Taco Bell Corp.

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Taco Bell Corp.

THINK OUTSIDE THE BUN CAMPAIGN
WANT SOME? CAMPAIGN

17901 Von Karman Avenue
Irvine, California 92614
USA
Telephone: (949) 863-4500
Fax: (949) 863-2252
Web site: www.tacobell.com

THINK OUTSIDE THE BUN CAMPAIGN

OVERVIEW

Despite being the number one fast-food chain serving up Mexican-style items like tacos and burritos, Taco Bell Corp. in 2001 had an image in need of a boost and sales that were in a steady decline. A former Taco Bell customer who had been eating at the fast-food chain for 10 years told Andrew Bluth of the Tribune Business News, "About six months ago, we just got fed up with Taco Bell … I'm not sure what's contributing to the problem, but I won't be back until they make some changes." In addition, Taco Bell in 2000 had canceled its long-running ad campaign featuring a Spanish-speaking dog described by Bluth as a "tired marketing strategy epitomized by an overused Chihuahua." To regain a marketing identity and win back customers, Taco Bell in September 2001 launched a campaign that featured the slogan "Think outside the Bun."

Created by Taco Bell's agency, Foote, Cone & Belding San Francisco, the $200 million advertising campaign was designed to encourage consumers to do what the slogan suggested and "rethink their eating habits and demand bold, innovative menu items like those found at Taco Bell … not to 'just settle for another burger or sandwich,'" reported Business Wire. The first ad in the campaign, a television spot, highlighted the technology popular with Taco Bell's core customers, young men. It featured Jeff Bezos, Amazon.com's chief executive officer, joined by other staffers discussing Taco Bell's newest "handheld," a chicken quesadilla. Continuing with the tech theme other TV spots included descriptions such as "three-cheese upgrade," "gooey interface," and "ergonomic design." Subsequent advertising, which included a multilevel sweepstake for gamers as well as television and print ads, featured tie-ins to Microsoft Corp.'s Xbox.

At the launch of the campaign, Taco Bell reported that same-store sales had dropped 24 of the previous 35 months, including a 2 percent drop for the quarter ending September 8. In May 2002, about eight months after the campaign's launch, Taco Bell reported an 8 percent increase in same-store sales for the first quarter of the year. The company cited the "Think outside the Bun" campaign as one of the reasons for the increase in sales.

HISTORICAL CONTEXT

Taco Bell founder Glen Bell's first effort at selling fast food was in the early 1950s when he opened a stand offering hot dogs and burgers. Perhaps seeing the success of the McDonald brothers on the horizon, Bell turned his attention to alternative menu items and his personal favorite: tacos. He opened Taco Tia in 1954 and sold it in 1956 when he acquired El Tacos, which grew to 100 units by 1958. Preferring independent ownership—Bell said, "It's tough to share a dream"—he sold his share of El Tacos to his partners and built the first Taco Bell in 1962. After 13 years at Taco Bell's helm, Bell resigned as chairman of the board, and in 1978 he sold the 868-restaurant chain to PepsiCo, Inc.

Under PepsiCo's ownership Taco Bell went head-to-head with big burger chains, like McDonald's and Burger King, and developed both a marketing niche and a national presence by attracting its core customers, college students, with affordable menu items. Some analysts, however, believed Taco Bell's problems could be traced back to its time as a division of PepsiCo. Bluth reported in the Tribune Business News, "Sales hit record levels, and the chain found a niche. Then came Pepsi's attempt to have Taco Bell run a hamburger chain, Hot n' Now, and some sit-down restaurant concepts. Then the big mistake: 'Border Lights,' an attempt at a healthier Taco Bell menu. The dramatic 1995 food addition was a total flop."

Bluth wrote in 2000 that Taco Bell's sales suffered a two-year decline under "Border Lights" and did not experience a slight increase until the strategy was eliminated in 1997 and the talking Chihuahua was introduced with the "Yo Quiero Taco Bell" theme. But, he said, "sales were flat [in 1999] and by all accounts 2000 is even uglier." To turn around its falling sales and compete in a market saturated with fast-food and casual-dining chains, Taco Bell dropped the Chihuahua and "Yo Quiero" theme, upgraded the quality of its menu items, and introduced "Think outside the Bun."

