Taco Bell

Brand Repositioning

Sona Martirosian

From its 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 brands 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 Bells products are that
they are inexpensive, convenient, and available late at night. The brands
personality is young, fun, and outgoing. Its 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 brands messaging has been focused towards a young,
hip, multi-cultural audience who are looking for a late night meal thats
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
Ms 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 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
Indexs 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 brands 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 Bells 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 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 theyre 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 Bells 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, 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 Bells 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 Carls 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 wont become a
part of their personality any time soon. CKEs 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 doesnt 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
McDonalds 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 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
doesnt 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 childrens 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
Todays 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, doesnt mean that you cant eat something thats 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
consumers 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 Bells 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 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 brands 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 Bells
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 Associations 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 thats better for you because of whats inside, not because they have
fewer calories.

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 worlds cuisines with ease
by selecting what countries youd like to eat from on our digital menu and
picking up your bite-size adventures at the drive-thru window. Taco Bells
fusion tacos let you grab a snack with your friends on your way to your next
adventure or on your way back.

Taco Bells young, millennial audience is looking for high quality, ethnically
diverse foods and ethic fusion options, and theres no one in the quick-serve
industry thats providing it to them. Taco Bells 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, snacksized foods.
The food sold at Taco Bell is classified as Mexican inspired, and most people
dont 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. Its 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 healthier ingredients, while the second
option focuses on the targets 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 brands 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 brands image and capitalize on the healthy eating trend in a
way thats 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.

Visuals for Positioning 1: The better for you fast food, any way you like it

Pish

*Packaging idea created by graphic designer Jonathan

Visuals for Positioning 2: Gourmet options with drive-through convenience

*Packaging design by graphic designer Andrew Kay

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