Americans loco for Taco Bell's Dorito snack

The popular menu item could offset parent company Yum Brand's falling fried-chicken business.

By InvestorPlace Aug 30, 2012 12:38PM

By Alyssa Oursler


investorplaceMunchers in America may not be too excited by Colonel Sanders' drive-thru fried chicken these days, but they're going crazy for Taco Bell's Dorito Loco Taco.

 

Sales of the snack -- seasoned beef, cheddar cheese, sour cream, lettuce and tomatoes tucked into a crunchy Doritos shell -- recently reached 200 million after debuting in March, making it the most successful product since the chain began 50 years ago.

 

Taco Bell is the youngest child of parent company Yum Brands (YUM), which also runs Pizza Hut and KFC. While KFC is the most seasoned of the three -- kicking things off in 1952 -- it's lagging in the U.S. by a landslide.

 

Luckily, the Dorito Taco is here to help. After all, isn't that was family is for?

 

While Pizza Hut has consistently been the strongest performer in the U.S., according to the company's annual report, Taco Bell's new product and extended hours are helping offset the poor domestic performance of Yum's fried-chicken-loving KFC.

 

Chicken and biscuits haven't completely lost their edge, though. Americans may seem to shrug off the snacks, but consumers in emerging and foreign markets are eating them up -- or Yum is at least trying to make them.

 

KFC has more than 3,700 restaurants in more than 700 cities throughout China, along with locations in India, Russia, France, Germany and some countries in Africa. And while the slowdown in China took away the appeal of such a global presence in recent quarters, the company hopes its foothold in the market will pay off in the long run.

 

For the short term, though, Yum is following the old motto "If it ain't broke, don't fix it." The company plans to keep betting on the super-popular tacos and is already testing a chile-lime version in Toledo.

 

The product may help Yum continue to compete with momentum stock Chipotle Mexican Grill (CMG), along with the big three of McDonald's (MCD), Wendy's (WEN) and Burger King (BKW).

 

It remains to be seen whether KFC will turn things around abroad and at home, or whether fried chicken is close to kicking the bucket. But for now, Yum's youngest child is doing its part to support the family.


So far this year, the stock has seen solid 9% gains.


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13Comments
Aug 30, 2012 4:14PM
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I SAY DO THE COOL RANCH TACO NEXT..DUH
Aug 30, 2012 4:54PM
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How about a spicy buffalo chicken taco.
Aug 30, 2012 6:55PM
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Smart people are staying away from KFC now because their prices have skyrocketed. Currently one piece if chicken per bucket is 2 dollars or more. Do the math, 2 dollars is a rip-off even in this economy.

Aug 30, 2012 6:34PM
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Prices have doubled and you get half the food. Burrito supremes are a joke.
Aug 30, 2012 6:01PM
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"recently reached 2 million after debuting in March, making it the most successful product since the chain began 50 years ago."

The actual number is 200 million sold.  As cited in the link :P
Aug 30, 2012 5:19PM
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More Advermucketing and ZERO reporting



Aug 31, 2012 10:58AM
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  - Use a coupon. You can't swing a dead cat without hitting a coupon!
Aug 31, 2012 10:54AM
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I would take KFC over McDonald's anytime! 
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Not for me. They're to thin and when you put hot sauce on it you never taste the shell. Regular shells for me. Also you can't have enough napkins and that  isn't enough. Bad mistake.
Aug 30, 2012 4:13PM
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