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Taco Bell Uses This Little-Known Secret to Stay on Top Year After Year The franchise is keeping cravings strong by taking enough risks to make it "cool," to both insiders and outsiders.

By Nate Hopper

This story appears in the January 2023 issue of Entrepreneur. Subscribe »

Image Credit: MAX-O-MATIC

Started Franchising: 1964 | Total Units: 7,900 | Cost to Open: $575.6K-$3.4M

It's #1 for the third year in a row. What keeps the cravings so strong? The brand has mastered the risky art of being cool — by paying close attention to both outsiders and insiders.

The Mexican Pizza was a goner. Or so Taco Bell thought.

It was 2020, and the pandemic had upended the food business. Like most restaurants, Taco Bell was busily simplifying the menu for the sake of a smaller restaurant staff. That's when executives zeroed in on the Mexican Pizza, a longtime menu item that was a bit of an outlier. It used several ingredients that no other product did. It took three or four minutes to make, while other items took just 30 seconds. Restaurants sold relatively few each day — at least, in comparison to thousands of tacos. "It was a cult product, but it wasn't a big product in terms of revenue," says Taco Bell CEO Mark King. The decision was painful but clear: Goodbye, Mexican Pizza.

Little did they know.

"As soon as we took it off [the menu], we had all this noise," King recalls. One petition to save the Mexican Pizza quickly amassed 50,000 signees — and eventually accrued over 170,000. In the spring of 2021, the alluringly raunchy rapper-singer Doja Cat tweeted to her millions of followers, "I will do everything in my power to bring back the mexican pizza from taco bell." (And then, months later, somewhat more spicily: "I want my fuckin mexican pizza back @tacobell why u quiet.") Meanwhile, King's inbox was filling up. It's normally peppered with complaints about bad experiences at restaurants, but now he was getting twice as many messages, all hitting a single note: Bring back the Mexican Pizza. "It wasn't really even a product," says King. "It was a movement. It was the Mexican Pizza movement."

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So in 2021, plans started percolating: Taco Bell would bring back the Mexican Pizza. It signed Doja Cat up for its Super Bowl commercial, during which the company vaguely teased a certain beloved product's comeback. And in May of 2022, at long last, the Mexican Pizza returned.

But Taco Bell couldn't predict just how epic the Mexican Pizza's comeback would be, because they hadn't realized how beloved, how desired, how cool the Mexican Pizza had become in its absence. They sold more than seven times as many Mexican Pizzas as before; overall same-store sales growth shot up 8%. They ran out of the special tortilla. The company tried to find other suppliers, but their recipes weren't quite right. Some stores sold out within a week. Taco Bell had a problem, albeit perhaps the best kind of problem: Taco Bell was not just cool — it was too cool.

Related: How Taco Bell Is Becoming the World's Most Innovative Franchise

Taco Bell has been on quite the streak. In the third quarter of 2022, it saw same-store sales grow 6% and system sales grow 9%; it had also added 200-plus restaurants over the course of the year, worldwide. "We thought we were going to have a good year, but not like this," says King. Now Taco Bell is No. 1 on Entrepreneur's list for the third year in a row, which is a rare accomplishment. In more than 40 years of the Franchise 500 list, this has only happened two other times — with Subway and Hampton by Hilton.

View the 2023 Franchise 500 Ranking Now

So what's feeding the frenzy? We track down the key ingredients that make up everyone's Taco Bell cravings: The brand's cool.

Image Credit: Courtesy of Taco Bell

Cool is a mindset.

In December of 2021, Sean Tresvant joined Taco Bell as its new chief brand officer, having spent years marketing Jordan Brand — a Nike sneaker subsector — which is built on its own particular kind of cool: products that balance the classic with the cutting-edge and are sought after by both a diverse collection of diehards and more casual but still thoughtful self-stylists. When he arrived at Taco Bell, he knew the company sold to just about everyone. But he felt the brand needed to speak to a specific someone. It needed, as he puts it, "a muse."

The age group that made the most sense to target was Gen Z. But picking a generation only tells you so much about how to sell to them. After all, Gen Z, like any generation, has lots of ideas and plenty of identities. So instead, Taco Bell aimed not for a demographic, but a psychographic: a mentality that embodies shared values, that has something specific to say and therefore can be spoken to. The company called this consumer "the cultural rebel." There was an energy to the archetype: It spoke to the generation's diversity, and what the company saw as its progressive values — a desire to rebel not just against something, but to rage for what it believed in. "That single act unlocked us to do some incredible work throughout the year," Tresvant says.

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It made the selection of Doja Cat — a Gen Z icon — for the Super Bowl ad a no-brainer and, King felt, gave the spot more power. "If you look at a lot of ads, I'm not sure who they're speaking to — other than being clever," he says. But Taco Bell's, they believed, knew exactly which viewers it wanted to feel seen.

This insight made the subsequent campaign for the Mexican Pizza's return particularly powerful. It gave momentum to events like Taco Bell's first-ever Drag Brunch tour — a five-city, 10-show tour timed to June's Pride celebrations, which featured a drag show and a lot of food in what The New York Times called "arguably the most mainstream marriage of drag and dining yet."

In naming its customer "the cultural rebel," Taco Bell didn't just identify a community. It formed a clique.

Cool is your people.

Lots of brands try to be cool. But they get it wrong: This isn't just about outwardly projecting cool. Nor is it just about appealing to the people you think are cool.

Real cool also requires looking inward. It's about being aware of the people you have, and how they feel, and how you can make them feel even cooler.

