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FDD Talk 2016: The Taco Bell Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on August 18, 2016

in FDD Talk 2017: Food Franchises, Franchise Earnings, Mexican Restaurant Franchise

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Taco Bell Photo by Mike Mozart

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Taco Bell franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Taco Bell franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Taco Bell’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2013, 2014, and 2015 average net sales, cost of sales, and cost of labor for Single-Brand Taco Bell-Operated Restaurants that were open for at least one year as of December 24, 2013; December 24, 2014; and December 22, 2015, respectively

Section I – Background Information

When Glen Bell came back to San Bernardino in 1946 after serving in the Marine Corps, he opened up a hot-dog stand he called Bell’s Drive-In. In 1950 he opened Bell’s Burgers and Hot Dogs, but he couldn’t help but notice how the Mexican restaurant across the street, Mitla Café, always had long lines.

He was intrigued, eating there regularly to see if he could figure out their methods. The owners liked him and ended up showing Bell how they made their tacos and other dishes. He started selling some tacos from a side window of his stand, and they quickly became a popular item, so Bell started opening taco stands he called Taco-Tia and restaurants called El Taco.

In 1962 he sold those to his partners and then opened his first Taco Bell in Downey, CA. Franchising the concept started in 1964. The current number of locations is 6,321; 274 of which are located outside the U.S. and 923 of which are company-owned.

Taco Bell is now a subsidiary of Yum! Brands, which includes other fast food chains such as Pizza Hut, KFC, and WingStreet. Here’s how Taco Bell keeps Tex-Mex on the tips of people’s tongues in the fast food segment:

Sending in Sulu

Actor George Takei will always be best remembered as Sulu in the original Star Trek series, but lately he’s become a hugely popular celebrity on the Internet. Taco Bell hired him for a brief cameo in its Super Bowl 50 ad for its new menu item – the Quesalupa. And then he got his own feature commercial for the Quesalupa called The Internet is Talking. It’s weird, quirky, and silly, and it works quite well.

What is a Quesalupa?

Okay, you know what a quesadilla is, right? It’s a soft flour tortilla heated on a griddle, then loaded with cheese and other fixins and folded over into a half-moon shape. It’s a pretty basic Tex-Mex dish.

Then there’s the chalupa, which a lot of people don’t know about. It’s a boat-like concave masa de maíz (corn dough) shell, deep-fried and traditionally filled with salsa, cheese, and shredded lettuce. Of course people have added lots of other fixins as well.

So Taco Bell’s new Quesalupa is basically a hybrid between a chalupa and a quesadilla.

Saving Numero Uno

It’s not often that a big, historic chain like Taco Bell has a chance to forever commemorate its very first location. Most such physical buildings would have fallen into disrepair and been torn down decades ago. On November 19, 2015, the building was lifted off its foundation, put on a truck, and taken to Taco Bell headquarters in Irvine, CA.

They’re still trying to decide what exactly they want to do with it – whether to run it as a restaurant with prices matching those on its 1962 opening, or turning it into some kind of innovation kitchen to inspire new chefs.

Section II – Estimated Costs

  • Please click here for detailed estimates of Taco Bell franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis

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