Canadian expansion includes beer on menu, Taco Bell announces
Fast-food players trying to compete with fast-casual chains through reinvention
HOLLIE SHAW
TORONTO In a seemingly inspired pairing for late-night urban revellers, Taco Bell will begin selling beer at some of its restaurants this summer as the fast-food chain embarks on a major expansion push across Canada.
Taco Bell Canada made the announcements Tuesday, saying it plans to more than triple in size over the next five to 10 years to 700 locations, from a current outlet count of 170 across the country.
The addition of beer to the menu comes after years of anemic fastfood sales in Canada, which averaged 1.8 per cent per year between 2011 and 2016, with so-called “fastcasual” chains accounting for the bulk of sales growth.
“Beer is something that goes well with Mexican food,” says Amanda Clark, general manager of Taco Bell Canada.
The new concept will look and feel a bit more upscale, with local artwork on the walls, an open kitchen, and larger servings of some dishes so customers can share, Clark said, in addition to the core menu items.
“Sometimes, fast-food gets the rap of ‘get in and get out,’” Clark says. “The look and feel is going to be nothing like we’ve seen (at Taco Bell in Canada) before. We want people to stay a while. “This will be a place to come in with your friends, enjoy shareable plates, and the environment will facilitate conversation and staying longer.”
The new concept is similar to Taco Bell’s “Cantina” concept in the U.S., which debuted in 2015 and sells beer, wine, sangria and frozen alcoholic drinks at six locations.
The bulk of the 11 Taco Bell locations opening in 2017 will serve alcohol, Clark said, and the Saskatoon unit will begin testing frozen drinks such as margaritas, with a potential rollout to other locations if there is enough demand.
The company will also consult with existing franchisees who are interested in renovating their restaurants and applying for an alcohol licence, location permitting.
The move comes as fast-food players are trying to reinvent themselves for modern palates and amid competition from fast casual chains such as Panera Bread and Mucho Burrito. McDonald’s, for example, has introduced customizable menu offerings, salads, smoothies and wraps, in addition to offering all-day breakfast at its restaurants.
Taco Bell, whose 170 Canadian locations generate sales of about $80 million a year, is a division of Yum! Brands of Louisville, Ky., along with Pizza Hut and KFC, which have two and three times as many outlets in Canada as Taco Bell, respectively. But there could be potential room for added growth in the market: same-store sales growth at Taco Bell Canada averaged 5.6 per cent a year for the five year-period ending 2016, according to Clark.
In the meantime, sales of Mexican food rose seven per cent in Canada in 2016, according to Ipsos data.
Regardless, KFC Canada tried to lure in fast-casual customers in this country with its new “KFC Fresh” concept restaurant in 2014, which offered beer and wine at two Toronto outlets.
Both closed after failing to resonate with customers.
Robert Carter, executive director of food service at market research firm NPD Canada, believes KFC Fresh’s core menu — healthier menu items such as grilled chicken and rice bowls — deterred customers, not the addition of alcohol. “It was alienating to existing KFC customers to move so much into that fresh-food area. KFC’s core consumer is there because of the fried chicken offering.” Darren Tristano, president of Chicago-based food service consultancy Technomic, Inc., said Taco Bell’s move in Canada is a more competitive growth strategy for the company.
“Taco Bell’s (restaurant concept in the U.S.) provides a narrowing of the gap between fast-casual and fast food, but it maintains the affordable price point that the majority of the consumers are looking for. When you get into 21- to 35-year-olds, an affordable place to eat that also has adult beverages becomes a great option and a strong demand driver.”