In Brief:

      • Founded in 1962 by Glen Bell, Taco Bell has cemented itself as a leading player in the fast-food franchise industry with 2 billion customers served every year.
      • Taco Bell grossed over $10B in revenue in 2019 with over $5B coming from the U.S. alone.
      • The brand has experienced massive growth within the industry after getting acquired by PepsiCo in 1978 and Yum! Brands in 1997.
      • Franchisees benefit from Taco Bell’s strong revenue growth, growing customer base, cutting edge marketing and technology, extensive training, and flexible ownership policy.
      • Taco Bell continues to innovate its brand by launching its Taco Bell Cantinas and has plans to expand to over 9,000 locations by 2022.

Financial Summary

    • Initial Franchise Fee: $25,000 – $45,000
    • Startup Costs: $525,525 – $2,851,775
    • Royalty Fees: 5.5% of gross sales
    • Average Revenue per Location: $1,600,000

In a nation dominated by fast-food, Taco Bell has long resided amongst the top. With over 7,000 locations around the world, the American eatery continues to innovate the fast-food industry with new offerings that “wow” consumers like the Doritos Locos Tacos and Cheetos Burrito. Taco Bell utilizes social media influencers and viral PR campaigns to ensure it’s products stay in the American conscious.

Under the parent company Yum! Brands, the fast-food, franchise titan earned a mammoth $5.5B in gross revenue for the fiscal year 2019 and serves around 2 billions customers each year. With the runaway success Taco Bell has experienced over the last few decades, it’s easy to forget how the company originated and who played the biggest role in making Americans say “si” to Taco Bell. We take a deep-dive into the California-based company below.

Glen Bell: The Founder of Taco Bell

Born in 1923, food was always a passion for entrepreneur Glen Bell. As a Marine in WW2, Bell served as a cook. After the War in 1948, Bell started his first eatery, a hot-dog stand in San Bernardino named Bell’s Drive-In. After selling his stand in 1952, Bell built a second location in San Bernardino where he sold hamburgers and hot-dogs, but also offered a limited menu of tacos.

Bell soon realized that his tacos were a popular choice for hungry consumers. After perfecting the taco making process to just a few minutes per taco, the young entrepreneur knew he had a hit.

Bell opened up his taco stand, Taco Tia, in SoCal, where he sold tacos for 19 cents each. Between 1954 and 1958, Bell opened three Taco Tias in San Bernardino before eventually selling those restaurants to open four locations for his new restaurant El Tacos in Long Beach. Bell and a partner owned and operated El Tacos before he handed the business over to his partner in 1962 –  and thus Taco Bell was born.

The now seasoned taco entrepreneur quickly opened his first Taco Bell the same year and the first Taco Bell franchise opened in 1964. When PepsiCo eventually bought out Bell in 1978, the restaurant chain had expanded to 868 restaurants nationwide.

How did Bell drum up interest for his tacos? Glen Bell was revolutionary in implementing PR campaigns to draw traffic to his eatery. When a new location for one of his restaurants would open, Bell would often host an extravagant grand opening, some of which were compared to the World’s Fair. Bell pulled out all the stops including spotlights, dancers, live music, hot air balloons, and much more.

First taco Bell franchise
The First Taco Bell

Tacos Without Bell: The Pepsi Years

When Pepsi acquired Taco Bell in 1978, the global conglomerate had big plans to spread its taco influence. Pepsi bought out fast-food chain Zantigo in 1986 and converted its stores in the Mid-West into Taco Bell locations. Under the guidance of Pepsi, Taco Bell acquired the Connecticut company Hot ‘n Now in 1990 and opened its first Taco Bell Express in San Francisco in 1991. Taco Bell Express operates as a to-go station for Taco Bell products inside convenience stores, gas stations and shopping malls across the United States.

Taco Bell began to use the co-branding strategy that many large-scale companies employ in which two or more brands agree to combine products or services under a single entity. This type of marketing strategy serves to increase market share and brand awareness. Taco Bell and Pizza Hut decided to co-brand in 1995, selling pizza and tacos in the same restaurants. Long John Silver’s decided to co-brand with Taco Bell as well in 2002.

Taco bell co-brand franchise

Yum! Brands Swoops In

Although PepsiCo experienced excellent growth within the fast-food space, the corporation decided to sell off some of its restaurant portfolio to Tricorn Global Restaurants in 1997. After acquiring Yorkshire Global Restaurants, A&W, and Long John Silver’s, Tricorn changed its name to Yum! Brands in 2002.

From 2002 on, the brand expanded to 26 countries and almost 6,000 locations by 2010. In 2014, Taco Bell began to experiment with a more upscale restaurant that includes alcohol, Taco Bell Cantina. Taco Bell now has plans to open 300 more Cantina locations by 2022 including 50 in New York City alone.

Taco bell cantina franchise

Why Do Franchisees Say “Yo Quiero Taco Bell?”

1. Strong Revenue Growth

Taco Bell projects solid revenue growth in the coming years, with global sales predicted to climb from $10 billion to $15 billion between 2017 and 2022. This offers franchisees the opportunity to be part of a global brand and take a bite out of the company’s predicted financial growth for themselves. 

