken Sandwiches [30]. While CKE doesn’t offer a low calorie menu,
they have taken into consideration the various dietary restrictions of their customers by offering
low carb, vegetarian, and gluten sensitive substitutions [31].
McDonalds
Positioning: So many choices with so little calories
McDonald’s on the other hand, has been trying to capitalize on consumers with healthier lifestyles
since the 1980s, when it started offering salads. Last year, in an effort to revamp their low calorie
menu and draw attention to their healthier options, McDonalds introduced the “Favorites Under
400 Calories” menu. The new menu groups different types of food into sections based on calorie
count[34]. In addition to highlighting the low calorie items, they are planning to focus on value
6. messaging in the coming year [33]. McDonalds has also made it their priority to reach the millennial
market with a line of low calorie chicken McWraps, which according to them have tested well with
this demographic. Although McDonalds is the largest fast-food chain world wide, it doesn’t even
rank in the top 10 for the millennials who are not interested in their traditional items [33]. The
company also plans to focus on “children’s well being” by offering not only healthier kids meals
but also education and activities. As one consultant told Ad Age “they're trying to sell everything
everybody wants” [33]. This attempt to reach different customers in various different ways has
contributed to McDonalds reporting its first quarterly loss in 13 years [35].
Taco Bell Positioning Option 1
The better for you fast food, any way you like it
Today’s customers expect convenience, quality, and options when it comes to fast food. At Taco
Bell we provide on-the-go high quality food with fresh ingredients that can be customized to fit
your dietary needs. Just because you need to get fast food, doesn’t mean that you can’t eat
something that’s good for you. Our digital displays and mobile ordering make it easy and
convenient for you to get exactly what you are looking for in your meal.
One opportunity for Taco Bell lies in taking advantage of the healthy eating trend. While its
competitors are either ignoring the trend, or focusing on providing low calorie options, none of
them are taking into consideration the consumer’s desire for cleaner, more organic ingredients. If
the new calorie posting legislation does in fact “shame” restaurants into providing lower calorie
foods, having a low calorie menu will no longer be a point of differentiation for fast-food
restaurants. Combined with research results indicating a rise in low calorie sales, all fast-food
restaurants will be striving to lower the calories on their menu.
In order for Taco Bell to differentiate itself, it needs to focus on providing food with healthier
ingredients, instead of low calories. One of the strengths of Taco Bell in this case is that most of
their menu items are prepared with the same basic ingredients: beans, rice, cheese, chicken, beef,
tomatoes, lettuce, sour cream, and tortilla shells. Highlighting the simplicity and “cleanness” of
their ingredients can give Taco Bell a clear advantage over their competitors who are using highly
processed and chemically enhanced ingredients in their low calorie options. In order for this
positioning to be effective, Taco Bell will need to acknowledge their reputation as low quality, and
openly share with customers all of the steps they are taking to improve their products. Higher
quality produce and meat will need to be used in all products, not just premium items,
incorporating organic or grass-fed items when possible.
Although using high quality ingredients will increase Taco Bell’s costs, studies have found that
customers are willing to pay higher prices for better ingredients [21]. Research has also shown that
the main reason customers chose fast food was because of the convenience, not price [36], so a
slight increase in prices to accommodate the cost of better ingredients should not affect sales.
Messaging focused around the simplicity and quality of their ingredients will be created and used
in all communications. The imagery used will include pictures of fresh looking products with clean
white backgrounds and bold writing in a bright color and a simple font. The colors used will be the
7. traditional Taco Bell purple, pink, yellow, and green will be added to imply freshness. Only one
color will be used at a time. Video ads will include Taco Bell representative talking about all the
positive changes they are making to improve their ingredients. These changes will also be shared
on the brand’s website and social channels. Images of young, healthy people enjoying Taco Bell
outside during the day will be used to show that late-night is not the only time to eat their
products. The packaging and wrappers will be updated to a cleaner look, with clean white papers
with item names written on them in a clear font in one bright color. The logo will also be updated
to a more streamline, simple image by keeping a black and white outline of the bell image, but
placing it next to the words Taco Bell in a smaller font, all in one line. (See page 9 for examples)
Because Taco Bell products are made to order, it will also be easy for the brand to accommodate
customized orders. This will encourage customers who only eat certain types of ingredients to
choose Taco Bell for their fast-food meals. For example, a corn tortilla option will be added to
accommodate gluten free eaters. Customers will be given the option to “build you own” taco,
where they can only include the ingredients they choose. A customer who is vegan can build their
taco without meat, or cheese.
To convey an image in line with the “farm branded” trend and the target demographics’ interest in
social responsibility, videos featuring the farmers who grow the vegetables used by Taco Bell will
be created and shared in ads, on the website, and social profiles. The videos will illustrate Taco
Bell’s commitment to sustainable farming practices and efforts to incorporate more organic
farming practices for their ingredients.
