Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Chipotle Mexican Grill, Inc. (CMG), PepsiCo, Inc. (PEP): Taco Bell Corp.’s Refocused Brand Should Deliver Mas Returns

Page 1 of 2
Yum! Brands, Inc. (NYSE:YUM) is one of the world’s largest fast food restaurant chains, with over 39,000 restaurants worldwide. Yum! earns the majority of its revenues through its three signature brands KFC, Pizza Hut, and Taco Bell Corp..

After a rough stretch that saw controversies in both its growing China market and the U.S. over food quality, Yum! appears to be righting the ship. A refocusing of its brand strategy in Taco Bell Corp. should lead to shareholder returns. Here’s how Taco Bell is helping shareholders Live Mas.

Branding: it matters!

A year ago, after questions about food quality and the “pink slime” fiasco, Taco Bell Corp. was ready to change some minds. Take into effect that parent company Yum! was facing quality concerns in its super growth Chinese market, and the whole company wanted to change minds. But, despite some fanfare from high profile investor David Einhorn, the ill-fated Taco Bell Corp. “Cantina Bell” was the wrong approach.

Chipotle Mexican Grill, Inc. (NYSE:CMG)

Cantina Bell, through its celebrity spokesperson Chef Lorena Garcia, aimed to convince customers that Taco Bell was going to compete with Chipotle Mexican Grill, Inc. (NYSE:CMG) on quality. That’s like saying Oasis was going to compete with the Beatles on melody. As Chipotle Mexican Grill, Inc. (NYSE:CMG) Founder Steve Ells put it best, consumers don’t seek “quality” grilled chicken from restaurants that don’t have: “knives, grills, or a cutting board.”

Besides being a bit of a joke, the Cantina Bell concept was dangerous because it signaled that Taco Bell was losing its focus. You don’t build a brand for decades that’s based off of cheap, quick, Mexican food and change it overnight; which is precisely why Taco Bell’s expansion of its Doritos Locos taco (via the cool ranch version) is such a good sign.

Doritos Locos is Spanish for profits

Taco Bell Corp. has learned that it doesn’t need to choose between the past or its future. By shoring up concerns about food quality while debuting new products that fit its brand, Taco Bell is choosing the best of both.

The results have been impressive and immediate. Taco Bell sold over 300 million of the original Doritos Locos taco in eight short months last year.

In addition to being right in the wheelhouse of Taco Bell’s brand the Doritos Locos line could have operational benefits for Yum!’s shareholders. PepsiCo, Inc. (NYSE:PEP) is the parent company of Doritos and has a longstanding relationship with Yum! as its beverage supplier.

Page 1 of 2