Taco Bell faces growing pains with deliveryTaco Bell faces growing pains with delivery

In July 2015, Taco Bell jumped into the on-demand economy with two feet by becoming one of the first national quick-service chains to offer delivery in partnership with DoorDash.

The move is considered a test, said Lawrence Kim, Taco Bell director of digital innovation. But in a way, the chain is always in test mode.

“We like to say we’re always in beta,” Kim said. “The nickname for my team is Taco Beta.”

Still, Taco Bell delivery is growing.

The Irvine, Calif.-based chain began offering DoorDash delivery in fewer than 10 markets with less than 250 restaurants. Since then, it’s grown to about 21 markets with about 500 restaurants participating, but it still represents a small percentage of the 6,500-unit system, Kim said.

For Taco Bell, exploring delivery was a direct response to consumer demand, Kim said. “Delivery was and continues to be the No. 1 requested item by our customers.”

The company briefly considered doing delivery in house, given the extensive knowledge available from sister brand Pizza Hut, Kim said.

But delivery at Pizza Hut is ingrained in the culture and built into the brand’s DNA, he said. To build that at Taco Bell would be too time consuming. And with both Taco Bell’s digital savvy and the on-demand economy taking off, it made sense to use a partner like DoorDash.

Taco Bell evaluated all the third-party players at the time, but decided to go with then-nascent DoorDash in part because the delivery specialist cared not only about the technology and logistics, but also about food quality, said Kim, who spent a day working as a “Dasher” delivery driver.

“Quality control was a huge factor and key variable,” he said. “The relationship Taco Bell had with its consumers and franchisees was crucial and DoorDash understood the importance of it.”

Even before the partnership, DoorDash was delivering food from some Taco Bell restaurants, mainly because customers wanted it.

And it wasn’t just DoorDash, Kim said. Other services would deliver Taco Bell orders too.

For now, Taco Bell's delivery customers must order through the DoorDash app or website. They cannot use Taco Bell’s website or mobile app to order food for delivery. Photo: Taco Bell

So Taco Bell worked out a partnership with DoorDash for the test, though Kim declined to reveal specifics of the agreement.

One element is that DoorDash is allowed to mark up menu prices, in addition to the flat delivery fee and driver tip.

Prices vary by market. But in a Los Angeles suburb, the DoorDash order of a Taco Bell chicken Quesalupa and a Crunchwrap Supreme with jalapenos cost $15.17 before tax, including a $4.99 delivery fee and a $1.33 tip for the driver that was added into the cost. The chicken Quesalupa was $4.55 and the Crunchwrap with jalapenos was $4.30 (though it arrived without the requested jalapenos, a 55-cent add on).

Ordered through the Taco Bell mobile app for pick up from the same restaurant, that meal cost $8.03 before tax. The chicken Quesalupa was $4.59 and the Crunchwrap with jalapenos was $3.44.

Consumers, however, do not appear fazed by the price difference, Kim said.

“Delivery has been extremely popular,” he said. “It grows in awareness every day and we’re really happy with the results.”

Obstacles to delivery

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Though there are customers willing to fork over $4.99 plus tip to have one taco delivered to their home or office, Taco Bell delivery orders are typically for groups, resulting in higher check averages, he said.

But there are several obstacles holding delivery back for Taco Bell, he noted.

For now, customers cannot use Taco Bell’s website or mobile app to order food for delivery.

They can use the app or website to find the nearest restaurant that offers delivery, though guests must then order through DoorDash’s website or app. And Tacobell.com/delivery allows customers to plug in their address to see if DoorDash even delivers in their city.

“Delivery has been extremely popular,” said Lawrence Kim, Taco Bell’s director of digital innovation. Photo: Taco Bell

But the chain’s platforms are not integrated with DoorDash — yet. Kim said that certainly would be a goal if Taco Bell decides to go forward with delivery nationally.

“I wish it could have been that way from the beginning, to be honest,” Kim said. “But that’s the beauty and the curse of technology.”

The fact that delivery is not available everywhere is also a challenge, he added. “That’s the dream for the brand and for the consumers and fans.”

As of mid April, DoorDash was delivering in 24 markets across North America, with Columbus, Ohio, as the most recent addition. That number is growing, but it will take time to be nationwide.

Speed is also an issue, Kim said.

Delivery times can range anywhere from a few minutes to a half hour, he said. A recent order in the Los Angeles suburb, for example, took about 30 minutes for delivery from a Taco Bell less than a mile away around noon on a weekday.

“As the technology advances and the logistics improve, these are things that will come into play,” said Kim. “For us, thankfully, we haven’t had any quality control issues and we want to keep it that way.”

In retrospect, Kim said he would have liked to have done more research to evaluate what guests expected from delivery from a time and cost standpoint.

For restaurant chains considering a step into delivery, he recommended looking at partners not just to test, but potentially to expand with.

“This on-demand landscape is a fascinating place to be,” he said. “There’s going to be so much movement in the next six months to a year. And we’re going to be on top of it to make sure we’re getting the best for our fans.”

Correction: April 20, 2016 An earlier version of this story had incorrect prices for the chicken Quesalupa ordered through the mobile app.

Contact Lisa Jennings at [email protected]
Follow her on Twitter: @livetodineout