by InvestorPlace Staff | January 24, 2012 7:27 pm
For many fast-food aficionados, “fresh” food is the bag of burgers, fries, tacos, gorditas, and/or nachos that gets passed to you at the drive-thru window. And the grease stains on the bag, as humorist Garrison Keillor might observe, affirm that freshness.
But the food engineers at Taco Bell have, once again, been forced to think outside the bun as the company, which is owned by Yum Brands (NYSE:YUM), reckons with its unsatisfying financial performance in 2011: flat sales in the first quarter, a decline of 5% in the second, a 2% slip in the third. The prescribed remedy is a slightly pricier, more upscale set of menu options based on fresh ingredients.
This strategy – one of the most significant menu revisions in years, a recent Reuters story notes—may have been inspired at least in part by the popularity of fresh-Mex specialists such as Qdoba Mexican Grill (NASDAQ:JACK) and Chipotle Mexican Grill (NYSE:CMG), whose prices fall in the $7-$8 range. Taco Bell’s new offerings, which are being test-marketed this week in Louisville, Ky., and Bakersfield, Calif., include $5 tacos, burritos, bowls. That price is similar to the fee for Taco Bell combo meals and premium offerings, but well above the $1 to $3 charged for standard menu items.
Whatever the results of the fresh-food test tastings, Taco Bell will not attempt to become Chipotle Lite, the company’s CEO, Greg Creed, told Reuters.
“To be a more relevant Taco Bell, we can sell products that are every bit as good but cost a whole lot less,” Creed said. “This is one of those watershed moments where we’re going to redefine what the brand stands for.”
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