2. Robust Customer Base

The Taco Bell franchise serves more than 40 million customers each week in the United States alone and recently overtook Burger King as the fourth-largest chain restaurant chain in the country. 

This means that franchisees can access a huge, nationwide customer base, benefitting from instant brand recognition and a huge pool of potential consumers virtually anywhere they choose to open a location.

3. Cutting-Edge Marketing and Technology

Entrepreneurs who want to be on the cutting-edge of marketing and technology will almost certainly fit right in at Taco Bell.

In addition to its robust, pre-existing customer base, Taco Bell’s parent company, Yum! Brands, has made growing its customer base a priority with innovative social media marketing campaigns and in-app customer loyalty programs to incentivize retention in a unique and modern way.

Plus, the brand has also pioneered technology to improve the customer experience through its award-winning self-service technology, advanced ordering options, and digital menu boards.

4. Extensive Training

Franchisees also benefit from thorough training provided by Taco Bell.

After their application is accepted, franchisees undertake a comprehensive management training program that lasts at least seven weeks. Franchisees also attend the company’s “Starting Bell” brand immersion training session, a three-day course which helps them develop the knowledge to run their own franchise unit.

5. Absentee Ownership Allowed

Unlike some franchises, Taco Bell allows absentee ownership, making it an enticing choice for entrepreneurs who can’t be onsite all the time for various reasons. 

FDD Summary

Initial Franchise Fee: $25,000 – $45,000

Traditional Unit (free standing structure with a full menu and drive-thru): $45,000

Power Pumpers (share the same features as a traditional unit but are connected to a gas station or convenience store): $45,000

In-Lines (does not have to include a drive-thru, some not all of the features of a traditional unit): $25,000

End-Cap (an in-line that includes a drive thru): $25,000

In order to begin the franchise process, franchisees must first pay an initial franchise fee of $45,000 for a Traditional or Power Pumper unit. The initial franchise fee for an In-Line or End-Cap unit will run a franchisee $25,000. This information can be found under item 5 of the Franchise Disclosure Document.

Monthly Royalty Fees: 5.5%

Taco Bell franchise costs are also impacted by royalty fees, or “period franchise fees,” that are the equivalent of 5.5% of the unit’s gross sales. The fee is levied on or before the fifth business day immediately following the accounting period.

Franchisees are also subject to a “period marketing fee” of 4.25% of the unit’s gross sales that’s due on or before the fifth business day immediately after the accounting period in which the sales were made. This particular fee is used to defray advertising costs.

Estimated Initial Investment Costs: $525,525 – $2,851,775

Traditional Units and Power Pumpers: $1,179,525 – $2,851,775

Name of Fee Low High
Initial Franchise Fee $45,000 $45,000
Real Estate and Building (3 months rent) $534,000 $900,000
Signs, Seating, Equipment, and Decor $271,500 $320,000
Opening Inventory $7,000 $10,000
Miscellaneous Opening Expenses $5,000       –
Travel and Living Expenses while training N/A N/A
Additional Funds (3 months) $40,000 $60,000
Total $1,179,525 $2,851,775

In-Lines and End-Caps: $525,525 – $1,256,775

Name of Fee Low High
Initial Franchise Fee $25,000 $25,000
Real Estate and Building (3 months rent) $177,000 $210,000
Signs, Seating, Equipment, and Decor $150,000 $320,000
Opening Inventory $7,000 $10,000
Miscellaneous Opening Expenses $5,000      –
Travel and Living Expenses while training N/A N/A
Additional Funds (3 months) $40,000 $60,000
Total $525,525 $1,256,775

Average Revenue Per Location: $1.6 million

On average in 2018, Taco Bell franchises made an estimated $1.6 million each in gross revenue. This figure is up from $1.18 million in 2006 and $1.5 million in 2017. It is important to remember that this figure merely represents an average. Results may vary across locations, but should be indicative of the popularity of Taco Bell. Taco Bell franchises are some of the most valuable franchises in the world in terms of revenue.

Wrapping it Up: Where Does the Taco Bell Franchise Model Go From Here?

In the U.S. alone, the fast-food industry is worth an estimated $256B. The verdict has been clear for decades, Americans love the convenience and taste of fast-food – the industry isn’t going anywhere for a long time. Taco Bell aims to expand into the Indian market with 600 locations by the end of the decade and 9,000 locations worldwide with $15B in global sales by 2022.

Furthermore, Taco Bell announced its 3 commitments for the new decade. These include using reusable packaging for a lighter carbon footprint, providing even more vegetarian options for the burgeoning vegetarian consumer base, and greater investment in its employees by paying a $100,000 salary for restaurant managers, establishing the “Live Mas” scholarship for team members who cannot afford college, and launching its “Makers” leadership program for team members who want leadership experience in order to rise within the company.

Firmly secured as a titan within the fast-food industry, Taco Bell, under its parent company Yum! Brands, has set its sights high in the new decade and should have no trouble reaching them.

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