When Taco Bell's chief marketing officer, Taylor Montgomery, sums up the Mexican chain's marketing dynamic, two words come to mind: “cultural rebel.”
To be clear, when he uses the phrase, it's not just Gen Z or millennials. It could refer to anyone from country music sensation Dolly Parton to rising rap artist Doja Cat. The chain is as keen to learn from different cultures as it is to influence them.
While Taco Bell repeatedly jumps into the zeitgeist, it also realizes that its brand belongs to its fans: It's a key reason why the company decided last year to liberate the “Taco Tuesday” trademark formerly owned by Taco John's and to feature LeBron James in its marketing, and why it hosted a wedding in a metaverse chapel after more than 300 people applied.
Taco Bell's marketing philosophy and commitment to its customers is nowhere more evident than when it comes to menu innovation. The fast-food giant kicked off 2024 with a bang by hosting its first-ever Live Más Live event during Super Bowl week in Las Vegas, where it unveiled several new menu innovations in a style similar to how Apple unveils new tech products. The moment combined its desire to put fans first with its belief that Taco Bell is the most innovative brand in the world.
“So what we wanted to create with Live Más Live was a way to really showcase those two things to our culture and our fans, the people that matter most,” Montgomery says. “What was most important to us with Live Más Live, and what my team and I thought a lot about, is you can't just talk the talk. You have to put your actions into it. It's no good just paying attention. So the idea was, how can we bring the culture into those two things and create a moment that shows that we are those two things, that we are a fan-first brand and that we are the most innovative brand.”
New products announced include Cheesy Chicken Crispy Panada, Crispy Chicken Nuggets, Cheesy Street Chalupa, MTN DEW Baja Blast Gelato, Cheesy Enchilada Dipping Tacos, Durex Deleche Cinnabon De Lite and Cheese-It Crunchwrap.
Chief Food Innovation Officer Liz Matthews says Taco Bell's approach to innovation has changed since the COVID-19 pandemic hit the U.S., mainly due to the emergence of delivery. The additional revenue channel has given the company more opportunities to do promotions with product drops and loyalty programs. Matthews adds that they've also seen increased demand from customers. There's still excitement from the past few years, and customers are eager to enjoy foods they've never encountered before.
Taco Bell continues to attract more loyal customers by introducing new items. Every 5 weeks— twice as frequent as in 2023.
“We want to keep Taco Bell in the news,” Matthews said, “so there's stories happening all week, all year round. Whether it's what we're doing with our loyalty program or new product launches, that's why people love our brand. They want to know what's next.”
There's so much love for Taco Bell that the brand sometimes has issues with new products leaking online, which was another benefit of the Live Más Live event: if customers are dying to know the news, why not be proactive and hype it up?
“I think there's always going to be speculation where people are guessing and trying to figure out what we're doing. I think we approached it differently this year,” Matthews said. “We thought, we're going to announce it soon, we're ready, we're excited, so we should just announce it. So we took a different approach so that people don't have to guess anymore, or speculate on Reddit.”
Taco Bell uses several techniques to gather information to help its product innovation team understand what's worth spending its time on. The first tool is using industry data. Essentially, they figure out what customers are eating at competitors' drive-thrus and even in their dining rooms. Social media also plays a key role. Taco Bell reviews daily and monthly what customers are saying about the menu and what they're saying about market testing. Employees go out in the field and tell employees what consumers are saying.
Montgomery treats every opportunity as a focus group — he sits in on his daughter's dance practice and gets loads of feedback from other parents about certain products — and his main job is to listen and understand better than anyone else what consumers want.
Through all the aforementioned channels, Taco Bell has learned that chicken is gaining huge popularity in the U.S. and has tailored its innovations accordingly. In March, the chain unveiled its Cantina Chicken menu, which includes the Cantina Chicken Burrito, Cantina Chicken Taco (soft or crispy), Cantina Chicken Quesadilla, and Cantina Chicken Bowl. In these dishes, the chicken is oven-roasted, shredded, and seasoned with Mexican spices such as pasilla and other chili peppers. New ingredients include purple cabbage, pico de gallo, white corn taco shells, and avocado verde salsa.
“Chicken consumption continues to grow, whether it's grilled or fried,” Matthews says. “Consumers are telling us they want more chicken. They get satisfaction from eating chicken every day and they want more chicken options. That's what started it. Then we found this amazing slow-roasted chicken, full of fresh ingredients and with this amazing new avocado verde sauce. It all revolves around this chicken, and honestly it was born out of consumers asking us for more chicken options.”
Feedback loops are also a good way for Taco Bell to determine which companies to partner with when it comes to culinary innovation. Recent examples include Cheez-It, Tajín, Secret Aardvark, Disha Hot, Salt & Straw and Beekeeper Coffee. Previously available on the menu for a limited time, the Cheez-It Crunchwrap is poised for a national rollout. A Cheez-It cracker 16 times larger than a regular size is stuffed with seasoned beef, nacho cheese sauce and classic Crunchwrap fillings, then wrapped in a folded tortilla.
“Obviously, there are a lot of people who would partner with us,” Matthews says. “I think the most important thing is that we love what they do and they love what we do, so it starts from there. It's funny, someone asked me, 'Are you guys going to start working on anything right away?' No, we just build relationships, talk together, explore ideas, and see if it's going to be a good partnership. But the most important thing is that it has to be authentic. We love the people we're working with and they love our brand. That's the secret to any partnership.”
Taco Bell is using the huge interest in food innovation to power its higher-margin, less labor-intensive digital channels. In some cases, the brand gives rewards members early access to menu items, and in other cases it runs surveys to let users decide which items they'd like to get for a limited time.
This strategy has worked extremely well: Taco Bell achieved the milestone of surpassing $15 billion in system sales for the first time in 2023, with the majority of this revenue generated through digital channels. The brand's digital sales mix reached an all-time high of 31% in the fourth quarter, up 7 percentage points year over year. This growth was primarily driven by in-store kiosk sales, which increased 15 percentage points year over year in the fourth quarter. Additionally, Taco Bell is prioritizing customer loyalty, as evidenced by a 17% increase in its active user base in 2023.
The brand achieved a 24% profit margin last year while maintaining its leadership position in key value perception metrics in the quick-service industry. In particular, restaurants located in lower-income markets performed better than other business segments during the fourth quarter and throughout the year. Additionally, its value menu, which now offers items under $3, has proven more popular with consumers compared to its testing phase.
Taco Bell's goal is to “offer something for everyone” and give people more reasons to frequent the restaurant, Matthews said. This counters the infamous veto vote that every restaurant wants to avoid when approaching consumers. But Taco Bell acknowledges that it can't overinnovate to the point that it overtaxes backhouse employees. Matthews noted that Taco Bell tries to strike a balance between introducing new products and making team members' lives as easy as possible. So when the company tackles a new product, it has to be “a big change” that both consumers and employees expect.
The most fun part about Matthews and Montgomery's jobs is that no two days are the same. That remains true on their mission to be cultural rebels.
“I'm much more productive creatively when I work on something for a set amount of time and then move on to the next thing,” Matthews says. “We have chefs in the kitchen all the time. We're always talking to our consumers. We're focused on multiple things every day. We don't have Twist days or anything like that. We work on everything every day.”
