68• August 15, 2005
NATION’S RESTAURANT NEWS
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Taco Bell bounces back
thanks to ‘Bold Choice’
Under brand boss Brolick, the once-struggling
chain becomes Yum’s most profitable concept
BY LISA JENNINGS
t may be the comeback story of the decade.
Five years ago Taco Bell, the industry’s leading
Mexican quick-service chain, was experiencing double-digit declines in same-store sales. News reports
of the use of genetically modified corn in the
brand’s licensed grocery products sent sales even further into a downward spiral, and franchisees were
decrying a lack of leadership.
Enter Emil Brolick, who after a decade at Wendy’s
International was handpicked in 2000 by David Novak,
chairman and chief executive of Taco Bell’s parent company, Yum! Brands Inc. Brolick established a new
vision he called Bold Choice, focusing efforts on operations by improving speed of service, consistency and the
quality of menu items.
Within a year Taco Bell had turned around and
things were looking up. Taco Bell now has seen four
consecutive years of positive same-store sales. Its annual average-unit volume is over $1 million, and what was
once the weakest of Yum’s five brands has become the
strongest performer. Taco Bell also is regarded now as
the second-most-profitable quick-service restaurant
brand in the nation.
“Taco Bell is perhaps the most important component
of Yum’s domestic business, as it generates approximately half of U.S. operating profits,” Mark Kalinowski,
an analyst with Smith Barney, noted in a recent report.
Last year the brand reported U.S. systemwide sales
of $5.7 billion with more than 5,900 U.S. units, of which
the Yum division owned 1,283. A new prototype
launched last year promises to deliver even better
results, with more modern interior decor and brandreinforcing design.
“I feel like Taco Bell has nowhere to go but up,” says
Allen Beebe, a former longtime franchisee based in
Modesto, Calif., who first started as an hourly employee
in 1966. “The leadership at that organization is better
than it has been in 20 years.”
Glen Bell opened the first Taco Bell restaurant in
1962 in Downey, Calif., a Los Angeles suburb that
proved to be a hotbed for fast-food development. Nearby
in San Bernadino, the McDonald brothers were doing
well with hamburgers. Bell was experimenting with
various taco concepts with partners such as John
Galardi, who later went on to develop Weinerschnitzel,
and Ed Hackbarth, the eventual founder of Del Taco.
Taco Bell grew steadily, and Bell sold the then-868unit chain to PepsiCo Inc. in 1978. In 1988 the brand
shook up the quick-service world with the introduction
of a value menu that included 59-cent tacos.
It was “an accident driven by acts of desperation,”
said Stuart Morris, president of QSR Consulting Group
Inc. in San Diego, who was Taco Bell’s director of marketing at the time.
Then-president John Martin was struggling with poor
results from the introduction of steak and chicken fajitas,
and it was thought his tenure was coming to an end.
Noticing a franchisee’s success with price point reduction
in Las Vegas, Martin introduced the value menu sys-
I
there are people out there for whom price is very important. We also know there are people for whom taste is
important, and they’re less price-sensitive.”
This year Taco Bell introduced the limited-offer
Crunchwrap, featuring traditional beef taco ingredients
folded inside a grilled, hexagon-shaped soft tortilla. A
crisp corn tortilla inside provides a pleasing crunch as
well as structure for easy portability. At $1.79 the product enters what Morris calls the “no-fly zone” of midtier pricing that can bring $2.49 big burrito customers
down in ticket size. But analysts say the Crunchwrap’s
unique appeal has increased transactions and given
sales an added boost.
Because roughly 70 percent of business comes
from guests who never leave their cars while at the
restaurants, the company has focused
efforts on improving the drive-thru
experience.
Brolick boasts that the chain has
shaved close to one minute off the time
guests spend in the drive-thru, using a
combination of new technology and discipline. A simple friendly greeting has
replaced attempts by drive-thru order
takers to sell suggestively.
The company also is looking at
upgrading drive-thrus by putting in better speaker systems and adding
canopies to provide shelter in rain.