TARGET MARKET

Taco Bell defined its core customers as young men who typically went out for fast food at least a dozen times each month. Bob Sandleman, of the market research firm Sandleman & Associates, said in an interview with the Orange County Register that the chain's new "Think outside the Bun" advertising efforts seemed perfectly planned to resonate with its target audience and the chain's core customers, young men. In an effort to further boost sales, company president Emil Brolick broadened Taco Bell's target audience to also include older consumers with more expendable income and with higher expectations that the food they purchased would be good quality.

Some analysts believed that Taco Bell's shift in marketing focus from its core customer to a broader audience could fail to achieve its intended goal of increased sales. Douglas Christopher, an analyst with Crowell, Weedon & Co., told the Orange County Register, "Targeting too many audiences at once might prove difficult. Becoming all things to all people never works." Other analysts, however, including Technomic Inc., believed that Taco Bell had the financial resources to pull off the strategy as long as the marketing included advertising that would resonate with the separate audiences.

COMPETITION

In 2000, as Taco Bell dumped its talking Chihuahua and was rethinking its marketing strategy, Del Taco, Inc., Taco Bell's number two competitor, was also restructuring its marketing and preparing to launch a new advertising campaign. Tim Hackbardt, Del Taco's vice president of marketing, told Nation's Restaurant News that the company would continue to target consumers 18 to 34 years of age, but the new advertising would be more focused on the chain's menu offerings. Hackbardt added that the Del Taco character, which, because if its resemblance to Zorro, had gotten the chain into legal trouble, had been eliminated. Additionally, although the company had traditionally turned to radio for its advertising, the new campaign would be focused on television spots with some radio support.

ONLINE MUSEUM PAYS TRIBUTE TO FOOD IMAGE SIGHTINGS

You never know what you will see looking back at you when you sit down with a slice of pizza, a piece of toast, or a bowl of nachos, but diners have been spotting images of everything from butterflies to the Liberty Bell to the Virgin Mary and Jesus in their food. To pay tribute to this unusual phenomenon, Taco Bell "launched a home for these edible 'visions' via the first online Food Sightings Museum at Tacobell.com," Amy Johannes reported in Promo. According to Johannes, the website was launched after consumers reported seeing images in the chalupa shells they purchased at Taco Bell. The website encouraged customers to submit photos of their food images online. Any food, not just Taco Bell's menu items, was admissible. People were also able to vote for their favorite image as well as whether the images were real, altered, or unrecognizable as anything other than the food pictured. "People are finding visions in many things," said a company spokesperson. "A customer a few years ago said he found Jesus in his Chalupa. We're playing off the phenomenon. We hope we get a lot of fun submissions."

Del Taco replaced its Zorro-like spokescharacter and launched its new ad campaign using another spokesman, Dan the Product Guy, for its new TV spots. By featuring the self-effacing product-development character Dan, Del Taco hoped to reach fast foodies, usually 18- to 34-year-old men, but not to alienate women. The marketing also was designed to focus on what Taco Bell did not offer and to clearly communicate the differences between the two chains.

In 1998 McDonald's Corp. entered the quick-service Mexican food competition when it acquired a minority interest in the Denver-based gourmet-burrito chain Chipotle Mexican Grill, Inc. With financial backing from McDonald's, Chipotle nearly tripled its size, growing to 100 units by the end of 2000 and claiming the number three spot in Mexican fast-food eateries, behind Taco Bell and Del Taco. The difference with Chipotle was it offered food that was not only spicy but freshly prepared daily. In addition, every restaurant had a unique design, and there were no children's menus. Chipotle's founder, Steve Ells, told BusinessWeek, "This is not the typical fast-food experience. This is something grown-up."

As part of its plan to develop branding and a corporate identity, Chipotle executives visited its different restaurants to talk with customers and created a website allowing consumers to submit comments about the chain. Based on the information gathered, Chipotle planned to increase the advertising promoting the freshness of its ingredients and to continue its "Food with Integrity" theme.

