In April 2014, Taco Bell launched its upscale taco company – US Taco Co. It was a secret project that just went public into test markets.
“We realized that at Taco Bell we weren’t reaching all of those who want Mexican food,” says Jeff Jenkins, senior brand manager. “Everyone in the U.S. has become a foodie,” says Jenkins. “The first thing young people do in a restaurant is take out their camera and take a picture of their food — and post it on Instagram,” via USA Today.
Guilty.
//instagram.com/p/m7wOExNxfL/embed/
Taco bell has always dominated the fast-food taco market with food fares starting at $0.99. However, they were missing a large vertical target audience with a higher willingness to pay — millennials — including myself.
The fast-casual market, where food is fresh and fast, but there is no wait service (e.g., server), is somewhere in between fast-food and sit-down. Such restaurants include Chipotle and Panera Bread. Now, Taco Bell’s US Taco Co. represents that untapped market. With a new brand, higher-priced menu, and specialty items such as the ones below, it’s a worthy contender.
- Winner-Winner: Southern fried chicken with border sauce
- One-Percenter: Maine lobster, garlic butter, pico de gallo, on fried bread
When it comes to your own business, a lot of times, entrepreneurs think laterally. For example, if you’re a photographer, you shoot weddings, dogs, cats, portraits, and etc. However, do not forget to target vertically (more expensive and more cheap) where willingness to pay is higher and opportunity cost is relatively lower, which only means one thing — potentially higher margins for revenue.
Related Post: Why Have a Multi-Brand Strategy
Comment below your favorite Mexican restaurant and entree!
Stay hungry,
Lawrence
P.S. Mm … still a loyal fan of Chipotle. This week, I tried a competition Dos Toros and quickly went back to Chipotle to ask for forgiveness.
TOFURIOUS 
Chipotle. Hands down. And chicken salad 🙂 Yum.
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Illegal Pete’s is a Denver based restaurant that is very similar to Chipotle – but the difference is the mix the ingredients before putting them into the tortilla. Great atmosphere, great food, fast-casual. I like the pork tacos!
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Thanks Lawrence… Chipotle Quesadilla baby!
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Guadalajara is my fave with the steak fajitas. Mmmmmmmm
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And chipotle just opened the brilliant Shophouse – same fast casual set up with hormone free meat but southeast Asian theme. Pork meatballs in curry sauce and green beans. I can’t get enough.
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How interesting! I’m going to have to check that out.
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Whoa! My mind is blown! How genius of them to think vertically. I completely agree with their decision to create a separate elevated brand to serve an entirely different market! I think one of the key components to navigating the lateral spectrum of business, is to not try and do it all under one brand. Not to say that it cant be done, but it is very difficult to sell a $5 taco in the same store that you are selling a 99cent taco.
Having separate brand identities that work individually along the vertical spectrum is the key to maximizing it.
Just look at how Gap has tapped into various vertical markets through 5 distinct brands. Old Navy (Cheapest), Gap (Affordable), Banana Republic (Accessible Luxury), Piperlime (boutique), INTERMIX (Exclusive High End).
As for my favorite Mexican restaurant … hands down that would be Los Guachos in Columbus, OH. Their Gringas with pineapple are to die for!
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It’s funny that you mentioned those brands. Those were my same examples a while back.
http://www.tofurious.com/marketing-tips/multi-brand-strategy/
Mm .. Los Guachos.
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How crazy!? Thanks for pointing me to another great read of yours! I had no clue that Darden does the same thing… It makes me wonder what other brands are under the same entity that I am not aware of. Crazy thought for the day…what if Folgers is owned by Starbucks? 😉
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Haha no, Folgers does not own Starbucks. Starbucks is a publicly traded company on NASDAQ: SBUX. Starbucks, though, owns the following brands – http://www.starbucks.com/careers/brands
You may also read Starbucks’s annual reports, which are public. On page 2 of 2013’s report, you can find a list of its brands.
http://investor.starbucks.com/phoenix.zhtml?c=99518&p=irol-reportsAnnual
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Your the best Lawrence! I’m making jokes and your like *BAM! “Here is some interesting information!” Thanks for the links, I always suspected Teavana was tied in somehow!
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Haha. Sorry. I got the joke. I thought I’d follow up with some interesting information for someone who is keen on Starbucks 🙂 In other news, if you like the company, Starbucks is getting sued by its shareholders for underestimating the impact of the company breach with Kraft’s lawsuit.
http://www.businessinsider.com/shareholders-sue-starbucks-over-kraft-dispute-2014-1
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Great post Lawrence! We’ll see how US Taco Co fairs. Living in Denver now, I have eaten at PLENTY of Chipotle’s/Illegal Pete’s, etc etc. They are all good, fairly priced, and I am NOT a picky eater. As long as it is fresh and somewhat healthy, and not ‘fast food’, it’s good to go! =)
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I still put my money on Chipotle, but Taco Bell has a lot of smart people backing them. Plus, there’s a lot of room for everybody. Chipotle isn’t mainstream in many areas still.
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Is that the sofritas on your burrito bowl? That’s my favorite right now! 🙂 Loved the article too–but I like commenting on food. 😉
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Heh heh. You know your Chipotle, Lauren. I like that 😉
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Chipotle salads all the way! Alberto’s if I’m feeling hefty! haha
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I miss Alberto’s. I usually get the Super Nachos.
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The reason this post helped me, is that I had my 3 branding words from the awesome book “Word Famous” by David Tyreman. However, what your P.S, PPS, etc did for me, was to create an elevator pitch, and a goal, from that concise sentence.
Very powerful stuff. As usual, you are efficient and insightful. Thanks for all your wisdom
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Very good observations, Linda. My postscript wasn’t even meant to be an intentional sale of Chipotle. However, I’ll elaborate on this concept next week.
In regards to your 3 branding words, that’s really good for positioning. However, what stops someone from claiming the exact same 3 words?
Therefore, make sure to protect your brand with other elements. Read this article —
http://www.tofurious.com/marketing-tips/brand-positioning-and-specialization/
Cheers, Linda!
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