What is in this article?:
- Analysts: Yum plans to double U.S. Taco Bell sales
- New buildings for building sales
Analysts said Yum officials were bullish on Taco Bell's chances of doubling 2012 sales.
Yum! Brands Inc. plans to double Taco Bell’s domestic annual sales to $14 billion by 2021, according to two securities analysts who attended investor meetings with the company Tuesday.
Louisville, Ky.-based Yum, which also operates and franchises KFC and Pizza Hut, told attendees that system growth would include an increase in average unit volumes from $1.3 million in fiscal 2012 to about $1.8 million by the end of the decade, as well as growing its unit count from 5,700 to 8,000 locations.
According to research notes from Andy Barish of Jefferies Group and David Tarantino of Robert W. Baird, Yum officials were bullish on Taco Bell’s chances of doubling its $7 billion in sales in 2012, based on the brand’s daypart expansions, menu line extensions, unit-growth opportunities and marketing.
Driving AUVs via the menu
Taco Bell plans to get the majority of the $7 billion increase in incremental sales by 2021 by growing average unit volumes with more menu items and more dayparts, the analysts wrote.
Tarantino noted that Taco Bell management was optimistic about the chain’s ability to drive same-store sales in the afternoon snack daypart, where it holds a 1.2-percent market share, compared with its 3-percent share of quick-service sales for lunch and dinner. He added that the “Happier Hour” initiative in which Taco Bell promoted Loaded Grillers contributed greatly to the chain’s 6-percent increase in first-quarter same-store sales.
He also wrote that Taco Bell has successfully tested breakfast, mostly in the West, and intends to roll out the morning meal systemwide by 2014. Its breakfast lineup includes a crunchy breakfast wrap, bite-size Cinnabon-branded cinnamon rolls, oatmeal, yogurt parfaits and coffee.
Barish noted that line extensions in the works for Taco Bell include a Flamas-flavored Doritos Locos Taco, shredded chicken on the main menu and new Mountain Dew frozen beverage flavors. The Cantina Bell menu will get steak quesadillas and fajitas this year, Barish wrote, “and though sales mix is currently around 4 percent of sales — skewing toward females, over-35 [customers] and higher incomes — the platform continues to drive improvements in customer perceptions about Taco Bell’s quality and freshness.”
He added, “We see a long runway for Taco Bell’s innovative platforms and like the focus on store economics and brand engagement.”