MARKETING STRATEGY

Taco Bell's "Think outside the Bun" theme was more than an ad campaign. It was also a brand repositioning effort that covered everything from marketing to food quality to how the company was run. It was designed to assure that consumers were aware of how Taco Bell differed from chains serving up burgers and sandwiches. In a move to further differentiate Taco Bell from other chains, its stores began offering a 98-cent value menu with a crunchy taco and a bean burrito, while burger chains were charging 99 cents for their value menu items. Another part of the new marketing strategy was that Taco Bell installed grills in its restaurants, enabling it to upgrade the menu and compete more effectively against "fresh Mex" chains, such as Chipotle. In addition, Taco Bell used tie-ins to high-tech products like Microsoft's Xbox to appeal to its core customers.

Moving the brand away from a campaign based on a chatty Chihuahua to a campaign that was food focused was also part of the strategy. San Francisco-based Foote, Cone & Belding Worldwide created Taco Bell's campaign, which connected fast food with the Internet and dot-coms and was designed to appeal to tech-savvy young men. The $200 million campaign launched with a television spot that featured two computer geeks eating lunch outside their office building and using computer-operating letter code to discuss their meals. In another spot the chain's chicken quesadilla was described as a hand-held device with an ergonomic design and gooey interface. Maintaining the technology theme, a print ad for the introduction of the chain's steak quesadilla tied it to the release of Microsoft's Xbox. The ad read, "The Xbox era begins at Taco Bell, 10.18.01."

OUTCOME

Taco Bell's "Think outside the Bun" campaign was a hit. The slogan and advertising received positive reaction from both frequent and casual customers of the chain. The success of the campaign was reflected in Taco Bell's sales numbers as well. After nearly three years of slipping sales, Taco Bell reported sales were up five straight months following the campaign's launch. Tricon Global Restaurants, the parent company of Taco Bell, said that fourth-quarter sales at Taco Bell stores open for more than one year rose 8 percent in 2001 over the same period in 2000. The company's marketing chief, Greg Creed, told the Orange County Register that "Think outside the Bun" was more than a clever slogan. Rather, he explained, the slogan was the "phrase that company leaders decided defines the brand. It's another reinforcement that we're not like the other guys." Based on the success of the campaign's youth-oriented and technology-based theme, Taco Bell expanded it through sponsorships such as the MTV 2002 Video Music and 2003 Movie awards.

WANT SOME? CAMPAIGN

OVERVIEW

In 1997 Taco Bell Corp. was the sixth-largest fast-food chain in the United States and the only Mexican-style fast-food restaurant operating nationwide. But in the previous two years the chain had experienced declining revenues. To repopularize itself and cement its brand image as a fun, appealing quick-service restaurant, in mid-1997 Taco Bell released a new marketing campaign created by ad agency TBWA\Chiat\Day of Venice, California.

The $200 million campaign included a number of television commercials, several of which were set in a pink room intended to depict the inside of a hungry person's stomach. Each spot ended with the tagline "Want some?" and displayed the Taco Bell logo. The final spot in the initial campaign, "Chihuahua," starred a talking dog. Because it was not expected to be popular, it was televised only in the northeastern United States in September 1997. In the spot a male Chihuahua named Dinky sniffed his way down a street, seemingly in search of a female companion. Instead he passed by a female Chihuahua to approach a human eating food from Taco Bell. Dinky then said in Spanish, "Yo quiero Taco Bell" (I want Taco Bell).

Public reaction to the "pink room" spots was lukewarm, and they were short-lived. Because of the excitement surrounding the regional spot featuring the Chihuahua, however, Taco Bell chose to air it nationally in October. The company followed it up in late December 1997 with a campaign that focused exclusively on the hungry little dog. The spots promoted the value pricing of certain Taco Bell items while solidifying the Chihuahua's role as Taco Bell's brand icon and marketing mascot. In May 1998 Dinky returned as part of a $60 million campaign to promote Taco Bell's Gorditas, a new menu item. Dinky's position as top dog began to fade in 1999, when he was reduced to a supporting character in the chain's commercials, and in 2000 insiders were calling Dinky "overused." Later that year Taco Bell dropped the Chihuahua along with TBWA\Chiat\Day.

