Soda Giant PepsiCo used to own fast food chain Taco Bell, but decided to spin-off the brand in 1997 after sales fizzled out the year before. Reports as to why this happened differ, but it was a smartly calculated move.
The New York Times reported that PepsiCo vowed the move was not made ‘for drama or quick fixes.’ But is history repeating itself with the much-anticipated, heavily advertised Taco Bell Breakfast launch?
Investment advice site Seeking Alpha claims that the breakfast campaign should be put out to pasture, despite only being rolled out to stores on March 27.
“I would seriously consider counting Taco Bell breakfast out of any long-term forward analysis.”
As expected, CEO David Novak definitely disagrees as evidenced by his statements in a Yum! Brands earnings release.
“At Taco Bell, we’re very pleased with the initial results of our national breakfast launch.”
The statement very vague in terms of the ‘initial results’ and what the total sales to date has been thus far. Seeking Alpha also calls that answer a familiar refrain and writes that a very similar statement was issued earlier this year.
Yum! Brands CFO Pat Grismer says that the breakfast brand is continuing to grow at Taco Bell stores nationwide. Grismer also said that the true story of the success or failure of the new menu items won’t be known until the end of the year.
“Taco Bell’s year will be more of a first half, second half story as we continue to build momentum with this exciting brand.”
It wouldn’t be wrong to assume that ‘momentum’ would translate into big sales for the 5,670 strong U.S. based Taco Bell’s. But you’d be very wrong.
“Now the big question you are probably asking is this: given the success of the breakfast launch, why did same store sales increase only 2% in the quarter?”
That is definitely a good question to ask! So just why is America’s love for Taco Bell just 2% greater than it was last quarter?
“Keep in mind that during the first two months of the quarter, our immediate emphasis was almost totally on breakfast.”
“We said all along the Taco Bell would be a first half second half story.”
That being said, the Bell’s tale of two halves better pan out and fast.
Every Taco Bell store nationwide is offering a breakfast menu. The stores will open for business at 7 A.M. and the hot breakfast will be served until 11 A.M. For comparison’s sake chief competitor McDonald’s only serves breakfast till 10:30 A.M.
The full menu includes 15 items ranging from the Waffle Taco and rounding out with the new as-of-last-month Grilled Breakfast Burritos. The burritos will be individually sold for the affordable price of $1.29 and will come in three varieties: bacon, sausage and fiesta potato. A breakfast quesarito is even available!
Fiesta of course translates to party, so perhaps Taco Bell is alluding to the fact that the fiesta potato burrito is like a party in your mouth.
On that note, why have breakfast in bed when you can have a Waffle Taco for breakfast at your local Taco Bell?
[Photo Courtesy of Wikimedia Foundation]