- 4 months ago
How Taco Bell’s CEO Keeps Gen Z Obsessed _ WSJ
Category
🤖
TechTranscript
00:00They are spending on brands they care about, and Taco Bell is a brand they care about.
00:04Fast food restaurants have been struggling.
00:06Sales have slowed over the last year as people pull back on spending.
00:10But Taco Bell has kept customers coming.
00:13It's a recipe for success.
00:14For us, it's how do we continue to really make the cult love us.
00:21Here's how Taco Bell's CEO says they're feeding the obsession.
00:26So fast food is so competitive.
00:28It is a cutthroat industry.
00:30How are you succeeding in fast food right now?
00:32We have this thing called the Magic Formula.
00:34And I've talked about the Magic Formula a lot, but it consists of four components.
00:38Being a buzzy brand and culture, we want to be a value brand.
00:41You see that in our value platforms.
00:43We want to be a great brand in digital.
00:45If you're not winning on this, you're not winning.
00:48Last, we're going to be innovative.
00:49And we have a history and a DNA of innovation, and we want to continually bring new exciting things to our consumers.
00:56Taco Bell brought back crispy chicken nuggets, and I can't believe how good they are.
01:01So it might surprise people that you sold out on chicken nuggets.
01:05Is Taco Bell a chicken restaurant now?
01:07The funny thing about chicken nuggets, I think even internally, we had people into the kitchen,
01:11some influencers, some people within the industry, and I think people kind of scratched their head a little bit.
01:16But it didn't surprise us.
01:17We knew that we had an amazing product.
01:19We knew we could storytell around that product.
01:21We knew some of the content that we created, are we a taco place or a chicken place, really resonated with consumers.
01:27From your taco place, it's also a chicken place that's also a taco place.
01:30And so the result, while surprising to a lot of people, wasn't surprising to us.
01:36So this is the Taco Bell back of house.
01:38How have restaurants had to invest to accommodate more chicken?
01:43We do have holding cabinets and things that keep the chicken longer.
01:46But if you just look at the back of house and how we invest in stuff like something that makes us more efficient,
01:51like Preppy, which manages hold times.
01:53When you look at line printers, which is all about accuracy for us, when you look at voice AI,
01:58it's investing in the holistic total back of house, which therefore helps all of our proteins resonate with consumers.
02:06What have you seen in trends or data that was like, oh, we have to be in chicken now?
02:12What happened to us is you start to get insights about how consumers are accessing more crispy chicken,
02:17how chicken is leading as a protein.
02:19So for us, it wasn't a new thing.
02:20It's now, let's get in the kitchen, no pen and tin, and look at different forms, different flavors,
02:26and how we can really leverage chicken on our menu for consumers.
02:31As other types of meat get more expensive, more and more restaurants are making the bet on chicken.
02:36In the last year, McDonald's, Chipotle, and Wendy's have launched chicken-focused campaigns.
02:41And sales for chicken chain restaurants have stayed high as burger chains have stalled.
02:46Chicken's very competitive right now.
02:48You've got chicken players that are focused on it, and then fast food is all into chicken, McDonald's, etc.
02:53How do you stand out?
02:54If you think about chicken nuggets, they weren't normal chicken nuggets like every other QSR had.
02:59It was chicken nuggets with a tortilla crusting.
03:02It was the sauces we provide were very Mexican-forward.
03:05If you think about jalapeno honey, bell sauce, jalapeno ranch.
03:08So for us, for chicken, it's one, we want to be where the consumer is, and two, we want to make sure we do it the Taco Bell way.
03:16The gordita crunch, all I do is munch on that good Taco Bell.
03:21So how are you looking for trends?
03:23We've been a brand that's been on the tip of culture.
03:26So we look at everything, both data, qualitative trends, quantitative trends, Gen Z trends, and we want to make sure we're at the forefront of it all.
03:34If you look at what we think about, we think about sports, we think about music, and we think about food.
03:39We stay pretty focused on those three things.
03:42We don't want to be the brand that jumps around and chases after every trend.
03:45I was going to ask about your tenure at Nike, which is known for, you know, big drops and hype.
03:51Are there elements of that experience that you're bringing to Taco Bell?
03:54I'd say the most important thing I'm bringing is, you know, Nike's a product and a taco's a product.
04:00And what I want to bring to continue to bring to Taco Bell is just storytelling about that product.
04:05Consumers fall in love with stories, and I think the more we storytell about the brand, whatever part of the brand it is, it's really important.
04:15I also said when I came in that I'd always hear we want to be the best in QSR.
04:20We need to have the best sales in QSR.
04:22We want to be the best brand with QSR.
04:24We want to have the best operations in QSR.
04:26And I said, why can't we just be the best brand?