HISTORICAL CONTEXT

Although it was the only nationwide Mexican-style fast-food restaurant in the United States, in 1995 and 1996 Taco Bell suffered declining revenues, which was largely attributed to increased competition in the industry. In addition, the company's marketing campaigns were not successful in increasing sales or meeting company expectations. In an article in USA Today Taco Bell president Peter Waller stated, "We spend $200 million a year on advertising, and I really want that investment to pay off." He added, "We had a strong campaign in the late '80s, but since then, we haven't made a connection with the consumers." Analysts in the fast-food industry concurred, indicating that Taco Bell's image needed updating. A PaineWebber analyst remarked that "Taco Bell ha[d] gotten stale" and lacked new ideas.

In 1997 Taco Bell sought to reverse the drop in sales and give its image a face-lift. In March 1997 Taco Bell awarded advertising agency TBW\Chiat\Day of Venice, California, the creative portion of its marketing account. Industry executives shared with the Wall Street Journal their belief that "the biggest problem facing Taco Bell is its image, and it's one the people at TBWA Chiat/Day will need to work hard at." The Costa Mesa, California, office of the agency that had represented Taco Bell from 1994 to 1997, Bozell Worldwide, maintained media-buying responsibilities, and its managing partner, Peter Stranger, stated, "We lost the creative portion because Taco Bell is looking for magic in the creative areas which we have not struck with them to date. If they can find magic, we support that."

TARGET MARKET

TBWA\Chiat\Day chose to focus its marketing efforts on men between the ages of 18 and 34, the group that accounted for the majority of fast-food sales. According to an article in the Los Angeles Times, Taco Bell's "advertising and marketing gradually shifted toward a more general audience—and away from its most important customers, the hungry young males who drive fast-food sales." Taco Bell had hoped to expand its consumer base, but when the strategy proved ineffective, the company chose to focus again on its core consumer group. The new campaign by TBWA\Chiat\Day aimed to use offbeat, catchy commercials to gain the attention of Taco Bell's core market of young males.

The chain reported that its target market consisted of consumers aged 18 to 34 who were loyal customers of Taco Bell. Vada Hill, Taco Bell's chief marketing officer, stated, "Our consumers have an intense emotional tie with the Taco Bell brand and associate great memories and experiences with eating our food." TBWA\Chiat\Day's research revealed that Taco Bell's consumers were "incredibly savvy, individualistic and pragmatic," and thus the agency sought to create a campaign that would be appreciated by this target group. Lee Clow, TBWA\Chiat\Day's chief creative officer, said, "Taco Bell's consumers have grown up in a media-saturated environment and respond to brand messages that are direct, honest and funny … We wanted to create a campaign that incorporates those key elements and breaks through the clutter by speaking directly to our audience about the desire for Taco Bell in a fun, humorous and memorable way."

In an effort to appeal to a broader audience and include potential customers outside the target group, Taco Bell also began to offer a 100 percent guarantee on its food items and service: "You'll love it, or we'll eat it." The guarantee was incorporated into commercials and was designed to lure new customers by informing them that the quality of Taco Bell's food had improved.

HISPANIC REACTION

Not everyone was thrilled by Taco Bell's "Chihuahua" campaign. Many in the Hispanic community found the Dinky commercials insulting and inappropriate. Gabriel Cezares, the president of the Tampa Bay, Florida, chapter of the League of United Latin American Citizens (LULAC), was quoted in the Tampa Tribune as saying, "They have a little Mexican dog to represent Mexican people who work like dogs and are treated like dogs and don't even get a burrito from Taco Bell to put on their tables." Cezares proposed a boycott of Taco Bell and urged Hispanics to write protest letters to the company's headquarters. Others in the Hispanic community, however, disagreed. Belen Robles, LULAC's national president, told the Tampa Tribune, "LULAC has a good working relationship with Taco Bell. I seriously doubt they would intentionally air something that is offensive to the Hispanic community."

Peter Stack, Taco Bell's vice president of public affairs, stated that precautions had been taken and that Hispanic focus groups had responded positively to the spots. He said, "This research is done to ensure that our ads are received in the manner that they are intended: to entertain and inform, never to offend." Campaign creators Chuck Bennett and Clay Williams explained that they tried to be careful not to offend anyone, that the Chihuahua was portrayed as smart and heroic, and that Hispanic actors were used to provide the dog's voice.

