Dive Brief:

• Taco Bell is launching a 10-item Cravings Value Menu, with six new menu items and a customizable vegetarian menu deal in an expansion of its emphasis on value, according to a press release issued Monday.
• Customers can order from the Cravings Value Menu across the company’s channels, while the vegetarian menu deal is only available to order online or in-app. The vegetarian combo is a permanent menu addition, while the new items attached to the Cravings Value Menu are available while supplies last, according to the press release.
• This value play is part of Taco Bell’s push drive more traffic. The chain is well positioned to offer value items, as other QSRs are raising prices in response to lingering inflationary conditions and to offset regional labor cost increases.

Dive Insight:

On Yum Brands’ most recent earnings call, CEO David Gibbs said that value promotions, while important to Taco Bell’s strategy, are targeted to account for only about 10% of mix, with value items and LTOs offering “new category entry points,” for customers. Taco Bell’s value offering, Gibbs said, was strong enough that its transaction counts have remained strong in a variety of trade areas.

“Our stores in lower-income trade areas are performing well with good transaction growth, just like our stores in high-income trade areas,” Gibbs said. “We're probably benefiting a little bit from some trade-down in those higher-income trade areas.”

Taylor Montgomery, Taco Bell’s chief marketing officer, said the brand is hoping to roll out more value deals across the brand’s menu, while also emphasizing digital engagement.

The vegetarian menu deal, called the “Veggie Build-Your-Own-Cravings-Box,” consists of a specialty menu item, like a bean Crunchwrap Supreme, chalupa or quesadilla; a classic item, such as a bean burrito or the chain’s spicy potato soft tacos; a side item and a fountain drink. The vegetarian Cravings Box starts at a price of $5.99.

Four existing menu items — Cheesy Roll Up, Spicy Potato Soft Taco, Cheesy Bean & Rice Burrito and Cheesy Fiesta Potatoes — and six new menu items comprise the cravings value menu. 

With leading Mexican fast casual brand Chipotle poised to raise prices by the mid-high single digits in California, it’s possible that Taco Bell will have an opening to capture significant trade-down in that market.