Taco Bell to Open Upscale 'Cantina' Restaurants
September 15 2015 - 12:20PM
Dow Jones News
Taco Bell is trying to go upscale, with plans to serve
tapas-style appetizers and alcoholic drinks at new "Cantina"
restaurants aimed at better competing in urban markets with
fast-casual chains like Chipotle Mexican Grill Inc.
The new Taco Bell Cantina restaurants, the first of which will
open this month in Chicago's trendy Wicker Park neighborhood and in
San Francisco, won't have drive-throughs, and the kitchens will
have an open design featuring food in open baskets so customers can
see the ingredients, the unit of Yum Brands Inc. said on Tuesday.
Technology also will be featured in the new restaurants, which will
include digital menu boards, television monitors and a mobile
ordering and payment app.
The modernized restaurants "reflect the Millennial trend of
seeking more urban environments to live, work and play," Taco Bell
said.
Chasing upmarket cachet is a leap for Taco Bell, which is known
in part as a prime spot for late-night junk-food runs. Its most
famous product in recent years was the wildly successful Doritos
Locos Tacos—made with Doritos shells—which come in nacho cheese,
cool ranch, and "fiery" flavors.
Still, this isn't the first time Taco Bell has tried to edge
into Chipotle's territory. Three years ago, Taco Bell introduced a
"Cantina Bell" line of burritos and salad bowls made with fresh
avocados and cilantro dressing developed by celebrity chef Lorena
Garcia, which contributed to a 13% same-store sales gain at Taco
Bell in the quarter in which they were launched.
At the time, hedge-fund manager David Einhorn told investors
that the success of the new Taco Bell items came at Chipotle's
expense, a notion that Chipotle strongly denied and that Taco Bell
said it couldn't confirm.
Taco Bell didn't say how many Cantina restaurants it will open
but that expansion plans for more urban markets are being evaluated
and that Taco Bell is planning to build or remodel around 600
restaurants per year. Taco Bell, which has more than 6,200
locations globally, is on track to add another 2,000 restaurants by
2022. The Cantina restaurants are the only ones that will serve
alcohol, the company said.
The new Cantina restaurants will still feature Taco Bell's
traditional menu, as well as the "tapas-style" menu of shareable
appetizers like rolled tacos. The San Francisco location will serve
beer and wine, while the Chicago one will serve that and other
alcoholic beverages including sangria.
Taco Bell has been a bright spot for Yum Brands, which has been
struggling with declining sales in its huge China division. In the
quarter ended June 13, Taco Bell posted the strongest results of
any Yum division, with same-store sales growth of 6% and overall
sales growth of 9%. Chipotle's same-store sales grew 4.3% in its
latest quarter, though total sales rose 14%.
Fast food chains all have been trying to figure out how to win
over younger customers who in recent years have flocked to
fast-casual chains like Chipotle, in search of fresher food. Chains
including Taco Bell have pledged to remove artificial ingredients
from their food. McDonald's Corp. recently said it would stop
selling chicken in the U.S. from birds raised with certain
antibiotics.
Write to Julie Jargon at julie.jargon@wsj.com
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(END) Dow Jones Newswires
September 15, 2015 12:05 ET (16:05 GMT)
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