Taco Bell building on new sales platforms

by Eric Schroeder
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NANTUCKET, MASS. — The successful launch of the Doritos Locos Taco at Taco Bell coupled with the pending introduction of the Cantina Bell menu has Yum! Brands, Inc. bullish on its U.S. growth prospects, said Tim Jerzyk, senior vice-president of investor relations at Yum! Brands. Mr. Jerzyk spoke June 19 at the Jefferies Group, Inc. Global Consumer Conference in Nantucket.

Mr. Jerzyk said Taco Bell, which accounts for more than 60% of Yum! Brands’ profits in the United States, is in the process of building three promising sales platforms for growth.

The first platform was the introduction of the Doritos Locos Taco. Taco Bell has sold more than 100 million of the tacos since the launch in March, and plans now call for line extensions, including Cool Ranch Doritos Locos Tacos and Flamas Doritos Locos Taco, which are now in test markets.

“Frito-Lay actually has 123 different flavors of their salty snacks that they utilize around the world, so it’s a very robust closet, so to speak, or pantry, so to speak, on which we can source new ideas in terms of flavors,” Mr. Jerzyk said. “Taco Bell is not looking at this just as a flavored taco shell — they’re looking at it as a flavor platform. So how can we better utilize not only this within tacos, which is obviously the core of the Taco Bell business, but can we use it in other products that Taco Bell sells today? They’re exploring that and very optimistic about that.”

The second platform is First Meal, which is Taco Bell’s version of breakfast. The menu was introduced into 900 stores in the first quarter and is expected to be in 1,000 restaurants by the end of 2012 and in potentially another 1,000 restaurants by 2013. By the end of 2014, First Meal is expected to be available nationwide, Mr. Jerzyk said.

The final platform driving Taco Bell growth is the upcoming launch of the new Cantina Bell menu. Mr. Jerzyk described the new menu as “basically a chef-inspired different line of products that’s more upscale, higher priced and probably a little bit of higher level of quality.” The Cantina Bell menu is expected to launch in July.

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