RETAIL/LEISURE : Taco Bell Profit Up 19%--$42.5 Million Posted for Quarter

The recession hasn’t stopped Taco Bell.

Powered by the addition of new restaurants and its low-priced menu strategy, the Irvine-based subsidiary of Pepsico reported that its profits rose by 19% and sales were up 18% in the second quarter ended June 15.

Taco Bell pioneered the price-cutting trend that has swept the fast-food industry when it slashed the prices of some basic menu items last year and grouped them into 59-cent, 79-cent and 99-cent categories.

When other chains--notably McDonald’s--followed suit, Taco Bell took a step further recently by producing miniature versions of Mexican-style food and selling them at a paltry 39 cents each. With same-store sales increasing by 7% in the second quarter, it appears that Taco Bell’s strategy is still paying off despite competition from 59-cent McDonald’s hamburgers.

Quarterly profits rose to $42.5 million, up from $35.5 million, on sales of $471.4 million, up from $398.9 million.