Taco Bell increases value with a $7 Luxe Cravings box

Diving certificate:

• Taco Bell added another weapon to its arsenal of affordable deals this week with the $7 Luxe Cravings Box, the company announced Thursday.
• The $7 offer consists of “Chalupa Supreme, Beefy 5-Layer Burrito, Double Stacked Taco, chips and nacho cheese sauce, and a medium drink” and is valid for a limited but unspecified period.
• Taco Bell’s strategy this year is heavily focused on value. The chain launched a 10-item Cravings menu in January, getting an early entry into the 2024 price war.

Diving insight:

The discount on the items starts at 55% when ordered individually, Taco Bell said. The discount rate varies by location. At a Taco Bell in Connecticut, the items included in the deal cost $19.15 when ordered individually, giving the Luxe Box about a 63% discount.

In the first quarter, Taco Bell’s sales in the US rose 2%. The Cravings menu contributed to the brand’s success, said David Gibbs, CEO of Yum Brands. during a conference call on quarterly results.

“Nearly one-third of transactions included an item from the Cravings Savings Menu, and 80% of purchases included at least one additional item, representing an increase in check amount of nearly 10% compared to checks without the Cravings Savings Menu,” Gibbs said.

Gibbs said Taco Bell is not experiencing the decline in low-income consumers that other QSR brands are experiencing this year and that Taco Bell is well positioned as a value leader. Taco Bell’s in-store sales growth was accelerating at the time of the May earnings call, Gibbs said.

Other brands have turned to value-added fare in recent months to win back customer traffic. KFC, also a Yum brand, is offering a $4.99 menu through the end of the year, while McDonald’s recently introduced a $5 menu and Burger King is offering several value-added deals. The shift to value-added fare follows a long period in which take-out prices outpaced general inflation. According to the Bureau of Labor Statistics, restaurant prices have risen faster than inflation every month since September 2022.