After years of chasing a sought-after consumer, this was something of a recent realization for Taco Bell. The company decided that "the [Taco Bell] team member is one of the biggest, if not the biggest, stakeholder," says Kelly McCulloch, the company's chief people officer. Restaurant staff are the face of the franchise, after all.

So how do you show your staff they're your number one? Taco Bell explored many ways. There are, of course, pay increases. And paid hours on Election Day to go vote. And a new app that allows corporate to share information directly with team members. And an internal incubator, which trains a small group of Taco Bell employees in how to solve business challenges. Last year, some of them competed to answer the question: How do we make working at Taco Bell the best job in quick-service restaurants? The winning idea, which is still being kept secret, will be implemented this year.

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There are also conversations with franchisees to explain why it's important to let staff express their values. "It is the right thing to do, and it's going to make you more money," says McCulloch, in part because it will make employees want to stay (and turnover is an unending problem for any franchisee).

But there is also the simple fact that if you offer something cool — something nobody else can get — to your community, its members will feel closer to you and to each other. That was the idea behind a collaboration with the raucous streetwear brand Born X Raised, to create a line of exclusive T-shirts that only Taco Bell staff would receive. They ultimately produced about 250,000 individually packaged shirts, each with a note from Mark King celebrating the brand's 60-year legacy.

To an outsider, a new uniform may seem like a small gesture. But within Taco Bell, the executives believe it marked a significant change: The company created something to share not with the consumer, but solely with each other. "Everybody [who got a T-shirt] felt special because it was for them," says Tresvant.

Cool is universal and unique, at once.

Taco Bell is a global franchise, and operates in markets that have many different ideas of what cool is. One country's "cultural rebel" may not look like another's. And that complexity will only grow, as Taco Bell's international unit growth was expected to outpace its U.S. domestic growth for 2022. So, how do you unify all of these people?

"We're built on doing things that nobody else does," says Julie Masino, president of Taco Bell International. No matter where they are in the world, Masino says, Gen Zers respond well to originality. (Masino points to the enormous young population in India and the punk-rock heritage of the U.K., both of which in 2022 joined Spain in having 100 units.) And here, Taco Bell has a built-in advantage: Unlike the crowded burger business, the taco market is much thinner — meaning there are wide-open spaces for franchisees to claim.

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That's part of why Taco Bell emphasizes the taco, no matter where its franchisees open shop.

"We have really an international focus on making the taco famous," says Masino. "Different markets love the quesadilla more than the burritos. But our core is our core, and that's what people are really coming to the brand for."

Image Credit: Courtesy of Taco Bell

Cool is building beyond tradition.

Cool changes, but it also stays the same. It is in motion, but it's grounded and not too far ahead. Or, at least, when it overheats, it knows how to recalibrate to cool. And at the core of Taco Bell's cool, there are those mainstays: its tacos, quesadillas, burritos, and Crunchwraps. "That represents — I'm just making this up — 90% of a day's sales," says King.

So what makes up the other (hypothetical) 10% in sales? Freedom. "You could launch just about anything you want, and if it wasn't successful, it's really not going to hurt your business," King explains. "And if you happen to hit a home run, then you've got…"

Well, you've got a Mexican Pizza.

Related: Taco Bell Just Premiered 'Mexican Pizza: The Musical' on Tik Tok, Starring Dolly Parton and Doja Cat

When Taco Bell brought the Mexican Pizza back this past May, it was so cool that the company ended up having to table its full return. It needed time to sort out supply-chain issues, but Taco Bell made a promise: When it comes back again, it'll stay for good. And in September of 2022, the brand delivered.

The pizza's second revival wasn't as big a deal as its first one, but it still sold at a higher rate than it had when it was on the menu originally. And this time, Taco Bell was ready. "We had a much better forecast, we were more prepared," says King. "It's a very, very solid part of our business now."

Cool is listening.

There was a lesson in the "Mexican Pizza movement," and it was related to an idea that King has espoused since he arrived at Taco Bell in the summer of 2019: Ideas should come from anywhere.

There are many reasons to adopt this philosophy, King says. To start, when an employee is closer to the day-to-day business, they tend to have more idealism and wilder ideas — and that's a good counterbalance to executives, who may become too conservative as they imagine the many ways a new concept can fail. Idealists are also more willing to be irreverent, and King values irreverence. He doesn't want Taco Bell to hew to nonsense rules, whether they are imposed by the greater corporation or the culture at large.

Instead, King sees the higher-ups' role as figuring out how to execute wild ideas — to play within that 10% space of "launch just about anything you want" — while, of course, explaining the rationale behind the wild ideas to any nervous franchisees, and incorporating their concerns.

This requires a humility not always associated with cool. "You can't always assume that where you think you need to go is the right place to go," says McCulloch. "You have to admit you do not have all the answers." She explains: "Early on in the process, I make sure that the questions I'm asking are not questions that are trying to tamp the ideas down. Let the process work. Let's see what happens."

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But the Mexican Pizza movement showed the power of listening to the consumer in a way that Taco Bell never had before — of not only knowing exactly who to listen to, but truly believing in the rumblings of their cravings.

From there, Taco Bell has begun asking their cultural rebels more directly what they want the future to hold. In late September through early October, Taco Bell held a vote, asking which of two former items it should revive: the Double-Decker Taco or the Enchirito (an enchilada-burrito hybrid). In 10 days, the company received more than 760,000 votes. The Enchirito, which had been off the menu since many members of Gen Z were in middle school, won.

Once again, Taco Bell had experienced a telling, illuminating surprise. "Everybody thought it was going to be the Double-Decker," Tresvant says. Even a cool company doesn't always know what's coolest.

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