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Fast Food, Faster Innovation: Taco Bell CEO grows fast casual giant to $15B in sales

Mark King’s strategy for keeping Taco Bell at the top of the restaurant industry: move faster.

“The faster we move, the more effective we’re going to be,” Chief Executive King told the Business Journal during a recent visit of the company’s nearly182,000-square-foot Irvine Spectrum headquarters along Glen Bell Way.

Notable examples of quick rollouts the fast-food giant has undertaken in the past year include ramped-up restaurant technology, online collaborations, new menu items and store openings overseas.

Last year also marked the debut of its new Defy drive-thru concept: a four-lane, two-story location in Minnesota in which a vertical “food tube” delivers orders from the kitchen on the second floor to your car.

“When I got here [in 2019], you could feel in the DNA of the company that innovation was important,” King said, citing the company’s forward-thinking food items, store operations and digital strategies as already strong areas that he wished to make even better.

“When there’s more awareness of what makes you great, then you can actually focus on it, and you can drive even more innovation.”

Tops in Town

Taco Bell topped 8,000 companywide restaurants at the end of last year, including 1,000 locations internationally.

It’s the fourth-largest fast-food chain in the U.S., trailing only McDonald’s, Starbucks, and Chick-fil-A in domestic sales, according to data from QSR Magazine.

Systemwide sales for the fast-food company, a unit of Louisville, Ky.-based Yum Brands Inc. (NYSE: YUM), have increased 25% over the past three years, reaching $14.7 billion in 2022. That’s up almost 17% from the year prior.

King credits much of this growth to the “restless creativity” of Taco Bell employees and its leaders, which is what drew him to the company, as he came off a four-year run leading Adidas North America.

Taco Bell is by far the largest locally-based restaurant chain by sales, and King intends to keep it that way.

Taco Bell has a goal to operate 10,000 restaurants in the coming years and reach $20 billion in sales within this decade, largely through franchising.

From Retail to Restaurants

King in 2019 replaced Brian Niccol who had left Taco Bell a year prior to lead Chipotle Mexican Grill Inc. (NYSE: CMG), now based in Newport Beach.

The first three decades of King’s career was spent with the TaylorMade golf division of shoe and apparel giant Adidas, starting in the sales segment and moving up to president and CEO through 2014.

King was later named president of Adidas North America.

Under King’s leadership, Adidas became the fastest-growing sports brand in North America, increasing sales 35% in 2017, doubling its market share and regaining the No. 2 position in the U.S.

Taco Bell was the executive’s first endeavor in the restaurant industry after almost 40 years in retail.

“I had a lot of learning to do,” King said.

He sought to uncover what made the Taco Bell business tick.

“The strategy is to follow the consumer, and how you make the consumer experience what the consumer wants it to be,” he said. “Not what we want it to be.”

His priorities have focused on driving innovation, maintaining cultural relevancy and strengthening franchisee relationships.

Now, King’s latest focus is on building a team and “culture that invites people to think of and challenge ways to improve the consumer experience,” King said. “That’s the way to the future.”

Defying Drive-Thru

Priorities among consumers have shifted since King joined Taco Bell, prompting the company to introduce two new digital-focused restaurant models.

Decreasing “time [spent in] the drive-thru was by far the most important priority,” King said of his initial work.

Yum Brands reported Taco Bell drive-thru times had improved in 2021, two seconds faster year-over-year compared to its average four-minute time. Last year, the average service time for the restaurant chain was around three and a half minutes, according to data from QSR.

“Ordering ahead, customizing your order, having the brand know who you are when you show up—these are the things technology is changing at the drive-thru,” he added.

One initial effort was the Go Mobile concept announced in 2020, with two drive-thru lanes, smart kitchen technology and on-site mobile pickup and kiosk ordering with no indoor seating.

The next year, Border Foods, a 35-year franchise partner of Taco Bell, pitched the four-lane, two-story drive-thru concept to King and global Chief Operating Officer Mike Grams that would become known as the Taco Bell Defy concept.

Drive-thru lanes at Defy facilities are built to accommodate mobile pre-orders, delivery drivers or traditional service. Customers can check in digitally and have contactless delivery of the food via a lift system, while a two-way audio and video technology service is also available to connect customers with team members.

The model aims to appeal to a broader buyer base while cutting drive-thru times to two minutes or less.

“I’m not a restaurant expert but I looked at [Grams and said], ‘this is the future of restaurants,’” King said.

