Taco Bell plans upscale fast-casual restaurants U.S. Taco
04/27/2014 8:32 AM
04/27/2014 8:32 AM
Taking the nation’s reputation as a melting pot society to heart, Taco Bell is unveiling an alter-ego restaurant with a menu of American-inspired tacos and craft beer.
The Irvine, Calif.-based fast-food chain is making a play for the $34 billion fast-casual space with U.S. Taco Co. and Urban Taproom. The edgy Day of the Dead-theme brand features $4 premium tacos, spicy steak-cut fries and alcohol-infused shakes. Each taco is a twist on classic regional dishes – from an East Coast lobster roll to Texas-style brisket.
U.S. Taco, opening this summer in Huntington Beach, Calif., is the first of what could be dozens across the country – and the world, Taco Bell Chief Executive Greg Creed said.
“I would love one day to see 1,000 of these,” he said. “But let’s not get that far ahead of ourselves. We’re opening a restaurant and seeing what happens.”
Because the menu is based on American meals, U.S. Taco won’t be selling burritos, beans, rice or tortilla chips.
“This is not a Chipotle walk-along,” Creed said.
The core U.S. Taco menu includes a lineup of 10 tacos and daily chalkboard specials such as the Winner Winner, fried chicken lightly drizzled in “S.O.B.” (south of the border) gravy and wrapped in a soft flour tortilla. The Southern Squealer features pulled pork with peach jalapeno barbecue sauce. The Smokey & The Bandito is stuffed with Texas smoked beef brisket topped with salsa and melted Oaxacan cheese. Sides include habanero dusted steak-cut fries and shakes spiked with Guinness and tequila.
Jeff Davis, president of the food-service consulting firm Sandelman & Associates, said launching a chain from scratch is “highly risky.”
“That being said, they’re doing a lot of things right,” said Davis. “They’re building a brand based on a completely new concept in an area they have expertise in.”
Restaurant industry strategist Dennis Lombardi agreed. “Certainly it is a bold move, but it’s also a very plausible strategy to test and exploit,” said Lombardi, a fast-food consultant with Ohio-based WD Partners.
Creed said U.S. Taco is not a Taco Bell spin-off.
“Taco Bell is Mexican-inspired, and U.S. Taco is American-inspired,” Creed said while sampling a plate of “loaded” fries and a fried chicken taco at the chain’s Irvine test kitchen last week.
The store design and cooking methods also differ from Taco Bell. An open kitchen allows U.S. Taco diners to see meals being cooked or grilled to order. The dining room features bright yellow, blue and red colors, wood tabletops and floors, subway tile and contemporary lighting.
Restaurant strategist Lombardi said fast-casual ventures are an attractive option for big, fast-food players because there are lower overhead costs. Stores are typically smaller and don’t include drive-through lanes, and menu prices are higher.
Other legacy fast-food chains jumping on the fast-casual bandwagon include the parent company of Wienerschnitzel. Last year, Irvine-based Galardi Group debuted Two Madres Mexican Kitchen, a Chipotle-style, build-your-own fresh-Mex meal joint in Mission Viejo, Calif. Galardi is looking to expand the concept.
“Quite frankly, I’m surprised I haven’t seen more of it,” Lombardi said.
The first U.S. Taco restaurant is slated to open at The Strand, a hipster-driven coastal center in downtown Huntington Beach. So far, Taco Bell has invested roughly $500,000 on the startup, Creed said.
But Surf City’s stringent alcohol rules have the inaugural concept off to a slightly rocky start.
Future U.S. Taco locations will be designed to serve more than 50 types of draft and bottled craft beer. But, due to “the city’s position on alcohol permits,” Taco Bell executive Jeff Jenkins said the chain chose not to include a taproom at the Huntington Beach location. The alcohol-spiked shakes are also off the table at the first store.
“Eventually, we’ll be looking at alcohol as a future part of the brand,” said Jenkins, senior brand manager at Taco Bell.
The booze hitch aside, Taco Bell officials are focusing on the larger task of rolling out an untested concept to the masses.
“No one today is doing a fantastic job of taking American classics and blending them into a taco,” said Jenkins, who is overseeing the development of U.S. Taco under the title “Resident Disruptor.”
Maybe not as a taco, but West Coast sandwich sensation Bruxie does it with waffles.
“If it is a similar inspiration to what we do, then they’ll be judged on how they execute and the quality of the ingredients,” said Dean Simon, co-founder of the Anaheim, Calif.-based gourmet waffle sandwich chain.
U.S. Taco has been in the works for a year. Creed tasked Jenkins to develop a fast-casual brand that would appeal to non-Taco Bell eaters with disposable income. The biggest challenge? Creating a menu that stood out in the already-crowded Mexican food segment, Jenkins said.
“How do we zig while everyone is zagging?” he asked.
With help from consulting chef Max Schultz of Sessions Sandwiches in Newport Beach, Calif., the Taco Bell team came up with the hybrid taco concept. They took inspiration from Philadelphia’s iconic cheese steaks to the South’s barbecue-slathered pulled pork.
Davis, whose company specializes in fast-food market research, said food quality will be critical for survival and future growth.
“That’s the $54,000 question – whether they have something that will appeal to consumers and drive loyalty. Those are yet to be seen,” he said.
On Tuesday, Taco Bell reported a 1 percent decline in same-store sales for the quarter ended March 22. The drop ends eight quarters of positive same-store sales for the chain, whose parent company is Yum Brands. U.S. Taco is unrelated to Super Chix, a premium chicken concept introduced recently by Yum.