With plans to add 2,000 new restaurants to its domestic store count by 2023, Taco Bell has launched its most aggressive franchisee recruitment push in 15 years with the goal of bringing in “new blood.”
The Irvine, Calif.-based quick-service chain currently has close to 6,000 units in the U.S., and its goal is to reach 8,000 domestic locations over the next decade, with about 25 percent of growth coming from franchisees new to the system.
The company is hoping to attract more female and minority franchisees and also encourage growth among existing operators, said Nicolas Boudet, Taco Bell’s vice president of U.S. development and franchising.
For a brand founded 51 years ago, such aggressive growth plans require some new tactics, said Boudet. “We never really focused on franchising before,” he said. Franchisees generally came “knocking on the door,” he explained, and, if they looked good and the geography made sense, they’d sign on.
Now, with such ambitious targets in sight, the approach is different, said Sean Reaves, Taco Bell’s senior manager of franchise recruiting and development.
While the chain’s 350 existing operators, which average roughly 20 units each, will be encouraged to grow, and corporate growth will continue, said Reaves, “we still need new blood in the system to reach that goal.”
The move is also part of a plan by Taco Bell parent, Yum! Brands Inc., to build on the brand’s “mojo” of late by doubling domestic system sales to reach $14 billion by 2021.
Taco Bell’s net domestic unit count has been stagnant over the past three years. The chain ended fiscal 2012 with 5,695 locations, only a slight increase from the 5,670 at the end of fiscal 2011 and 5,634 in 2010.
Finishing the Sept.7-ended third quarter, Taco Bell had 5,724 units in the U.S.
Over the past two years, however, the once-struggling brand has demonstrated a remarkable turnaround with the success of the Doritos Locos Tacos line and the fast-casual-like Cantina Bell menu designed by celebrityLorena Garcia. Same-store sales climbed 8 percent in 2012 and remained strong this year despite more difficult comparisons, according to company reports. In the September-ended third quarter, Taco Bell’s same-store sales rose 2 percent, lapping a 7-percent increase the prior year.
Taco Bell’s recent success has been fueled in part by innovations in marketing, which the company appears to be applying to its franchisee recruitment effort.
For example, Taco Bell recently launched a new website devoted to franchisee recruitment. Open to all, the site includes videos and an unusual amount of information about the franchising experience with the brand, including details from restaurant design models to franchising costs — though some is reserved for franchise disclosure documents, as is typical.
Boudet said the chain is looking to work both with smaller operators that might be interested in one to five stores in more rural areas, as well as bigger franchise groups that would commit to more in urban markets.
The franchisee recruitment effort also includes a new program this year dubbed “Starting Bell,” in which new owners come to the chain’s Irvine headquarters for training and exposure to senior leadership.
The chain is also strategically building its relationship with lenders, who are increasingly open to investment in the restaurant space, said Boudet.
With other franchise brands like Dunkin’ Donuts and Baskin-Robbins planning to double domestic unit count over the next two decades, and niche segments like fast-casual pizza aggressively seeking experienced operators, the franchise recruitment climate is “very competitive,” said Boudet. “And we’re not immune to that competition.”
Still, Taco Bell’s pipeline includes about 200 new openings in 2014 — double that of 2013 — and the chain will continue beating the recruitment drum.
Next up: international growth. Taco Bell has about 245 international locations, mostly in Latin America and Canada, though a handful of units are in the United Kingdom and India.
“We’re just formulating a strong strategy there,” said Boudet. “But our big focus now is on the U.S. market.”