Taco Bell's Grilled Cheese Burrito — and its controversial decision to kill menu items like its beloved potatoes — send sales soaring
- Taco Bell's systemwide sales grew 5% in the most recent quarter.
- The popularity of the Grilled Cheese Burrito and larger party packs helped boost same-store sales by 3%, according to CEO David Gibbs.
- Meanwhile, controversial menu cuts — including potatoes — helped restaurants grow profit margins, with operating margins up 4.3% in the quarter.
Taco Bell's controversial decision to slash customer favorites including potatoes and Nachos Supreme from the menu is paying off for the chain.
On Thursday, parent company Yum Brands reported Taco Bell's systemwide sales grew 5% in the most recent quarter. The growth was driven by same-store sales growth of 3%, as well as operating margins increasing by 4.3%.
In a call with investors, executives highlighted the success of the Grilled Cheese Burrito, which rolled out in July. Yum Brands CEO David Gibbs said that the embrace of the larger, family-style orders also helped drive sales, with sales of party-size meals like the Nacho Party Pack doubling.
Gibbs said that the chain has thrived as food has gone from "fuel to something like entertainment."
"Taco Bell always has their finger on the pulse of consumers," Gibbs said.
Taco Bell sent some customers spiraling earlier this year with its controversial menu cuts. In August, the chain cut 12 items from the menu, including potatoes and Nachos Supreme. The Mexican Pizza is Taco Bell's next item on the chopping block.
Many customers were furious to see beloved menu items disappear. But, Taco Bell said on Thursday that menu simplification, along with reduced hours, boosted restaurant margins and contributed to the 4.3% increase in operating margins.
Taco Bell isn't the only chain trying to grow margins by cutting back its menu. McDonald's All Day Breakfast may never return, as the chain cut its 24-hour service of McMuffins along with underperforming items such as salads.
Correction: An earlier version of this article misstated the name of Yum Brands CEO David Gibbs.