COMPETITION

With more than 6,500 units in the United States, Taco Bell had no national competitors in the Mexican fast-food category. In 1997 it dominated the market, claiming more than two-thirds of all sales in Mexican quick-service food. Independent restaurants, with a share of 19 percent, followed Taco Bell. Regional chains such as Taco John's, Del Taco, Taco Time, and Taco Bueno made up less than 10 percent of Mexican quick-service sales.

In the overall fast-food market, Taco Bell held 2.1 percent of the national share in 1996 and ranked fourth, following McDonald's, Burger King, and Pizza Hut. Rounding out the top 10 fast-food restaurants were Wendy's, KFC, Hardee's, Subway, Dairy Queen, and Domino's Pizza. Thus, three divisions of Tricon Global Restaurants—Pizza Hut, Taco Bell, and KFC—were in the top 10, and their combined market share of 6.2 percent placed them second after McDonald's, which in 1996 had a market share of 7.7 percent.

Some of Taco Bell's competitors capitalized on the Chihuahua spot by creating marketing campaigns that included a Chihuahua. El Pollo Loco, a regional Mexican-style fast-food chain in southern California, aired a spot that mocked the talking Chihuahua by indicating that its growth might be stunted if it continued to feast on tacos. The spot was part of a series of spoof advertisements by El Pollo Loco. Jack in the Box also created a parody that featured a talking Chihuahua. The spot pitted the dog, visibly pudgier than Taco Bell's, against Jack in the Box's ball-headed Styrofoam Jack character and attempted to direct attention to Jack in the Box's specialty items.

MARKETING STRATEGY

In the late 1980s and early 1990s Taco Bell enjoyed growth in sales and continued to expand its locations. In 1995, however, earnings began to suffer. Same-store sales fell by 4 percent in 1995 and by 2 percent in 1996. Taco Bell appeared ready for change when it gave TBWA\Chiat\Day, an agency known for its innovative work, creative responsibilities for advertising in March 1997.

In planning the $200 million marketing campaign, Taco Bell hoped to update and build its brand image and to solidify its rank as one of the top fast-food chains in the country. It also wanted to boost store traffic and reverse the two-year sales slump. In the Los Angeles Times Hill discussed Taco Bell's goals by explaining, "The challenge isn't getting this core group to eat fast-food … The challenge is getting them to turn right into a Taco Bell as they drive down fast-food row instead of McDonald's or Burger King." Hill also noted, "It's not that they're not coming to our restaurants … It's just that we want them to come more often."

The new campaign was released in July 1997 on prime-time network television with several of the "pink room" spots, which were intended to convey the message "There's something inside you that's hungry for Taco Bell." The first commercial that appeared on network television showed two young men in an apartment who were awakened by their growling stomachs. Another spot featured a throng of youths dancing and thrashing about in a pink room, with the chaotic activity meant to symbolize the rumblings of an empty stomach. The final spot in the initial campaign, developed by the TBWA\Chiat\Day creative team of Clay Williams and Chuck Bennett, featured Dinky the male Chihuahua. Bennett explained the development of the spot in PR Newswire: "We wanted the Chihuahua's character to be perceived as a 19-year-old guy in a dog's body who primarily thinks about food and girls. We were able to craft the spots in such a way as to bring this character out and convey the message that the dog was on an undying quest for Taco Bell."

Williams and Bennett had come up with the Chihuahua concept while eating together at a Mexican restaurant in Venice, California. They spotted a determined-looking Chihuahua walking down the street by itself. Bennett explained, "He was a little dog totally on a mission, on full cruise mode to something only it saw … He appeared to have no concept that he was a [three]-pound dog in a giant world." Bennett and Williams decided that the Chihuahua could play an entertaining and effective role in the Taco Bell campaign.

In May 1998 new television spots starring Dinky began airing to promote Taco Bell's new food offering, Gorditas. The spots were tied to the release of the new Godzilla movie; one featured the feisty Chihuahua trying to trap the giant monster with a cardboard box and a few Gorditas while he beckoned, "Heeere, LEE-zard LEE-zard." The little dog also starred in a music video to promote a new rap/urban-pop album by Los Angeles Lakers basketball star Shaquille O'Neal.

