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Thinking Outside of the Bun

Recently Yum! Brands Inc. (YUM), owner of the KFC, Taco Bell and Pizza Hut dining chains, posted first-quarter profits that topped analysts’ estimates as new menu items helped Taco Bell’s domestic sales.  Net income fell 26 percent to $337 million, or 72 cents a share, from $458 million, or 96 cents, a year earlier.  While significant challenges remain for KFC in the international segment, Taco Bell produced positive results from its new cool-ranch Doritos Locos Tacos product that was significant enough to carry the day for its two siblings.  Chief Executive Officer David Novak is trying to lure U.S. consumers with new food at Taco Bell in an effort to double last year’s $7 billion in domestic sales from the company’s Taco Bell subsidiary by 2021.

The good news at Taco Bell comes after a massive new marketing strategy was implemented in the spring of 2012 to counter a difficult sales year in 2011, when existing store sales dropped two percent over the previous period.  “Live Más” replaced “Think Outside the Bun,” which had been Taco Bell’s tagline since 1999, and followed a two-year run of “Yo Quiero Taco Bell” commercials starring a talking Chihuahua.  “Live Más” risked confusing consumers who were accustomed to the value oriented Taco Bell of old, but the chain was seeking to elevate its food profile by extending its breakfast platform to 800 locations, roll out a higher-end Cantina menu and “reinvent the taco” with the Doritos Locos Taco, a product for which Frito-Lay constructed a proprietary shell made from Doritos.  If the current performance is any indication, the new strategy was worth the risk.

“Taglines are important expressions of brand positioning that restaurants have staked out, and consumers can connect the dots, but I’ve never seen a tagline turn a brand around or drive same-store sales,” said Dan Dahlen, chief executive of Dahlen Communications Inc.

The company’s integrated marketing and consumer engagement effort includes advertising (television, radio, outdoor, digital and cinema), as well as social and public relations support features songs performed in Spanish and is aimed at blending cultures and to remind consumers of Taco Bells Mexican-Inspired Brand.  The new ad introduced Taco Bells new Cool Ranch Doritos Locos taco and is part of Taco Bell’s largest marketing campaign to date.

This year the campaign began by building up awareness of the Cool Ranch DLT, for about three weeks the prior by utilizing its social media channels, providing sneak peeks at the new taco with password-only “speakeasy” events in New York, Dallas and Los Angeles.  Taco Bell worked with a documentary filmmaker and Twitter as well as the bands Passion Pit and Wild Cat Wild Cat which are part of Taco Bell’s long-running “Feed the Beat” program.  The campaign executed “speakeasies” in New York, Dallas and Los Angeles, in which the chain identified fans and “social-media influencers” and invited them to sample the product early by giving them a “secret pass code.” Once fans given the pass code unlocked it, they were then prompted to spread the word via social media so that others could try the product as well.

The launch was also supported by TV ads inspired by consumer responses to the original Doritos Locos Taco, and subsequent demand for a Cool Ranch version.  One 30-second launch spot, titled “World’s Most Obvious Idea,” illustrated everyday consumer reactions to Nacho Cheese DLT, saying “they should make a Cool Ranch one.”  In addition, on all Cool Ranch DLT wrappers, cups and $5 Big Boxes Taco Bell  invites fans to post to Instagram or Tweet their best #wow or #duh face, using those specific hashtags, followed by #CoolRanchDLT, for the chance to see their photo reactions on a big screen billboard in Times Square.

Perhaps the most unique component in the creative marketing strategy is Taco Bell’s 3-D spot made in partnership with NCM Media Networks.  The new spot is the first QSR 3-D spot in cinema industry history and was first viewed on more than 8,000 3-D screens in top movie theaters nationwide, a 2-D version of the campaign also ran across NCM’s full cinema network of more than 19,300 screens.  Taco Bell made the upfront commitment with NCM to make the best strategic use of the big screen on a consistent basis to amplify the brand’s key promotions throughout this year. NCM estimates that 90 percent of its theaters are within a 5-mile radius of a Taco Bell location making it geographically significant to the brands outlets.  The campaign is the brand’s largest marketing campaign in its history.

Taco Bell most recently announced that it’s eliminating kids’ meals from its menu. Touting itself as the first national fast-food chain to do so, company officials said its ditching kids’ meals because they aren’t relevant to its core customers.  “As we continue our journey of being a better, more relevant Taco Bell, kid’s meals and toys simply no longer make sense for us to put resources behind,” said Greg Creed, CEO of Taco Bell, in a statement. “What does make sense is concentrating on expanding choices that meet and exceed the diverse needs of consumers of all ages, without losing focus on what makes us great today.”

The more than $100 million dollar gamble spreads the message and the risk across all media; social, digital and traditional, and appears to be drawing in new customers while successfully securing the loyalty of its most avid fan base.  While early assessment indicates some impressive movement in the right direction, time will tell whether the innovative strategy to reinvent the taco and make the company more relevant will result in significant sustainable results in profits for Taco Bell and its parent company.