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The Hidden Economic Miracle of Taco Bell’s Menu

How the taco giant lives mas among fast-food chains by reconfiguring the exact same stuff

Have you ever noticed that no matter what you order from Taco Bell’s vast menu, whatever’s inside that shell or tortilla is basically the same stuff that’s in most every other menu item? It’s genius, isn’t it? The perception of variety, but with (mostly) the exact same goddamn ingredients! The Onion pointed this out way back at the end of the 20th century, and yet, still no one seems to mind, as the chain remains a fast-food behemoth amid so much change in the restaurant industry, in large part thanks to those reliably modest Taco Bell menu prices.

So how do they make this work? And what are the underlying economics behind it? Alongside Benjamin Lawrence, the Aziz Hashim Professor of Franchising at Georgia State University, we’re figuring out how Taco Bell leverages ground beef, beans, lettuce, cheese and tomato into endless permutations of cheap, charmingly disreputable, quasi-Mexican cuisine.

About those always-the-same ingredients. Don’t most restaurants do that?

Many try to, yes. It’s just good business. “Fundamental to any type of food service outlet, the fewer items you have, the more efficient you are,” Lawrence says. “That’s why restaurants that operate well tend to create items out of the fewest possible ingredients because it reduces waste, it improves efficiency in the kitchen and you don’t have to carry as many items.” Taco Bell, though, does this better than most.

What’s so unique about Taco Bell?

Ever noticed how menus keep expanding, much like Morgan Spurlock’s gut in Super Size Me? Take McDonald’s, for example. Once upon a time, it had a very simple menu: burgers and fries, really. But over time, as they tried to attract a larger market share and they added salads, burritos and whatnot, it made them less efficient to run. KFC added different breading and types of chicken, becoming ever more complex. Domino’s too. Lawrence says Subway is in a different type of situation, where they’re so stuck to certain price points — don’t even start with that $5 footlong earworm, dammit — that its Sandwich Artists have to try to upsell you every two seconds on just about everything: avocado, cookies, salad, pizza, etc.

Yeah, but what’s this have to do with Taco Bell?

The difference with Taco Bell is that they can just change one little variable — say, a taco shell caked with MSG-laden Doritos dust — and they’ve got a hot new anus-burning product, if not practically a whole new category. “The Doritos Loco Taco has been one of the most amazing brand launches ever,” Lawrence says. “It killed it for them. That’s just putting their stuff in a different shell, and it’s hard for me to think of another brand that is able to do that.”

He points out that you can change the shape of pizza or put cheese in the crust or whatever, sure. And a hamburger, at the end of the day, is just a hamburger. But Taco Bell’s cuisine and ingredients are very malleable. You can take the same set of ingredients, and by adding one more (say, a “taco shell” made out of breaded chicken) you change the presentation, the texture, you make it spicy, or whatever else.  

Taco Bell has leveraged this ability into their marketing, too. They embrace wacky, ridiculous new products all the time. Lawrence says they’re high on the excitement scale of innovative products, while at the same time, they’re not expensive. That’s quite a feat.

So Taco Bell’s menu prices are so reliable because those core ingredients are so cheap?

Correct. It’s certainly not caviar or wagyu steak. We’re not even talking about a half-decent burger patty. “[While] Taco Bell isn’t unique in [reconfiguring a few menu items], they’re lucky in the sense to have some core ingredients that lead to a very efficient food cost,” Lawrence says. “Beans and rice and those types of things are relatively cheap.”

Those “healthier” things they offer, though, those are made of different ingredients, right?

Like that old Cantina Bell menu? Yes, usually. The ingredients are different and often more expensive. One reason is the psychology behind this: People perceive quality items to cost more, and so in order to market a premium ingredient, it should be more expensive. Do you already see the problem here for a brand like Taco Bell? The other thing is, how are customers supposed to reconcile foods evoking freshness and health that share a menu alongside shit like a beefy crunch burrito or nacho fries? They just can’t.

Research has shown there’s this implicit bias that people view healthy food as less tasty, and that unhealthy products are tasty,” Lawrence says. “If you gave two people the exact same product and you reframed it as a healthy versus a non-healthy product, people won’t like the healthy product.”

Taco Bell is much more value-driven, and it’s hard to have healthy products in this context, according to Lawrence.

On the other hand, don’t vegetarians love Taco Bell?

Yes — among the most vocal communities lamenting the removal of the seven-layer burrito and the Mexican pizza from Taco Bell menus were Indian Americans. During the second wave of Indian migration to the U.S. in the 1980s and 1990s, Taco Bell was often the only fast-food option that worked for them in many places throughout the U.S.

So while Taco Bell seems somewhat stuck with its reputation for indulgent, unhealthy foods that keep you glued to the toilet, it’s truly in a category of its own, at least for its size: An imitation ethnic cuisine, rather than just burgers, sandwiches or pizzas. Not only that, it’s actually in another category of its own for its size, when you account for its long-standing vegetarian-friendliness. And it’s fortunate that the sorts of offerings in its repertoire can all stem from a few core ingredients — all of which are cheap. The company then continually makes these core ingredients exciting by reconfiguring them (as in the grilled stuft nacho) or adding some kind of wild card — flatbread, nacho cheese, Day-Glo red tortilla chips or whatever else. 

For as unregarded as Taco Bell’s food can be, a look at the underlying economics and marketing of it all makes it obvious why the brand tends to kick as much ass financially as its food does to its own customers. If Taco Bell has a business secret, this seems to be it.