News
Taco Bell hopes to disrupt marketplace with $2 meal deals
May 13, 2010
Taco Bell is known for its value meal, offering a variety of items between 79 cents and 99 cents. With the quick-service industry still challenged by high unemployment among its core demographic, the company has volleyed a new salvo in the discounting war with the introduction of $2 combo meals.
According to the company's website, it is offering four $2 Meal Deals that include a choice of entree, a medium soft drink and a bag of Doritos. Entrée choices include Grilled Chicken Burrito, Double Decker Taco, Gordita Supreme or 5-Layer Burrito. The 5-Layer Burrito and the Grilled Chicken Burrito are on the Why Pay More menu, priced at 89 cents and 99 cents, respectively.
According to USA Today, Taco Bell "is the only national chain selling an entree, side dish and drink for $2 — a penny more than an iTunes video download."
From the story:
"This is certainly thinking outside the bun," says Bob Sandelman, CEO of the restaurant research firm Sandelman & Associates. "I'm sure McDonald's will be watching with interest." …"If we just tossed a pebble into the pond, the ripple wouldn't find its way to shore," explains Greg Creed, president of Taco Bell. "We're throwing a boulder into the pond. This will be a disrupter in the marketplace."
Other QSRs have found success with new value promotions. Arby's reported its new $1 Value Menu boosted traffic and same-store sales in April, while Jack in the Box and Sonic are seeing lift from bundled meals, including Jack in the Box's new Pick 3 for $3 menu. Burger King saw traffic and comps improve after its shift to a larger value mix with its former $1 Double Cheeseburger promotion.
According to Jack in the Box and Sonic's recent updates, bundled meals seem to have a lower impact on margins than discounting. Arby's reported Thursday a 12 percent decrease in average check in markets that just introduced the value menu, although that decrease improves over time as guests use the value menu item as add-ons rather than a full meal.
Taco Bell will support the $2 Meal Deal through an integrated summer campaign that includes TV and radio advertising, in-store promotions, websites and social media activity, as well as public relations and enhancements with Taco Bell's existing sports and entertainment sponsorships. The TV advertising, handled through Draftfcb, Irvine, will include 15- and 30-second spots that humorously depict consumers' question of "Which item in the $2 Meal Deal is free – the Taco Bell item, the chips or the drink?" In-store signage was also handled through Draftfcb, Irvine, and digital was handled by R/GA, San Francisco.
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