Taco Bell: Brands In Demand

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Nearly three years after muzzling its talking Chihuahua, Taco Bell has turned the brand around during one of the worst economic climates in U.S. history. Not only is it again leading the Yum Brands portfolio, it has also become one of the best performing chains in the restaurant category.

Taco Bell ended 2002 with same-store sales up 7%, compared to flat results in 2001 and a 5% decline in 2000. Same-store sales at siblings Pizza Hut and KFC were flat for the year. Much of the credit belongs to President-Chief Concept Officer Emil Brolick. The former Wendy's International R&D guru joined Taco Bell in July 2000 when the company dropped its ad agency Omnicom Group's TBWA/Chiat/Day, Playa del Rey, Calif. and its tagline "Yo Quiero Taco Bell." He later made then-field marketing shop Interpublic Group of Cos.' Foote, Cone & Belding Worldwide, San Francisco, agency of record. At Taco Bell, Mr. Brolick pushed quality to fill the chain's stalled new-product pipeline with fare more like that of the fast-growing casual fresh Mexican segment. In April 2001, he recruited Greg Creed from Yum's international unit as chief marketing officer and later Jeffrey Fox as VP-marketing from sibling Pizza Hut.

bold positioning

To win back lapsed customers and turn the brand around, the team started a rigorous and disciplined process to rekindle consumer interest. Through research, they learned that Taco Bell was most successful when it was seen as a bold brand, so they positioned the menu as "a bold, conscious choice" as an alternative to burgers, Mr. Creed said. The marketer and agency crafted a one-page strategy to allow the brand to move away from its icon-based campaign to a food-focused one.

Still, it took a while to find a new advertising voice for the brand. But the new management team was steadfast and in September 2001, FCB unveiled its "Think Outside the Bun" campaign. To guide the "non-campaign" campaign, the agency followed a brand manifesto that spelled out everything from colors to casting and even its wry wink of humor. One constant is that food is always the hero.

"Clearly, there was a lot of pressure to get quick results," Mr. Creed said. "It was a tough time. There were a lot of people who would have panicked to get [better] same-store sales numbers."

Promotions also improved under the process with youth-oriented tie-ins like Microsoft Xbox and sponsorships for MTV's 2002 Video Music and 2003 Movie awards.

At the same time, the chain updated interiors and drive-thrus, and employees received "customer mania" training. As a result, the chain said it shaved 90 seconds off its service times and cut employee turnover rates by 17%, meaning less time is spent training newbies.

Because it is overlapping so many product launches from last year, this year "is really a test for Taco Bell if they can continue this momentum," said Mitch Speiser, restaurant analyst for Lehman Bros. "Their operations are improving, including speed of service, so this year will be tougher than last year, but Taco Bell is well-positioned to continue to grow."

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