Taco Bell to cook up breakfast burritos

The fast-food chain makes a push into morning sales, but can it compete with heavyweight McDonald's?

By InvestorPlace Jan 26, 2012 9:46AM

By Jeff Reeves


Taco Bell is largely responsible for the late-night snacking push across the fast-food world as one of the first major chains to stay open into the wee hours -- as late as 4 a.m. at most locations with its Fourthmeal menu.

 

Now the Mexican-style restaurant is looking to stay open so late that it'll actually open early. Taco Bell is introducing a breakfast menu at almost 800 restaurants.

 

The signature item? What else but a breakfast burrito.

 

According to top marketers at Yum Brands (YUM) -- the corporate parent of Taco Bell, Pizza Hut, KFC and other fast-food brands -- the chain hopes breakfast burritos will be cooking up nationwide by the start of 2014. But the first offerings are actually cooking up this morning, mostly in about a dozen Western states. Those lucky Firstmeal menu states include California, Arizona and Colorado. Breakfast hours start at 8 or 9 a.m., depending on location, and wind down at 11 a.m.

 

What's being served? Actually, some very impressive brands fill out the menu, including Johnsonville sausage, Tropicana orange juice, Cinnabon sweets and Starbucks (SBUX) Seattle's Best coffee.

 

Diners can order a 99-cent sausage or bacon-and-egg burrito or a $2.79 Grande Skillet Burrito with all the works. Or make them a combo with hash browns.

 

The move into breakfast shouldn't surprise anyone. McDonald's (MCD) has long been the standard bearer of fast-food breakfast, with some estimates pegging as much as 25% of sales for the Golden Arches coming from Egg McMuffins and morning coffees.

 

That makes it a big breakfast target. In 2010, Burger King completely revamped its menu to get into the a.m. action, with the new BK breakfast menu boasting an upscale cibatta sandwich. And Subway has been doing its darnedest to establish a breakfast following.

 

Taco Bell's push may spark curiosity, but its very late entry makes it questionable whether sales will find traction. It's harder to lose money on breakfast, since eggs are much cheaper than beef and veggies these days, but that doesn't mean Taco Bell has found a cash cow.

 

It's also worth noting that Taco Bell has been revamping much more than just breakfast. The company actually just launched items for its standard menu that are meant to appeal to fast-food consumers focused on fresh options.

 

Yum Brands will offer its next regular profit report on Feb. 6, so we'll see whether developments like these have helped the company keep up its streak of increasing sales. Yum has posted seven straight quarters of year-over-year growth.

 

Will the roll-out of Taco Bell breakfast help keep sales momentum strong? Maybe, maybe not. But it's certainly a reasonable strategy to grow Taco Bell's customer base.

 

Much more reasonable, say, than a recent harebrained scheme at Burger King to launch home burger delivery.

 

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19Comments
Jan 26, 2012 12:46PM
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I hope they bring back the country breakfast burrito that had sausage gravy in it.  I use to love their breakfasts  back in the early 90s.
Jan 26, 2012 12:25PM
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I hope the breakfast at Taco Bell is better than at Subway.  I recently got a Subway breakfast sandwich and it was the worst thing ever.  I have not been back and do not plan to ever eat breakfast there again.
Jan 26, 2012 2:01PM
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I've been waiting for years for them to bring back breakfast I ate it in Gatlinburg,TN and near the Tri-cities airport in Blountville,TN it was delish. They need to be 24 hr with breakfast all day like sonic has.
Jan 26, 2012 4:29PM
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Nothing like jump starting the flatulence to make the day at the office more enjoyable.
Jan 26, 2012 5:54PM
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Still waiting for the day that Taco Bell will be a fancy restaurant like in the Movie "Demolition Man"
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I quit Mickey D's early on when I stood in line for 20 minutes for an egg McMuffin and when I came to the top of the line, I was told the magic hour of 10 AM had arrived by 10 seconds, so I was out of luck, (or breakfast).

So it all depends on when Taco Bell shuts it off. 

I'm pretty happy with the all day breakfast at Jacks.

Jan 26, 2012 8:43PM
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  the Taco Bell's here in our area (Ohio) have been serving breakfast for over a year now ... the skillet burritos are actually pretty good

Jan 26, 2012 3:57PM
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This isn't new in Colorado.  They tried in the 90's and it was pretty good.  Then they discontinued it a few years later.
Jan 26, 2012 5:23PM
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Yea they did the breakfast burritos here in St Louis, too.  Hmmmmm scrambeld eggs, sausage gravy, tater-tots and cheese.  Way better than Mcdonalds and cheaper too. Hope it will be again.....
Jan 26, 2012 8:11PM
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Why leave work for breakfast burritos ? We have two guys who come here every day and drive right into the shop not 20 feet from me :) yum.
Jan 26, 2012 6:30PM
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What, no breakfast tacos?

They are a staple of the diet down here.

As for calling the BK idea of delivery "hairbrained", where is there any evidence of that? It could well work out very favorably for them. But it's premature to call it hairbrained since they haven't even started it yet. I used to live where we could get burgers delivered, I realy liked it.

 

Jan 30, 2012 9:06AM
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Hmm.... I thought the Taco Bells that were open 24 hours already served breakfast.  About 15 years ago, there was a Taco Bell on the way to my workplace, but no McD's or BK.  I would often stop in for a breakfast burrito and coffee.  I suppose the news here is that Yum is going to open MORE restaurants serving breakfast, but the people that write the news didn't realize this was a new move.  Next thing you know, they're going to report that some Wendys are going to open for breakfast.
Jan 26, 2012 8:19PM
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I thought they always had the breakfast burrito, with taco or chili raheno? sause.
Jan 26, 2012 7:26PM
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Ken Leatherbarrow,  I like you find the breakfast cut-off time too early.  I have not been able to find this answer, my one and only Taco Bell  is not slated to be serving breakfast.

Jan 26, 2012 5:48PM
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Yummy, I hope it works out.  2014 seems so far away though!
Jan 26, 2012 5:45PM
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It's about time!  I've been hoping they would start serving breakfast.  I was hoping it would be spicy and different, though.  It sounds pretty much  like everyone else's offerings.
Jan 26, 2012 7:18PM
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I think that all fast food restaurants  should be open 24/7. Dependent upon the actual sales
in their area. All year long both night and day, people travel. It might be nice to see on an exit
sign that these restaurants or fast food franchises are now open 24/7.
I really don't however support a combo franchise such as Kentucky Fried/Taco Bell.
Each should be separate Restaurants in separate buildings. This way they don't have conflicting hours of operation.
Why not include a breakfast  taco as well? Contact  me for more information.
Get away from Starbucks coffee which is way over priced and come into the real world.
The coffee selling giants of this country are Starbucks and Dunkin Donuts.
The price of a cup of coffee is outrageous. A specialty coffee, or lets say a collate is even worse at about $4.00 each.


Jan 26, 2012 3:44PM
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So Taco Hell is trying to get the breakfast crowd? Best of luck you all potential customers!
Jan 26, 2012 10:17AM
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dont eat at taco bell ,but i own the stock ,,,keep eating america
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