Why Taco Bell’s Subscription Plan “Makes A Lot Of Sense” In The Fast Food Wars


A subscription service … for tacos?

It could happen. This week, Taco Bell (YUM) announced plans to test a Netflix-like 30-day subscription service at a 17-site pilot in Arizona, through the end of November.

Dubbed the “Taco Lover’s Pass,” the price of the plan ranges between $ 5 and $ 10 (depending on the user’s location) and will be offered exclusively on its app. Once purchased, it will unlock a hidden menu, allowing customers to redeem one taco per day for 30 days.

So, can a seemingly exaggerated idea work in a world where consumers are constantly being asked to pay cover fees for streaming content?

“It makes a lot of sense,” Peter Saleh, analyst at BTIG Restaurants, told Yahoo Finance. He explained how the service drives traffic to the app, captures customer data, drives more frequent purchases, and builds brand loyalty.

Taco Bell is testing a new subscription service

“Overall, I think if you buy this pass, whether it’s $ 5 or $ 10, I think you’ll feel a little bit compelled to go there more often,” Saleh explained.

“And we know that loyal customers come back two to three times more often than non-loyal customers and spend 25-30% more,” he added.

Fast food loyalty programs have exploded in recent years, with Saleh noting that “almost every concept” now uses one. It’s a way to encourage repeat visits to a world where options abound and restaurants have had to fight for foot traffic in the pandemic era, with limited in-store meals and more. consumers working from home.

Burger King (QSR) rolled out its app-based loyalty program nationwide earlier this month, joining competitors like Starbucks (SBUX) and McDonald’s (MCD) who have aggressively embraced the digital revolution in a landscape transformed by COVID-19.

“It’s an effort to differentiate yourself and find a different way to attract new customers, while also bringing back the customers you have more frequently,” Saleh told Yahoo Finance.

“There is a real struggle for customer traffic out there, and you have to find ways to be creative and different from your peers. I think that’s one way Taco Bell and Yum! Brands are doing it.” , added the analyst.

Fast food giants embrace celebrity partnerships

NEW YORK, NEW YORK - SEPTEMBER 13: Lil Nas X attends the 2021 Met Gala celebrating America: A Fashion Lexicon at The Metropolitan Museum of Art on September 13, 2021 in New York City

NEW YORK, NEW YORK – SEPTEMBER 13: Lil Nas X attends the 2021 Met Gala celebrating America: A Fashion Lexicon at The Metropolitan Museum of Art on September 13, 2021 in New York City

Big name partnerships are another hallmark of the fast food experience. Last month, Taco Bell announced that Grammy-winning artist Lil Nas X will become the chain’s impact manager – the latest in a series of collaborations between restaurant chains and premier stars. plan.

McDonald’s was the first to engage in business with celebrities. The fast food giant’s celebrity ordering campaign has seen great success thanks to partnerships with rapper Travis Scott, Korean pop group BTS and now The Saweetie Meal, featuring the hip artist’s favorite menu items. hop and the “Saweetie ‘N Sour” sauce.

Meanwhile, Burger King has announced its commitment to providing “real food,” banning 120 man-made ingredients. To promote the new campaign, the burger chain introduced “Keep It Real” meals. Created by celebrities, the meals use the real names of the celebrities instead of their more well-known stage names. Partnerships include Nelly, Brazilian singer Anitta and TikTok sensation Lil Huddy.

“I see it as following the leader,” Saleh said.

“McDonald’s has been doing this for [awhile] and it worked great, so you see more piling up. No one wants to be left behind. It’s hard to find something that resonates and works to generate traffic … I think it’s going to be a trend until they find something else that works, ”he continued.

Still, Saleh warned that “you’ll end up running out of celebrities to use,” explaining that menu and food innovation is still the key to growth.

“But at this point, with restaurants that are limited in their workforce, they have to limit the amount of innovation and find different ways to attract customers and use their marketing tools in a different way,” said the analyst.

Alexandra is a producer and entertainment correspondent at Yahoo Finance. Follow her on Twitter @ alliecanal8193

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