The campaign was modified in 1999, with Dinky still playing a part but in a supporting role rather than as the star. A new tagline also replaced the popular "Yo quiero Taco Bell." Television spots that began airing in December 1999 used the tagline "Grande taste. Loco price. Only at Taco Bell," and in them the chain's food upstaged Dinky. One spot, titled "Bus," showed Dinky taking over a public bus in hot pursuit of a working mom on her way home in a minivan with a Taco Bell Grande Meal beside her on the front seat. The meal was meant to feed the mom's hungry family, but the Chihuahua had other plans for the dinner: claiming it for himself.

OUTCOME

Although the public did not embrace the original spots featuring the pink room, Taco Bell had a winner with the talking Chihuahua. The Licensing Letter quoted Peter Stack, Taco Bell's vice president of public affairs, as saying, "This is a phenomenon; it's safe to say it happens once in a brand's lifetime." "Yo quiero Taco Bell" became the mantra of the masses, the Chihuahua breed grew in popularity, and Taco Bell's two-year sales decline ended. In 1997 the chain enjoyed a 2 percent increase in same-store sales.

Taco Bell's Hill stated, "These ads are just the kind of break-through advertising that we challenged TBWA Chiat/Day to create." The Chihuahua spot was so successful that Dinky became the star of subsequent Taco Bell ads. Hill explained, "The original commercial captured the imagination and excitement of our consumers and the catch phrase 'Yo Quiero Taco Bell' is also becoming part of our target market's vernacular. The response has been so overwhelming that we had no choice but to bring back the Chihuahua." TBWA\Chiat\Day's Williams commented on the spot's effectiveness. "After the launch of the first Chihuahua commercial," Williams recalled, "it became apparent that this spot was creatively right on the mark. It was able to connect with our target market while at the same time being broad based enough to speak with the entire market as a whole."

The Chihuahua spots ranked among the top three most popular campaigns ever analyzed by Ad Track, USA Today's weekly poll designed to measure a campaign's popularity and effectiveness. Ad Track had covered more than 140 marketing campaigns since 1995. Only 8 percent of the poll's 566 respondents stated that they disliked the Dinky commercials, while 47 percent said that they liked them. Among the target group of 18- to 24-year-old consumers, 53 percent of the females and 40 percent of the males polled stated that they liked the spots. Minority groups surveyed also enjoyed the Chihuahua spots. Among Hispanic consumers 55 percent said that they liked the commercials, and 57 percent of black respondents gave their approval. When polled regarding the campaign's effectiveness, 36 percent considered the commercials to be effective. Entertainment Weekly rated a Chihuahua spot as one of the top 10 television commercials of 1997.

Billboards emblazoned with the Chihuahua's image appeared across the United States, and Taco Bell implemented a toll-free telephone number for customers who wanted to order Dinky T-shirts. Posters and cardboard cutouts of Dinky were displayed at Taco Bell restaurants, but Dinky proved so popular that the posters were frequently stolen. Taco Bell reaped the benefits of the Chihuahua craze with increased revenues and immense recognition in 1997 and intended to ride the Dinky wave as long as possible. According to the Virginian-Pilot and Ledger-Star, Taco Bell public relations manager Laurie Gannon stated, "When the commercials run their course, we'll move on to something else."

Despite earning accolades as one of the "most memorable ad campaigns in recent history," according to Knight Ridder/Tribune Business News, by 2000 Dinky the Chihuahua had worn out his welcome. The Knight Ridder/Tribune Business News article described the campaign as a "tired marketing strategy" and Dinky as an "overused Chihuahua." In mid-2000 Taco Bell reported that same-store sales had dipped 6 percent for the second quarter compared to the previous year. In response, the chain replaced its president, Peter Waller, and fired its ad agency and Dinky's creators, TBWA\Chiat\Day. In 2001 Taco Bell released a new marketing campaign, "Think Outside the Bun," created by the chain's new agency, San Francisco-based Foote Cone & Belding.