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In an unexpected turn of events, Yum! Brands' (NYSE: YUM ) Taco Bell chain has accomplished an extremely impressive image rehabilitation. Though far from its more refined competitor Chipotle Mexican Grill, Taco Bell has spruced up its menu substantially, conducted a massive PR effort involving a popular chef, and just now has pulled kids' meal items from the menu -- the first of its kind to take such a drastic move in the name of controlling childhood obesity. The move will have a meaningless impact on sales, but more importantly, it publicly addresses the obesity crisis in the U.S. and takes tangible maneuvers in decreasing its contribution to said crisis. A costless endeavor, abolishing the kids' meal will create tremendous goodwill among a new population of health conscious Americans.
Healthy tacos? Not exactly.
It's not that Taco Bell is even remotely healthy, though the company has made an effort to offer lower calorie, lower-fat items, similar to competitors such as McDonald's and Wendy's. And, in the future, it's unlikely we will see a Taco Bell menu full of locally sourced, healthy fare that you would be proud to instagram with the hash tag #fitlife. But none of that is the point in this; the point is that Taco Bell has taken a tremendous step in the right direction by simply removing its products that are specifically designed to entice children.
Long has been the strategy, especially for McDonald's, of developing a deep-seeded, nearly addictive relationship with children via plastic, hopefully non-chokable toys, that go along with the delicious and greasy meal of a burger and fries. Studies have shown that kids are conditioned to literally love McDonald's and become lifelong customers based on these efforts. And you thought the NSA was scary.
Icing on the cake for Taco Bell's decision to end the child mind-controlling/belly fattening strategy is that kids' meals account for half a percent of sales. Investors should not expect any material loss from this move, and the company will only benefit from the positive public voice behind it -- a rare luxury for a fast food company.
Best in show
Taco Bell was once the no man's land of fast food -- a salmon-colored pit of ambiguous Mexican-influenced grub. But its multi-year turnaround strategy, in retrospect, looks beautiful.
The company embraced its position as late night college food by creating fourthmeal -- the concept that if you are up late enough and have altered your consciousness, you deserve an extra meal at the end of it all. From then, it introduced a Fresco menu --healthier options without fatty ingredients like sour cream and cheese. On the opposite end came the Doritos Locos Taco -- its best selling product ever, and one that will continue to enhance the bottom line in the near future. Though simple in theory, marketing analysts thought it was a brilliant move for the company.
Now they are the white knight of fast-food shops by removing kids' meals and saving the world. It doesn't matter that they barely sold any of them.
Somehow, Taco Bell became the best PR story in all of fast-food land, and it's going to show up on Yum!'s income statement.