While “locally grown” is a major trend for the upcoming year there is no way of defining what
constitutes “local”[26]. National Restaurant Association’s research found that using the words
“made from scratch”, “freshly made”, or stating where exactly the product was grown was just as
effective in appealing to customers as saying it was “locally grown” [20]. While it would not be
feasible to get locally grown produce at all Taco Bell locations, stating that the products are
“freshly made” on site will be incorporated into the messaging. Additionally, stating that certain
products are imported from Mexico or other South American countries will not only allow
customers to know the origin of the ingredient, but also add authenticity to the ethnic foods.
To incorporate the target demographics’ need for increased convenience and their familiarity with
technology. Digital display order boards will be added at counters and at the drive-thru. These
boards will allow customers to choose which ingredients they want in their meals and pay by
sliding their credit cards. A similar smart phone app will be available for download through which
customers can “build their meal”, then scan their phone at the counter or drive-thru to pay. The
digital displays will also cut down the number of employees needed behind the counters, freeing
up resources to be spent on better ingredients.
By making these changes Taco Bell will be repositioned as the healthy fast-food option that’s
better for you because of what’s inside, not because they have fewer calories.
8. Taco Bell Positioning Option 2
Gourmet options with drive through convenience
We know our customers are tired of the same old, boring drive-thru options. At Taco Bell we
have always been there for you with innovative new products to satisfy your late night cravings.
Travel through the world’s cuisines with ease by selecting what countries you’d like to eat from
on our digital menu and picking up your bite-size adventures at the drive-thru window. Taco
Bell’s fusion tacos let you grab a snack with your friends on your way to your next adventure or
on your way back.
Taco Bell’s young, millennial audience is looking for high quality, ethnically diverse foods and ethic
fusion options, and there’s no one in the quick-serve industry that’s providing it to them. Taco
Bell’s existing menu allows for customization and creation of new ethnically diverse tacos and
burritos just by adding a few new ingredients. The famous Korean barbeque tacos that have taken
over the New York and Los Angeles food truck scene can be brought to the mainstream through
Taco Bell. The menu can also feature Greek tacos made with feta cheese, Indian tacos made with
curry chicken, and other options using ingredients from different cuisines. Customers will be able
to build an “international meal” by ordering more then one of these small, snack-sized foods.
The food sold at Taco Bell is classified as “Mexican inspired”, and most people don’t view it as
authentic Mexican. The new Taco Bell will broaden the meaning of “Mexican inspired” by creating
“Mexican fusion” meals that mix Mexican food items like tacos and burritos with ingredients used
by cultures around the world. Customers will be given the option to customize their meal by
adding ingredients from different cuisines.
The imagery used with this positioning will be bold, bright, urban, adventurous, and fun. The same
Taco Bell purples, and yellows will be maintained, as well as the images of young people enjoying
nighttime activities. The messaging used will be fun and humorous. The signage and product
packaging will be updated to appear more upscale and hip with darker undertones, bright colors,
and slick lines. (See page 10 for examples)
Updating the menu with these products will create a longer-term boost to the brand that was seen
from the one-time Doritos Locos promotion. It’s clear from the success of that product that Taco
Bell customers are looking for new, interesting options. By adding ethnically diverse items to the
menu Taco Bell will create renewed interest within their target demographic.
The same technological changes as listed in the first positioning option will be applied with this
positioning as well to increase user convenience.
With this repositioning, Taco Bell will become the fast food destination with exciting, ethnically
diverse options that can be customized to fit your tastes.
Performance Prediction
Both positionings take into account the target demographics desire for customization and
convenience. The first positioning option also focuses on improving product quality and offering
9. healthier ingredients, while the second option focuses on the target’s desire for ethnically diverse
foods and snack size items. While the Gourmet Drive-Thru positioning will generate initial
excitement, it will be hard to maintain the same level of interest in the long run. This positioning
does not seem like too much of a stretch for Taco Bell, which is a brand known for coming out with
innovative products like the Crunchwrap or the Doritos Locos. But international, gourmet quality
tacos may be too much of a stretch and not feel authentic because of the brand’s low quality
reputation. The “better for you food” positioning that focuses on improving ingredient quality will
be a better fit for the brand at this time. It will help improve the brand’s image and capitalize on
the healthy eating trend in a way that’s not being done by any of their competitors. The gourmet
products can be tested at a later time, after the brand has cultivated a reputation for higher
quality ingredients.
10. Visuals for Positioning 1: The better for you fast food, any way you like it
*Packaging idea created by graphic designer Jonathan Pish
11. Visuals for Positioning 2: Gourmet options with drive-through convenience
*Packaging design by graphic designer Andrew Kay
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