Dive Brief:
- Taco Bell’s first-party loyalty channels drove more than half of its digital sales growth, Chris Turner, CEO of parent company Yum Brands, said on a Q2 earnings call last week. The restaurant chain’s digital sales mix reached 47%, up 5 percentage points since the same period last year.
- As part of its efforts to strengthen the customer-brand relationship, Taco Bell is launching a redesigned app in the third quarter, according to Turner. The app aims to increase discovery, present more curated offers, and allow customers to personalize orders and customize favorites.
- The “more intuitive and personalized” app will accelerate Taco Bell's owned digital performance, Turner said. “Together, these enhancements will strengthen engagement with one of the industry's most digitally connected consumer bases.”
Dive Insight:
Yum is leaning into loyalty across its brands, with Taco Bell its prime example.
Though Taco Bell saw dampened sales in July after the cyclosporiasis outbreak, the quick-service restaurant chain remains the top brand in Yum’s portfolio. Excluding Pizza Hut, which Yum is selling, Taco Bell represents 43% of Yum’s divisional operating profit.
Taco Bell delivered 7% same-store sales growth in the second quarter, “outperforming the QSR industry for the ninth quarter in a row,” according to Turner.
However, the brand is also recovering from what Turner calls a “U.S. food safety industry issue.” Last month, federal regulators connected shredded lettuce served at Taco Bell to the ongoing cyclosporiasis outbreak.
“Our measures of online sentiment, as we said, have returned to pre-issue levels of positivity. There's been no change in our measures to brand love. In fact, in some of those measures, there's even an increase in positivity in brand love,” Turner said. “And the best proof point is that consumers are coming back to the restaurants on a steady basis.”
Much of the brand’s digital sales is driven by Taco Bell's loyalty channels.
“I really think it speaks to the power of loyalty and the unique nature of Taco Bell's loyalty programs,” Turner said. “The Taco Bell fandom wants to be a part of the conversation. We go far beyond just an earn-and-burn type program. The Taco Bell program is about building a real connection with our fans.”
Turner also credited Byte, Yum’s system of AI-powered technologies, for outpacing other quick-service restaurant growth and for strong margins.
As part of Yum’s Raise the B.A.R. priorities, each brand is working to build deeper relationships with its customers.
“Loyalty is a critical capability because today's consumers expect personalized experiences, relevant offers and seamless digital engagement from the brands they love,” Turner said. “When executed well, loyalty creates better experiences for consumers, stronger engagement with our brands and more powerful demand-driving tools for franchise partners.”
