Taco Bell’s Cravings Menu Brings Customers Back to Fast Food

Temporary store closures in the Middle East, Malaysia and Indonesia due to the war between Israel and Hamas, “in addition to a more cost-conscious consumer, presented headwinds to comparable store sales,” CEO David Gibbs said on a second-quarter earnings call Tuesday.

But Gibbs said Taco Bell is outperforming its competitors in the fast-food sector. “I think we’re really seeing Taco Bell stand out from the crowd,” he told investors.

Customers are looking for ways to get the most bang for their buck, something McDonald’s and Chipotle have learned the hard way. Gibbs praised Taco Bell’s 10-item value menu as a great example of how to attract these price-weary customers in a tough environment.

“These are unique items that no one else in the industry offers. And they’re not smaller versions of a basic item. They’re unique,” ​​Gibbs said.

YUM has launched or reintroduced value deals across all of the biggest names in its portfolio. There’s KFC’s Taste of KFC deals and Pizza Hut’s $7 Lovers Deals. Taco Bell, known for its value meals, has an extensive Cravings Value menu.

Among the three chains, only Taco Bell’s same-store sales in the U.S. increased in the second quarter of 2024, by 5%. Same-store sales at KFC and Pizza Hut declined by 3%.

Chief Financial Officer Chris Turner said on the earnings call that about 210 restaurants were temporarily closed in the Middle East, Malaysia and Indonesia due to the war between Israel and Hamas, affecting sales in the region.

The earnings call highlighted the struggles of fast-food and quick-service restaurant chains to retain customers who believe it’s cheaper to eat at home. McDonald’s, Starbucks, Burger King and Wendy’s all reported declines in traffic and overall sales and have expanded into discounted meals.

Meanwhile, Taco Bell’s Cantina Chicken line, launched in March, sold above the company’s expectations and drove a 7% increase in system sales alone.

“Since the platform launched, Taco Bell’s chicken sales mix has increased 10 points with nearly one in four orders including a Chicken Cantina item,” Gibbs said.

The company also reported an increase in digital sales and a positive rollout of new technology. Taco Bell is set to expand its use of AI voice technology in its drive-thrus to hundreds of U.S. locations by the end of the year, betting on an area where competitors have failed. Lawrence Kim, Yum! Brands’ chief innovation officer, previously told CNN he has confidence in his company’s technology.

Yum reported second-quarter revenue of $1.76 billion, below expectations of $1.8 billion.

CNN’s Clare Duffy contributed to this report.