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OM in the News: Designing New Products at Taco Bell

June 17, 2014
Taco Bell's new  Waffle Taco

Taco Bell’s new Waffle Taco

Chains such as Chipotle and In-N-Out Burger may rely on a stable menu of popular items, but Taco Bell engineers a constant rotation of products in hopes of not only keeping consumers coming back but also uncovering the Next Big Thing. Explains the firm’s chief marketing officer: “We want to be the leader in food innovation and believe there is no finish line when it comes to being first and staying relevant.” Crafting a breakfast hit, like the new Waffle Taco, is lucrative. In recent years breakfast has been the fastest-growing day part for the industry.

Taco Bell’s innovation team looks at 4,000 to 4,500 ideas every year, of which 300 to 500 are tested with consumers reports BusinessWeek (June 2-9, 2014).  Only about 8 to 10 new products make the Taco Bell menu nationally each year. Including products in testing and all permutations, Taco Bell launches dozens of items each year. This keeps the 40-person innovation team busy and well-fed. “We eat all day long,” says the chief food and beverage innovation officer.

In search of ideas, the product developers mine social media, consider new ingredients, and track rivals. Some Fridays, the team does what they’ve dubbed a “grocery store hustle” to see what’s new in retail. But the basic pillars of anything they develop remain taste, value, and speed. The less a restaurant has to change its kitchen operations, ingredients, or equipment, the better.

The developers come up with a prototype, then start testing it with consumers in the lab and in test restaurants. The typical product goes through about 100 iterations by the time it is launched. The Waffle Taco, for instance, was changed 80 times through various characteristics such as shape, weight, thickness, intensity of vanilla flavor in the shell, and fillings.

Classroom discussion questions:
1. Where does Taco Bell fall in innovation ranking, based on Figure 5.1 (see p. 156)?

2. Which product strategy best describes Taco Bell: differentiation, low-cost, or rapid response (see Chapter 5)?



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