What is in this article?:
- Analysts bullish on Taco Bellâ€™s sales, unit growth
- Mobile set to roll soon
Breakfast, mobile ordering expected to drive gains, industry watchers say
Mobile set to roll soon
Tarantino and his fellow analysts also were encouraged by Taco Bell’s mobile-ordering app, scheduled to roll out later in 2014, which also would support a loyalty platform down the road. The app was beta-tested at five locations.
“We think the most disruptive driver will be the new mobile app,” Barish wrote. “Taco Bell has one of the best customer engagement strategies in the industry and has truly cultivated a lifestyle brand among Millennials.”
The app enables not only mobile ordering but also the ability to customize orders, and soon it would also feature mobile loyalty, e-gifting, gift card payments and integration with social networks.
Stacking up to store growth
Senatore said the breakfast and mobile programs in aggregate would accelerate Taco Bell’s rebound in sales and profit growth, eventually enabling the chain’s faster unit growth targets and new level of average unit volumes at $1.8 million, compared with its current level of $1.4 million.
“Over time, we believe a successful breakfast launch would be a key component of targeted higher volumes, which would in turn support an acceleration of growth to 200 units per year,” she wrote. “In the near term we believe current volumes can support the 100 locations per year target in traditional suburban markets, as well as rural trade areas with some opportunity to expand the urban footprint as well.”
Barish added that rural markets could potentially support about 1,000 locations for Taco Bell. While the rural units’ average unit volume of $1.2 million trails the system average, they remain solidly profitable due to much lower investment costs.
In the international arena, where Taco Bell has yet to make a significant impact, management sees the opportunity for 1,000 openings over the next 10 years, Tarantino noted.
Taco Bell operates or franchises more than 5,600 restaurants. It is a division of Lousiville, Ky.-based Yum! Brands Inc., which also operates or franchises KFC and Pizza Hut.