The future of Taco Bell is ‘lots of different types of restaurants’

Taco Bell recently unveiled a 2.0 version of its digital-forward Go Mobile restaurant, about three years after the initial concept was introduced in the throes of the pandemic. The updated asset will play a big role as the chain targets 10,000 units “in the coming years,” and will also support parent company Yum Brands’ goal of reaching 100% in digital sales transactions.

Elements of this design – including a walk-up window and dedicated parking for digital and third-party orders and grab-and-go shelves – will be incorporated into future builds. Notably, Go Mobile 2.0 comes as Yum’s digital sales exceed 45%.

Related: Taco Bell provides a peek at bullish domestic development plans

Still, it’s important to note this iteration is about much more than just supporting the digital customer. Scott Mezvinsky, managing director, North America, Taco Bell, said the model should also boost franchisee profitability and alleviate employee “pinch points,” especially during the rapidly returning late-night daypart.

“We always want to maintain or accelerate our growth and we feel we have the runway to do that. The way we get there is through franchisee profitability, and making sure we take care of our franchisees, our team members, and our customers,” he said during an interview earlier this week.

This restaurant design checks all of those boxes. That said, the digital business does serve as the fulcrum. Taco Bell U.S.’s digital sales grew by 35% in Q2, for instance, and with digital and third-party sales continuing to grow at a swift clip, Mezvinsky said the company had to start getting creative about making employees’ lives easier.

“A lot is happening, especially at late-night. This is an attempt to see if we could alleviate some of their pinch points of having orders coming in from so many different channels,” Mezvinsky said. Having a walk-up window or grab-and-go shelves and not having to focus on dining room customers should support this objective.

On the franchise economics side, the 2.0 asset is materially smaller than a traditional restaurant with about 10% lower CapEx. That’s a conservative estimate, by the way, and doesn’t really scratch the surface on potential labor savings by not having a dining room.

“Also, because it’s smaller, it will allow us to go into areas we couldn’t go into before,” Mezvinsky adds.

Many of those areas will serve as what he calls “infills,” allowing franchisees to open a Go Mobile near a traditional Taco Bell and siphoning some of that growing digital traffic. To reiterate, alleviating pinch points is a priority, but blowing up the existing playbook is not.

“The idea is these should go where there is a Taco Bell nearby, so if customers want to go into a dining room, they can,” Mezvinsky said. “We’re not taking the point of view that there is no more need for dining rooms. We’re just making it so that when we know we have more digital sales, this could be an infill asset to go into places we couldn’t otherwise.”

In addition to this infill strategy, Mezvinsky said the Go Mobile 2.0 concept could fit well in a market with higher crime that may have otherwise been a deterrent for an opening. Or it could work in a small town where the company is testing the waters on demand.

“There is a lot of application (for the model),” he said.

Although it’s technically an iteration, Mezvinsky calls Go Mobile 2.0 “the beginning” of how the company is learning how to better support its employees in this digital era, how the company is better able to support its franchisees’ needs and wants so they’ll keep growing, and how the company will keep that spotlight on that ever-important digital customer.

As an example, on the employee side, Go Mobile 2.0 includes a Kitchen Display System that provides the ability to prioritize orders based on size and complexity, access build cards and share orders with other employees.

“One of the things we learned from (Go Mobile) 1.0 is the tech component on how you manage two orders coming in at once, how does that tech work in the back of house? We’ve come a long way in a short period of time,” Mezvinsky said.

Also since 1.0, the company has learned that two drive-thru lanes “can be powerful” but such a model requires more space and a higher digital mix to be effective. The 2.0 design is more flexible, with one or two lanes available. It also has a stronger focus on delivery drivers, “who we view as a key stakeholder,” Mezinsky said.

“How do (drivers) have an easier experience? If it’s easier for them to access our brand, that translates to more sales,” he said. “We’ve evolved our thinking. We’re going after the same challenges, we’re just thinking about how to do it tighter as the digital business grows so fast, and so that our technology and designs accommodate where the customer is today.”

Just two Go Mobile 2.0 restaurants are open at this point, so it’s too early to understand their performance just yet, but there are certainly plenty of benefits on paper. However, Mezvinsky reiterates this model is just one tool in Taco Bell’s robust toolbox. There will continue to be traditional restaurants and Cantina restaurants and maybe even a few more Defy restaurants in the chain’s not-so-distant future, all collectively moving the needle toward 10K and then, likely, a new development goal.

“One thing we feel good about is innovation runs through our DNA and … we do innovate against our assets. There is no way we’re going to get to 10,000 restaurants without our franchisees wanting to build and invest capital in the brand and the way we support that is by giving them options that make them excited,” Mezvinsky said. “The future of Taco Bell is lots of different types of restaurants.”

Contact Alicia Kelso at [email protected]