04:28We're going to keep this a secret, but the Bell doesn't deserve to be kept a secret.
04:34How have you honed in on your customers?
04:37When I came to Taco Bell, I think we were trying to sell to everyone and speak to everyone.
04:41I think it's important to sell to everyone, but the brands that break through speak to somebody specifically.
04:47And who we speak to is somebody we call the cultural rebel, somebody who is pushing trends forward, who is changing the game.
04:53What age is the cultural rebel?
04:55Tell me more about the cultural rebel.
04:56We'll call it epicenter Gen Z.
04:59When we think of Gen Z, we'll call it 18 to 30 Gen Z.
05:02That's who we're speaking to.
05:03So it's almost a sub-segment of Gen Z.
05:05And it's a mindset.
05:07And we want to make sure as we create food content, it really gives us a roadmap or a blueprint for what we create.
05:13So we're not just creating things.
05:14We're creating things that speak to that cultural rebel.
05:17This is Taco Bell's celebration of its fames.
05:19Behold, a bunch of randos, not famous people.
05:22Wait, what?
05:23Sorry, big guy.
05:24Taco Bell has competition in capturing this specific demographic.
05:27DCDX, a research firm that studies how Gen Z interacts with brands, ranked Taco Bell as number five on the Magnetic 100, a measure of restaurants' power to reach Gen Z based on how much and how often it's talked about online.
05:42Okay, guys, I am back and I got a Baja blast.
05:47How are we getting Gen Z to spend?
05:48When you look at that group, they're the word of mouth brand ambassador or brand advocate that will drive your brand forward.
05:54And if you look at that, they are spending on brands that they care about.
05:58How do you get them to keep caring?
06:00You keep caring by executing the magic formula.
06:02We want to make sure that from a brand standpoint, from a digital standpoint, from a value standpoint, and from an innovation standpoint, we keep on executing the plan.
06:10Get lux for less, only at Taco Bell.
06:12You talked about value a little bit, and value is really the name of the game in the industry right now.
06:17It's also become very competitive.
06:18Everyone's offering some kind of value offering.
06:21How are you standing out?
06:23I think the way we stand out is there's value promotions and there's value platforms.
06:27Value platforms, when you think of CVM, cravings value menu, we have 10 items under $3.
06:33And then when you look at our boxes, our value boxes, we have $579.
06:37Those are platforms that we invest in each and every day.
06:40And then we also have the promotion on digital, which I think makes us unique in the industry.
06:44Taco Bell appeals to a more low-income demographic than the average for other quick-service restaurants.
06:49Consumers are tightening their belts, been doing that for a while now, I'm sure you know that.
06:54How are you still having things for sales increases when a lot of other brands aren't?
06:59We think about the menu as core and value in LTOs.
07:02It's a very exciting menu that people can come to, no matter income level.
07:07People have options within Taco Bell, and it's just a brand that people want to be involved with.
07:12Taco Bell got me again with the box deal.
07:15Let's talk about boxes.
07:17The Lux Cravings boxes.
07:18So a lot of those items are quite premium and would be more expensive if you bought them a la carte versus in the box.
07:24How are you making those profitable for franchisees?
07:27We work with our suppliers, we work with our partners, we work with our franchisees to make sure they're priced appropriately.
07:35And each box gives you something different.
07:37And we're always making sure that we have the right cost of sales so at the end of the day, franchisees can be profitable.
07:44Franchisees have said that the boxes are profitable and good overall for their business because they get more people in the door.
07:50Give it up. Taco Bell fans.
07:53Do you want to be the biggest brand?
07:56I want to be the best brand, and I want to make sure we are a global brand.
07:59Taco Bell previously opened in Mexico, and that didn't work.
08:02Could you see returning to Mexico?
08:04I think anything's possible.
08:05This brand, we want to grow international.
08:07It's a big focus of ours.
08:09It's part of our overall strategy.
08:12And I think no country's off-limit.
08:14Like I said, KFC has 28,000 restaurants there in our house, and we're learning a lot how to be successful internationally.
08:21So Taco Bell is doing great right now.
08:22There has to be things that keep you up at night.
08:26What are some of the biggest challenges here?
08:28I think what keeps me up at night is just keeping the team motivated and not being complacent.
08:32We have incredible momentum, but we, to the R and ring the bell, we want to be relentless.
08:36We want to keep our foot in the gas.
08:38Two, international.
08:39We want to keep international growing.
08:41We're going to open five markets this year.
08:44We're in 32 markets.
08:45Beverages, we have one, the Moss Cafe, looking to grow that to 30 by the end of the year.
08:50And we think the opportunity is unlimited with the Moss Cafes around the world.
08:56Sean, thanks so much for joining us.
08:58Thanks for coming out, Heather.
08:59Taste how I did today, guys.