At a meeting of Taco Bell franchisees last year in Honolulu, a Ronald McDonald look-alike strutted on stage and told Taco Bell's chief executive that McDonald's wanted the whole fast-food pie. Taco Bell President John Martin answered the hamburger clown by smashing a meringue pie in his face.
Now, by totally revamping its image--from the look of its logo to the cut of employee uniforms--Taco Bell has lots more to fight back with than pie in the eye.
A slew of planned corporate changes was shown Tuesday at a Los Angeles seminar for nearly 900 franchisees of the Irvine-based Mexican fast-food chain. The company's flashy new packaging was unveiled in a fashion show, in which models were decked out as six-foot tacos, burritos with legs, and walking cups of soda.
"We want to be a McDonald's with pizazz," said Martin, in an interview at the Century Plaza Hotel.
The changes don't reflect a company on the defensive. Far from it: Taco Bell is one of the fastest-growing restaurant chains in the world. The changes, Martin said, are to ensure that the rapid growth continues.
For more than two years, Taco Bell executives have labored over plans to give the company a mainstream image like McDonald's or Burger King. That requires an American look, and the company has spent millions of dollars researching ways to accomplish that. Major overhauls at the company-owned stores and franchise outlets could cost upwards of $100 million, Taco Bell executives estimate.
Although Taco Bell's menu will remain mostly Mexican, little else at the chain of 1,800 restaurants will. A recent survey of 500 Taco Bell customers revealed that a vast majority said they didn't like the looks of the restaurants--inside or out. "We just weren't in the same league, visually, as our competitors," said Larry Higby, senior vice president of marketing.
In 1985, the chain will spend $10 million replacing with colorful bells the sleeping sombrero that now adorns its sign. It will lighten its drab-brown buildings by painting the exteriors off-white and adorning the interiors with splashes of color; put its workers in brighter uniforms; package its food in snazzy new wrappings; and even add at least one ethnically mixed menu item: Mexican pizza.
Some critics, while praising the cosmetic changes, have suggested that Taco Bell needs to make deeper alterations. Richard Martin, West Coast editor of Nation's Restaurant News, is critical of Taco Bell's refusal to offer the likes of hamburgers and chicken nuggets at its outlets. "I'm not so sure that their declaration that the public has grown tired of hamburgers is entirely credible. It may be wishful thinking."
With sales of more than $900 million in 1984--more than 30% better than the year before--Taco Bell is the undisputed leader in the Mexican fast-food industry. Its anticipated 1985 sales of $1 billion will account for more than half of the entire Mexican fast-food market. However, that figure is still a far cry from the $8.5 billion in sales that McDonald's posted last year.
And while Taco Bell, a subsidiary of PepsiCo Inc., will sink $55 million into advertising its new image in 1985 (an increase of 40% from 1984), McDonald's will spend upwards of $500 million on worldwide advertising, Taco Bell's Martin estimated.
Growth will continue at a furious pace as Taco Bell plans to add 350 more restaurants in 1985. "We'll add more restaurants in the next year than Del Taco or Naugle's have in their entire chains," Martin said. Within five years the company expects to have 4,000 restaurants nationwide and post sales of nearly $4 billion.
"We're in the big leagues now. We're not going to walk, we're going to run," said Martin.
Taco Bell wants franchisees, which make up about half of the company's operations, to fall in step behind the company-owned stores and remodel quickly. "Sure we have the choice not to remodel," said Carl Nicolaysen, a franchisee from Salem, Ore. "But then they have the choice not to renew our (franchise) contracts when they expire."
Negel Gooch, a franchisee from Fairfield, Calif., said the new changes will cost him an additional $150,000 in improvements at a second Taco Bell he intends to open. "It's time to catch up," he said.
Yolanda Stewart was so impressed with Taco Bell's improvements that she left her 18-year post in Taco Bell's corporate real estate department and recently bought a franchise in Rancho Cucamonga. "It's like the company is finally in the big time," she said.