Taco Bell has put everything into value – and it’s paying off.
The taco chain, owned by Yum! Brands, reported a 5% increase in store sales last quarter.
It outperformed its sister brands KFC and Pizza Hut, as well as industry rivals such as McDonald’s, which reported a decline in sales last quarter.
Earlier this year, the company revamped its Cravings Value Menu, adding six new “meal” items that cost less than $3.
And it offers deals like the Luxe Craving Box for $7, which includes a Chalupa Supreme, a Beefy 5-Layer Burrito, a Double Stacked Taco, chips with nacho cheese sauce, and a medium drink.
“Taco Bell clearly stands out in today’s environment. Not only is it achieving existing store sales growth well above the QSR category, but it is also delivering restaurant-level margins near record highs,” Yum! Brands CEO David Gibbs said Tuesday during the company’s earnings call.
“We have a great opportunity to build on values that make it difficult for others to keep up,” he said.
Taco Bell uses relatively inexpensive ingredients and offers smaller portion sizes to keep costs down.
But competition for cheaper fast food is intensifying as rivals expand their own low-cost menus to lure diners back.
McDonald’s has extended its $5 savings offer on meals and CEO Chris Kempczinski recently announced that the chain would introduce a more permanent savings menu.
The $5 offering is “a bridge value program,” he told CNBC’s Squawk Box. “I would consider the $5 menu as kind of the first chapter of a multi-part value playbook that we’re going to write,” he added.
Taco Bell’s sales increase was also due to new menu items such as Cantina Chicken, which the company said exceeded expectations.
Yum! Brands also announced plans to begin using AI in hundreds of Taco Bell drive-thru locations by the end of this year, joining the 100 Taco Bell restaurants in the U.S. that already use voice AI technology.
