The Future of Taco Bell is “Lots of Different Types of Restaurants”

Taco Bell recently unveiled a 2.0 version of its digital-forward Go Mobile restaurant, about three years after the initial concept was introduced in the throes of the pandemic. The updated asset will play a big role as the chain targets 10,000 units “in the coming years,” and will also support parent company Yum Brands’ goal of reaching 100% in digital sales transactions.

Elements of this design – including a walk-up window and dedicated parking for digital and third-party orders and grab-and-go shelves – will be incorporated into future builds. Notably, Go Mobile 2.0 comes as Yum’s digital sales exceed 45%.

Still, it’s important to note this iteration is about much more than just supporting the digital customer. Scott Mezvinsky, managing director, North America, Taco Bell, said the model should also boost franchisee profitability and alleviate employee “pinch points,” especially during the rapidly returning late-night daypart.

“We always want to maintain or accelerate our growth and we feel we have the runway to do that. The way we get there is through franchisee profitability, and making sure we take care of our franchisees, our team members, and our customers,” he said during an interview earlier this week.

This restaurant design checks all of those boxes. That said, the digital business does serve as the fulcrum. Taco Bell U.S.’s digital sales grew by 35% in Q2, for instance, and with digital and third-party sales continuing to grow at a swift clip, Mezvinsky said the company had to start getting creative about making employees’ lives easier.

“A lot is happening, especially at late-night. This is an attempt to see if we could alleviate some of their pinch points of having orders coming in from so many different channels,” Mezvinsky said. Having a walk-up window or grab-and-go shelves and not having to focus on dining room customers should support this objective.

On the franchise economics side, the 2.0 asset is materially smaller than a traditional restaurant with about 10% lower CapEx. That’s a conservative estimate, by the way, and doesn’t really scratch the surface on potential labor savings by not having a dining room.

“Also, because it’s smaller, it will allow us to go into areas we couldn’t go into before,” Mezvinsky adds.

Many of those areas will serve as what he calls “infills,” allowing franchisees to open a Go Mobile near a traditional Taco Bell and siphoning some of that growing digital traffic. To reiterate, alleviating pinch points is a priority, but blowing up the existing playbook is not.

“One of the things we learned from (Go Mobile) 1.0 is the tech component on how you manage two orders coming in at once, how does that tech work in the back of house? We’ve come a long way in a short period of time,” Mezvinsky said.

Also since 1.0, the company has learned that two drive-thru lanes “can be powerful” but such a model requires more space and a higher digital mix to be effective. The 2.0 design is more flexible, with one or two lanes available. It also has a stronger focus on delivery drivers, “who we view as a key stakeholder,” Mezinsky said.

“One thing we feel good about is innovation runs through our DNA and … we do innovate against our assets. There is no way we’re going to get to 10,000 restaurants without our franchisees wanting to build and invest capital in the brand and the way we support that is by giving them options that make them excited,” Mezvinsky said. “The future of Taco Bell is lots of different types of restaurants.”