Taco Bell hopes to turn orange Doritos cheese powder into green — as in cash from its latest invention.
The Mexican-style chain plans to roll out Doritos Locos Tacos at midnight on Wednesday at its nearly 5,600 restaurants nationwide. The fast-food chain, a unit of Yum Brands Inc., calls the tacos that use shells made out of Nacho Cheese Doritos the biggest product launch in its 50-year history. It plans to introduce a Doritos Cool Ranch taco shell this fall.
The company said it plans to spend up to $75 million to advertise the new tacos — about three times more than it typically spends to promote new menu rollouts.
The new tacos come as Taco Bell attempts to rebound from the bad publicity generated by a lawsuit a year ago that alleged the meat filling served at its restaurants didn't have enough beef to be called that. Taco Bell denounced the claim as false and spent millions to defend its filling and shore up its image. The suit was dropped about three months after it was filed by an Alabama-based law firm, but the chain's sales have struggled.
The new Doritos tacos are the latest in a string of things Taco Bell has been doing to improve its menu — and boost its image. The chain is testing a Cantina Bell line of more upscale foods created by celebrity chef Lorena Garcia. Taco Bell also recently rolled out a breakfast menu in about 800 restaurants, with plans to roll out its breakfast burritos and hash browns nationwide by 2014.
The latest rollout comes after Taco Bell tested the tacos a year in Bakersfield and Fresno in California and Toledo, Ohio. Taco Bell said one out of every three purchases at those stores included Doritos Locos Tacos — about twice the typical number of purchases of a test product.
"It's kind of like the brand has its mojo back," said Brian Niccol, Taco Bell's chief marketing and innovation officer who declined to give details on the company's deal with PepsiCo Inc.'s Frito-Lay snack unit, which makes Doritos. "We're doing what we really do best, which is first innovation."
Taco Bell, which is based in California, certainly could use a boost. Sales at stores open at least a year — an indicator of a restaurant chain's health — were down 2 percent for the year and 2 percent for the fourth quarter. Taco Bell accounts for about 60 percent of U.S. profit for Louisville-based Yum Brands, which also has struggled with slumping sales in the U.S., but posted a 1 percent gain in revenue from existing restaurants in the final three months of 2011.
Mark Kalinowski, an analyst at Janney Capital Markets, predicts a turnaround for Taco Bell in a recent note to investors. "We believe that the new product pipeline combined with time that has passed since the lawsuit should set Taco Bell up for a very strong year," he wrote.
But Laura Ries, president of Ries & Ries, a marketing strategy firm based in Atlanta, said while a splashy product rollout can help consumers forget about a publicity setback, Taco Bell has a bigger problem of how to improve its product so that it stacks up against competitors like Chipotle Mexican Grill.
"Certainly people love Doritos, but putting them onto a shell doesn't necessarily make it a more authentic Mexican restaurant," Ries said.