When the first 400-square-foot Taco Bell opened in 1962, the concept of a two-story, four-lane drive-thru would’ve likely seemed like a fantasy. A three-part musical on TikTok celebrating its Mexican Pizza, probably even more so. But these were just a few of several major moves the chain made in its 60th anniversary year—which all came under the leadership of Mark King, who took the helm in 2019 and has led Taco Bell through a tricky few years.
Despite issues across supply chain, labor, and inflation, “we’re positioned better today than we were three years ago,” he told us. Speaking with Retail Brew, King broke down Taco Bell’s biggest moves of the year and previewed what’s to come in 2023.
This is the first of a two-part interview. It has been edited and condensed for clarity.
It’s been a big year for Taco Bell. What do you feel is the main move or accomplishment that stands out to you? I guess if you were going to just pick one, it was the relaunch of the Mexican Pizza, for a lot of reasons. It was a product that had been around for 30+ years, that had kind of a cult-like following, but certainly wasn’t a main menu item. And because of the genius way the marketing team relaunched it all on TikTok, with Doja Cat and Dolly Parton, with the musical, and all of the things that made Mexican Pizza come to life, I think it was just a great example of what we call “restless creativity”—take something and do it in a completely new way and create a new life for it. And it not only had big sales impact, but I think it had amazing brand impact.
On the most recent earnings call, [Yum! Brands CEO David Gibbs was] talking about how there’s a balance of the cheaper $2 Cravings Value Menu and more premium items. So how has that strategy played out? We’re very fortunate that our menu really has three different elements to it. One is everyday value. And we call it our Cravings Value Menu. So we have $1 products, $2 products, and a $5 option. So if you really are pinched for money and are looking for great food at value, you have that at Taco Bell. Then we also have what we call LTL, or limited time offerings, that come out for three, four weeks at a time. And those are new products and different products like [The Big Cheez-It Tostada]. So price isn’t the most important thing for them, and [consumers are] willing to try those, so we can take a little more pricing there. And then we have the reason consumers come to Taco Bell, which is really tacos, burritos, quesadillas, nachos, and crunch wraps. Those five products make up the majority of our business. And because consumers like those, again, in inflationary times, they’re willing to pay a little bit more for those. So we have this three-pronged strategy for pricing that allows us to maintain really great value for consumers, but still be able to have margins for the franchisees, and it’s been very successful in 2022.
Retail news that keeps industry pros in the know
Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.
What do you feel like the biggest challenge was for Taco Bell this year? I think it was on the labor side. For whatever reason, it was hard to get people to come back to work. So we definitely had a challenge, as everyone else did in the labor market. I think we probably fared as well or better than most, probably based on the strength of the brand. We focused a lot on team member safety, team member compensation, and just not a paycheck. But certainly we upped what we were paying employees, but really focused on a path to an RGM [Restaurant General Manager]. So what we try to do with labor is just paint this picture that there’s a future here, and it’s a career at Taco Bell. And so I think that helped us compete in the labor market.
The Taco Bell Business School was announced in January. How did that first year go?
This first year was more about learning—What do we have to add to the curriculum?—partnering with Yum Brands and the University of Louisville to make the curriculum a little bit more robust. And then we’re also bringing in franchisees that are helping to build out the curriculum. So I think year one was a big success. And then it brought attention to something—a lot of learnings from the first year—and looking forward to pushing this forward in the second year. That being said, this is a long-term program for us. What we’re really excited about is the excitement by team members for learning, for improvement, and seeing that they have a long-term future with Taco Bell.