Taco Bell joins the trend of inexpensive fast food meals

Taco Bell has introduced a $7 meal called the Luxe Cravings Box for a limited time. The move is seen as a way to attract more customers as some have turned their backs on fast food due to inflationary pressures.

Yahoo Finance reporter Brooke DiPalma joins the Morning Brief to analyze Taco Bell’s pursuit of value and discuss how it will play out in the fast-food sector as other brands try similar tactics.

Click here to watch the full episode of Morning Brief for more expert insights and information on current market events.

This article was written by Nicolas Jacobino.

Video transcript

Taco Bell is offering a cheap $7 menu for a limited time.

This comes after a number of other fast food chains have started offering cheaper alternatives to lure customers back. Now there is a debate about how investors feel about the cheap meals.

We have our own from Yahoo Finance.

This is Brooke Dipalma.

OK.

Here’s how to break down the $7 menu for us.

What’s going on at Taco Bell?

How does it compare to the rest?

Yes.

That’s why they call it the Lux Menu.

And that is ultimately because consumers today consider fast food to be a luxury.

And that’s exactly what they’re banking on with this luxury meal box and the $7 price tag. The company says that’s actually a 55% discount if you buy each item individually.

So you get it in this box.

And ultimately it includes a whole range of different articles.

It includes a Chalupa Supreme, a meaty five-layer burrito, a double stack of taco chips and nacho cheese sauce, and a medium drink. But overall, there will be plenty of passersby on the street watching to see if this works throughout July, and not just at Taco Bell, but at any business that has recently introduced their version of a value menu item.

We’ve seen McDonald’s, we’ve seen Burger King, we’ve seen KFC, we’ve even seen Starbucks jump on this bandwagon, and many analysts are saying that July is going to be a crucial month to see if this strategy works, and there are three ways to find out who’s going to win this price competition.

Analysts would like to see an increase in footfall and more customers in stores while these limited-time offers are being promoted.

They also want consumers to buy more than just a cheap meal.

They want to see those premium attachments, they want consumers to add more to their ticket.

In addition, they want to see the frequency of visits.

They want consumers to come back for these inexpensive menu items, among other things, but they also want consumers to come back afterward, and this is largely done in an attempt to change the perception that fast food is currently too expensive.

The story goes on

So yes, these affordable menus are only available for a limited time, but they want customers to come back afterward.

You know, it’s interesting, I look at some comparative data on the Taco Bell NPS, the Net Promoter Score, the number of people who would be likely to recommend your brand.

Um, and right now they’re at minus 13 and it’s been going down since last year. Who has the best chance of winning the price war when you know that everyone is battling with whether customers will recommend your cheap menu to others and likely become repeat customers.

Right.

So I was at Taco headquarters in Irvine, California last week, and the CMO and other executives there are really hoping to hit the nail on the head and attract consumers by saying, “Yeah, this is $7, versus $5, the other guys are doing it.”

But we give plenty of food.

We offer a lot of different items in their $7 box and they really hope this will attract competition.

They also recently announced a Cheez-It collaboration.

We also hope that LS will be part of the competition.

But what really matters on Wall Street is who does the best marketing, who does the best advertising to get customers in the store, and who makes it clear to the competition that they value them the most, like the CMO at Taco.

So, actually, he’s telling me that he doesn’t think others would provide a hearty meal for what they’re offering with these inexpensive menu items.

Everything about the value wars.

Now we will see who comes out of it.

All right, Brooke, thank you very much.