Taco Bell wants to give you a little buzz with your burrito, with its plans to open "cantinas" as it tries to compete with a host of new, fast-growing casual eateries.
The Irvine company said Tuesday that the restaurants, in urban locations, will serve alcohol and have open kitchens, digital menu boards and TVs.
The first Taco Bell Cantina is set to open in Chicago next week, with the second debuting in San Francisco later this month.
Taco Bell, a subsidiary of Yum Brands Inc., said the cantinas are part of its planned expansion into new markets that will reflect the "millennial trend of seeking more urban environments to live, work and play." The restaurants will have no drive-through windows.
The company hopes to open eight additional cantinas over the next year, though a spokesman said the company is still evaluating locations.
The venture into urban markets is part of a larger expansion by Taco Bell, which aims to add 2,000 stores by 2022 and build or remodel about 600 each year, providing what the company said was ample opportunity to "do something different." The chain currently has nearly 6,000 shops across the U.S.
The opening of the cantinas comes as the fast-food industry competes with fast-casual restaurants such as Chipotle and Panera Bread that have appealed to younger diners looking for higher quality. That segment saw U.S. sales jump 9.5% in 2014, compared with 2% for fast food, according to research firm Euromonitor International.
To adapt, some of the biggest names in the fast-food business are looking to up their game.
Struggling McDonald's, which saw U.S. same-store sales drop 2% in the second quarter, recently announced it would serve breakfast all day nationwide and eventually switch to only cage-free eggs in the U.S. and Canada. Even Starbucks is rolling out beer and wine to more locations.
Senior restaurant analyst R.J. Hottovy of Morningstar said that although Taco Bell has been a "bright spot" in the fast-food industry — same-store sales rose 6% last quarter — the cantinas offer a path to further growth and a way to elevate its brand to a level on par with fast-casual restaurants.
"Consumers have shown a willingness to pay up for fast-casual brands such as Chipotle, Five Guys and Panera," Hottovy said. "I think this is Taco Bell attempting to play in that space."
Owner Yum Brands, based in Louisville, also operates the KFC and Pizza Hut restaurant chains.
Taco Bell spokesman Matt Prince said the pricing of traditional menu items at the cantinas will be the same as at regular locations, though there will be unique options. In addition to alcohol, the new Taco Bells will have tapas-style offerings, allowing patrons to share plates of nachos, rolled tacos and other menu items during certain hours in the evening.
Customers at the new Chicago restaurant will be able to enjoy a $4.50 glass of craft beer from New Belgium Brewing Co. or a $4 Dos Equis — along with wine, sangria and frozen alcoholic drinks called "Twisted Freezes," Prince said.
The San Francisco location, near AT&T Park baseball stadium, will have only beer and wine. Pricing and offerings for that location have yet to be determined, although the desire is to offer some sort of local brew, he said.