The company now has 50 new Bold
Choice prototype units, and all new
builds and remodels will follow the
improved format, offering franchisees the
option of 50-, 60- or 70-seat footprints.
Aiming for a more eye-catching
look outside, the interiors of the prototype include bolder colors and more
comfortable seating. Brand identity
is reinforced at about 72 “touch
points” throughout the store, from
the taco-shaped door handles to the
bell logo incorporated into the backs
Within a five-year window Taco Bell emerged as Yum’s strongest performer, a
turnaround president Emil Brolick credits to the chain’s “Bold Choice” initiative. of chairs.
“They’re subtle things,” Brolick
notes. “But it’s the cumulative effect of this experience
Stuft Burrito, from $1.89 to $2.89, a Quesadilla for
that says to somebody, ‘There’s something different
$1.99, and in 2002 the more health-oriented Border
here; there’s something special.’ ”
Bowl line of meals in a bowl for $2.99. Two years ago
Ghareeb says his two Bold Choice units have far
the “Fresco Style” option was introduced, allowing
exceeded expectations. Ground-up models cost about 15
guests to substitute fat-free salsa in place of sour
percent more to build, but by next year Ghareeb plans to
cream, sauces or cheese.
have 20 of the new-and-improved units. “Sales have
The value menu was not abandoned, however. Last
more than offset building costs,” he says.
year Taco Bell introduced the Big Bell Value menu with
A simplified menu board is being tested, which may
seven filling items that offer an everyday “price sancturesult in some deletions from the menu.
ary” for heavy users, said Brolick. The line was unique
“We think there’s the opportunity to take slow-movin that it broke the 99-cent price barrier on value items
ing items off the menu and not miss a heartbeat,” says
up to $1.29. The goal was to offer something for everyBrolick. “But we’re being very methodical about it. We
one.
have to create room for anticipated items years down
“This segmentation strategy is something we’re
the road.”
going to keep working on,” says Brolick. “We know that
temwide and sales shot up more than 20 percent.
By the mid 1990s the value menu was a standard
feature among fast feeders, but soon product quality
began to erode. Taco Bell’s sales plummeted, and the
company appeared to lose direction.
“We didn’t know where we wanted to go after that,”
recalls Don Ghareeb, chief executive of Tacala LLC,
based in Birmingham, Ala., the largest Taco Bell franchisee, with 165 stores. “And we didn’t really figure it
out until the current leadership.”
Taco Bell had become “a place for cheap food,” says
Brolick. One of his first challenges was to upgrade quality across the menu, from the beans to the tortillas.
A number of higher-priced menu items were also
introduced, starting in 2001 with the signature Grilled
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Profile
Emil
Brolick
LISA JENNINGS
That type of forward thinking is appreciated by
franchisees like Ghareeb.
“It’s a much more strategic company now,” he contends. “It used to be we’d be looking at promotional
strategy 90 days in advance. Now we’re looking at it
two years in advance.”
Marketing programs urging guests to “Think
Outside the Bun” have focused more directly on food,
though over the past few years Taco Bell has developed
partnerships with NASCAR and Major League Baseball
for high-profile promotions.
Though the wisecracking Chihuahua icon of the previous decade helped build brand recognition, company
officials said the dog did little to improve sales — and
he later came back to bite them. A Michigan-based promotions agency sued Taco Bell for misappropriating
the talking Chihuahua concept. Several years of court
battles ensued, ending in January with a settlement.
The case cost Taco Bell $28 million. Taco Bell sued the
ad agency that developed the commercials seeking
reimbursement.
This year Taco Bell also brought an end to a fouryear boycott called by the Coalition of Immokalee
Workers, or CIW, an organization representing the
largest farmworker community in south Florida.
Responding to claims that tomato workers lack basic
rights and protections, Taco Bell agreed to pay a pennyper-pound surcharge — estimated to raise $100,000
this year — to benefit such workers and to improve
farm labor standards.
So far this year, comparable-store sales continue to
improve, up 5 percent respectively for both the first and
second quarters, and the outlook remains positive.