The first Defy location opened last summer in Minnesota.

“Ten years ago, it was continual improvement on what you did, and now it’s ‘what’s the next thing that’s going to change everything,’ like the Defy restaurant,” King said.

Practicing at Home

About a quarter of Taco Bell’s international growth has taken place in the past two years, led by Julie Felss Masino, the current president of Taco Bell International.

The division reached 1,000 units during the fourth quarter, up from 789 locations at the start of the year. Its biggest international market is Spain, with 100 franchised locations.
The brand’s growing digital channels and campaigns helped give the division a boost last year, according to Felss Masino.

When entering a new market outside of the U.S., King said Taco Bell aims to act as a “Mexican-inspired, California-cool brand.”

Efforts to duplicate Taco Bell’s model abroad start with inviting international franchisees to the Taco Bell test kitchen at its Irvine headquarters and training them for new restaurant openings.

Visitors will work in a replica of a Taco Bell kitchen layout from abroad, where local employees might also be asked to stop by for practice runs.

Becoming a global brand has its challenges, but King “can see really accelerated growth in the next 10 years.”

Collaboration

Brand partnerships is one side of the business King was already familiar with prior to signing on as CEO.

“That world is a lot about collaborations, whether it’s with athletes or musicians or celebrities,” King said of his background in footwear and retail.

At Taco Bell, King wanted to find influencers and celebrities who were not only “on the leading edge of culture,” but were also “authentic supporters and fans” of the food.

This has led to marketing campaigns with artists like Doja Cat, who helped announce the return of the Mexican Pizza dish with a viral song on social media channels like TikTok, as well as longtime performers like Dolly Parton.

“I’m a little out of the culture and the mainstream today, so the social media team finds the people and introduce them to me,” King said (see story, this page).

Executives from Yum Brands have also highlighted the help of celebrity partnerships in Taco Bell’s sales growth in the past year.

Chief Financial Officer Christopher Turner referenced a marketing campaign with actor and comedian Pete Davidson that helped boost sales of breakfast items during the fourth quarter by 9%.

“This team continues to deliver industry-leading results,” Yum Brands’ Chief Executive David Gibbs told analysts.

The company’s pursuit of cultural relevance has also led to a variety of performance projects, from launching a drag queen brunch to producing a digital Broadway musical.

“From my seat, it’s been fun to watch,” King said.

Taco Bell Cantina

Taco Bell’s Defy drive-thru restaurant concept isn’t the only unique model in the fast-casual brand’s portfolio.

The Taco Bell Cantina, which serves alcoholic beverages alongside its standard menu, has become a strategy for the company to better attract both locals and visitors.

“This is where the Taco Bell system is different than most,” Chief Executive Mark King told the Business Journal.

The first Cantina location opened in Chicago’s Wicker Park in 2015. There are now about 50 locations, with 80% spearheaded by franchisees who help ensure each location is unique to its respective location.

“The franchisees have really been empowered to say what would work in this neighborhood or this community,” King added.

The latest cantina debuted in Los Angeles on Hollywood Blvd. with a historic movie theater theme.

Others include a Las Vegas location with an open kitchen design and a second floor available for private events; the outpost is one of six operated by Sonoma-based Diversified Restaurant Group.

One spot in Nashville features live music while another in Chicago next to Wrigley Field is a draw for Cubs fans going to a game.

“We’ve realized from a corporate standpoint, the more individual they are, the more successful they are in that community,” King said.

—Emily Santiago-Molina

Nabbing Retail Execs

Mark King sports an almost 40-year career in golf apparel and footwear as an Adidas veteran.

That career took a bit of a departure when he became chief executive of fast-food chain Taco Bell in 2019, but it hasn’t stopped him from looking to his retail peers for help in his first restaurant venture.

Taco Bell hired Sean Tresvant as global chief brand and strategy officer in 2021 in a move to keep the chain relevant with mainstream culture, King said.

Tresvant spent the prior 16 years with Nike, where he climbed the marketing ladder before landing the role of chief marketing officer of the Jordan brand category in 2020.

“He understands branding and brands better than anyone I’ve ever worked with,” King said.
Tim Bergevin was hired in 2022 as vice president of influencer and community marketing after working at Converse, where he led entertainment and influencer marketing to attract younger consumers.

“You cannot hire traditional marketers who aren’t in touch with Gen Z,” King said.

—Emily Santiago-Molina

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