Mexican Pizza gave Taco Bell an enormous sales boost

By Danielle Wiener-Bronner, CNN Business

Taco Bell can thank Mexican Pizza for a boost in sales last quarter.

Sales at US Taco Bell stores open at least a year jumped 8% in the three months ending June 30. In that period, Taco Bell sold more than 20 million Mexican Pizzas across the country and saw loyalty membership grow 10%, driven largely by customers’ desire for early access to the product.

For Taco Bell, the frenzy around Mexican Pizza was important because of the attention it brought to the chain.

“The benefit of things like the Mexican pizza is the connection it has with consumers … and the halo it provides to the brand,” said David Gibbs, CEO of Taco Bell’s parent company Yum Brands, during an analyst call Wednesday. “It’s just as much about the buzz … and the relevance it creates for our brand as it is about the discrete amount of sales.”

Taco Bell removed the beloved item — pizza sauce with ground beef or beans sandwiched between two crispy tortillas — in November 2020 when it slimmed down its menu to simplify operations during the pandemic. Mexican Pizza came back for a limited time in May, but the item quickly sold out. Some locations ran out within a week, said Gibbs.

Taco Bell plans to bring the item back to menus permanently in the fall. At that point, “we will get actual discrete sales benefit that might translate into a couple of points,” said Gibbs.

Buzz is essential to fast food companies, which have to battle for notoriously fickle customers who don’t have much brand loyalty. Excitement around an item can inspire customers to go to, say, Taco Bell instead of to one of its competitors.

And when an item really hits, it can make a huge difference. Consider Popeyes’ spicy chicken sandwich. The much-hyped item sold out within two weeks of arriving on menus. After Popeyes brought it back, it drove sales for the brand.

Setting yourself apart with distinct products or promotions is especially important now, as some customers pull backs spending because of inflation, noted Gibbs.

“The formula to win in any environment for us is to have a lot of brand buzz, to have product news and to have great value,” he said. Mexican Pizza, in addition to cheaper options like $2 burritos, “added up to a blowout quarter for Taco Bell.”

Other Yum brands didn’t fare as well, however. KFC’s same-store US sales fell 7% in the quarter, and Pizza Hut’s fell 4%.

— CNN Business’s Jordan Valinsky contributed to this report.

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