Taco Bell (YUM)
Taco Bell president Brian Niccol believes its push into breakfast is a big deal. Niccol wants it to be a strong No. 2 behind McDonald’s. In AdAge he’s quoted as saying, “The breakfast sandwich hasn’t changed 40 years, and we think this breaks that paradigm.” If he’s right, it could provide a significant boost to YUM stock.
While I don’t doubt the Waffle Taco and AM Crunchwrap will taste great, I’m not sure it’s as inventive as Niccol believes. Taco Bell’s essentially taken its menu and made it work for breakfast. But regardless of how you view the menu it’s bringing to the table, you have to like its chutzpah. Rolling out breakfast at all 5,500 of its U.S. locations is bigger than anything it’s done in the past 50 years.
While McDonald’s managers are twiddling their thumbs trying to figure out all-day breakfast, Taco Bell is adding a whole new stream of revenue to its business. That’s huge. I’ve been tough on YUM stock in the past for abandoning its U.S. franchisees, but this move sends a signal that it does care and is prepared to do something about it.
For me, YUM stock just became a lot more attractive.