Taco Bell Beats Chipotle to the Quesarito Punch

Yum! Brands' (NYSE: YUM  ) Taco Bell is trying to wrestle the breakfast crown from McDonald's (NYSE: MCD  ) since rolling out breakfast nationwide three months ago, but that doesn't mean it's neglecting its core lunch and dinner menu.

Come tomorrow, Taco Bell is rolling out the Quesarito nationwide. Just as the name suggests, it's a quesadilla and burrito literally rolled into one. A cheesy quesadilla is used as the flour tortilla wrapper of a burrito that itself is stuffed with Latin rice, Chipotle sauce, reduced-fat sour cream, and your choice of protein.

It's Taco Bell, so you know this is cheap. It starts at just $1.99 for the seasoned beef version. Go with shredded chicken and you're at $2.79, or it's $2.99 for steak.

And because it's Taco Bell, you also know this isn't going to do your gut or arteries any favors. The shredded chicken Quesarito weighs in at 620 calories and 30 grams of fat. That's the healthiest -- or perhaps least unhealthy -- option of the three.

It probably also isn't a surprise to see that Taco Bell isn't the first quick-service Mexican restaurant to crank out the Quesarito. If the name sounds familiar, it's because it's part of the Chipotle Mexican Grill (NYSE: CMG  ) secret menu. Chipotle will make many items that aren't on the posted menu. The more popular items include a quesadilla and a kid's meal, but many adventurous locations will give the Quesarito a shot if you ask. Now that Taco Bell is taking the concoction national after testing it out on its own, it leads one to wonder whether it will help or harm Chipotle.

Yum! Brands claims that the Quesarito has been its most successful product in a test market since the Doritos Locos Tacos two years ago. We know how well that did in lighting a fire under Taco Bell's sales, as it has sold 825 million of them. The combination of the Doritos Locos Tacos with the rice bowls that were added a few months later helped lead Taco Bell to a rare victory over Chipotle in terms of same-store sales growth.

That will be easier said than done. Chipotle's coming off a first quarter where comps soared 13.4%. After several strong quarters, Taco Bell's comps declined 1% during the same period. That should change for Taco Bell this time around. The one-two punch of breakfast that was introduced in late March and now the Quesarito should propel Taco Bell into positive territory this quarter. It's battling on two fronts -- attacking the morning dominance of McDonald's with breakfast and hitting close to Chipotle's home with Monday's new menu addition -- but that doesn't mean it's losing its focus.

A Quesarito commercial hits your TV on Thursday. Chipotle probably won't mind. If anything, it will draw attention to its off-menu item made with better ingredients. This isn't the Doritos Locos Tacos attack, where Chipotle didn't have anything to offer in response. If the country's health habits are on a downward spiral to the point where folks are demanding burritos in quesadilla wrappers, Chipotle will be ready and perhaps benefit from the more educated and decadent market.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 09, 2014, at 7:25 AM, lowmaple wrote:

    Well it's kind of Taco Bell to sell samplers so we vaguely know what they'll be like at CMG.

  • Report this Comment On June 09, 2014, at 1:21 PM, plenow wrote:

    Do we really think there is much of a crossover market between the true Taco Bell customer and the Chipotle customer? Do we really think that Taco Bell was at all inspired by a secret menu item at Chipotle. The answer to both is no.

    Simply by looking at Taco Bell's plans for U.S. Taco Company answers that there is minimal crossover between the brands' customers.

  • Report this Comment On June 09, 2014, at 4:12 PM, briamazing wrote:

    Enough whining. 620 calories isn't that much. Neither is 30 grams of fat, it's barely half a day's worth. Three meals at 620 calories is less than the recommended amount for a teenager – Taco Bell's most heavily targeted demographic judging by its social media profiles. Food snobs these days. Besides, Chiptole may have "better ingredients" and swankier marketing, but a wimpy veggie burrito with no cheese at Chipotle is still more than 620 calories.

  • Report this Comment On June 09, 2014, at 5:09 PM, TMFKris wrote:
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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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