“Emil’s philosophy was always that we’re not look-
Titles: president, chief
concept officer, Taco Bell
U.S.A.; chairman, Taco
Bell Foundation
Reports to: David Novak,
Yum! Brands chairman, chief executive, president
Prior positions: senior vice president of new product
marketing, research and strategic planning, Wendy’s
International, 1988-2000; vice president of marketing and concept development, Ponderosa Inc.,
1981-1987; senior financial and product development positions, Copeland Corp., 1976-1981, and
Chrysler Corp., 1972-1976.
Career turning point: “joining Taco Bell”
Education: bachelor’s and master’s degrees in economics, University of Detroit
Hometown: Grand Haven, Mich.
Current residence: Orange County, Calif.
Personal facts: married, three children
Favorite food: Taco Bell Bean Burrito, Fresco Style
Hobbies: running, golfing, cross-country biking
mil J. Brolick was chosen in July 2000 to lead
Taco Bell, now the largest of Yum! Brands Inc.’s
five restaurant brand subsidiaries. He came to Taco
E
ing for home runs, with 15 percent growth,” said
Beebe, who sold his 37 Taco Bell units late last year in
an attempt to slow down and get out while the going
Bell after a decade at Wendy’s International. Taco
Bell, after only a year with Brolick at the helm, saw a
turnaround that has resulted in four consecutive
years of comparable-store sales increases.
Taco Bell has become the most profitable Yum brand.
How do you plan to keep it that way?
Four years ago we created a brand vision called Bold
Choice with five key strategies: running great restaurants and differentiating the brand; [having] the leading
quality perception within the Mexican QSR category;
redefining price value; creating a powerful brand invitation; and revitalizing our asset growth. We are constantly evolving the tactical execution of these strategies, and we’ll continue to raise the bar on ourselves.
One initiative you’re praised for is speeding up service in the
drive-thrus. How have you done that?
Our goal is to provide exceptional speed but also
speed with service. Over the past three to three and
a half years, we’ve taken close to a minute out of the
time it takes to go through our drive-thru, using a
combination of technology and discipline. We have
implemented timers in our stores to allow us to break
down the time guests spend at the menu board,
waiting between the board and the window, then getting their food and making the transaction. We set
targets for ourselves and report against that.
— Lisa Jennings
was good. “We’re looking for 3 percent year-after-year
growth. We’re looking for base hits that will continue
to advance the brand.” ■
KFC: Back to the future by
getting ‘old-school cool’
Chain beats slump with variety bucket,
‘Snacker’ as full name makes comeback
BY AMY GARBER
hen Gregg Dedrick was named to the top post
at KFC two years ago, the industry’s largest
chicken chain was in a slump. New products
and its once-popular commercials with pitchman Jason Alexander of “Seinfeld” fame had
stopped moving the sales needle, and a brief attempt at
positioning fried chicken as a diet option had failed.
To make matters worse, KFC faced unprecedented
competition from burger and pizza chains that had
begun promoting more chicken on their menus.
“There were a lot of challenges,” recalls Dedrick,
who 10 years ago had worked at KFC as its chief people
officer. “Our relationship with franchisees was going
through a real difficult time. Whenever sales are down
for that long it puts a big strain on the relationship
with franchisees and it creates a crisis of confidence.”
While such an intimidating task would unsettle
W
many, Dedrick was eager for the job
as KFC’s president. He says he is
drawn to “big challenges,” especially those at Yum! Brands Inc.’s
chains, including Pizza Hut, Taco
Bell, A&W and Long John Silver’s.
In the mid-1990s Dedrick worked
closely with David Novak, now
Yum’s chief executive, to lead Pizza
Hut and KFC out of tough times.
Over the last 24 months,
Dedrick has put the focus back on
fried chicken at the chain’s 5,415
U.S. units, reinvigorating KFC’s
product pipeline with items like the
99-cent Snacker sandwich and the
The exterior design at new KFC prototypes is bringing back the chain’s old name,
(Continued on page 70) “Kentucky Fried Chicken,” and giving Col. Sanders a younger look.
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