Please ensure Javascript is enabled for purposes of website accessibility

Taco Bell Creating New 'Fast Social' Restaurants With Cantina Chain

By Rich Duprey - Mar 14, 2020 at 6:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Mexican restaurant chain wants to create a new category of fast-food dining.

Taco Bell has big plans for its tech-forward Cantina restaurants, with an intention to shake up the quick-serve space with what it's calling a "fast social" style.

The Mexican food chain is making the restaurants both more experimental and more experiential, a key growth initiative by Yum! Brands (YUM -0.08%) as it attempts to fashion Taco Bell into a $20 billion brand by the end of the decade.

Interior of a Taco Bell Cantina

The Las Vegas Taco Bell Cantina also features a gift shop. Image source: Taco Bell.

Putting the social into fast food

The higher-end, urban-oriented Cantina is positioned as a fast-paced, tech-heavy chain featuring self-order kiosks and digital menu boards. Yum! Brands opened its 60th store in the fourth quarter, but eventually, it will be expanding the concepts into its 7,000 traditional Taco Bell restaurants.

What currently differentiates Cantina from other Taco Bells is the absence of a drive-through window, which currently represents 70% of its business. Instead, the restaurants are designed for cities with high levels of foot traffic and feature open kitchens, custom menus with shareable appetizers, and alcoholic beverages such as beer, wine, sangria, and alcohol-infused icy drinks called Freezes. 

The idea behind Cantina is to have customers stay and socialize, so they're also loaded with lots of charging stations for mobile devices. The Las Vegas location also includes a VIP lounge and a DJ booth, and in true Vegas style, there's a wedding package available.

Adding more digital highlights

This move also suggests Taco Bell may be trying to make the concept more than a buzz-worthy catchphrase. It looks to be fast food with a highly social atmosphere. Although remaining mum on exactly how it plans to achieve a lot of its lofty goals, Yum! Brands said two new Cantinas highlight the direction it intends to take.

At the Times Square location in New York City, Taco Bell promised to infuse technology into the restaurant by utilizing new digital features for a smoother ordering experience, as well as showcasing digital moments throughout the store.

Similarly, its San Ramon, California, restaurant would see the fast-social concept become "centered around gaming." Whether that means it will just be a chance to play a few video games or will be more like rival Chipotle Mexican Grill, which is sponsoring an e-sports team, remains to be seen.

Time to play ball

Gaming presents a big opportunity. Data analytics firm Newzoo says digital gaming is a $68 billion global opportunity and growing, and it expects the market to grow at an 11% compounded annual growth rate to hit almost $94 billion by 2022.

The meteoric growth trajectory has piqued the interest of numerous non-traditional gaming outlets to become more closely entwined. Toymaker Hasbro, for example, has become a major sponsor of video gaming tournaments. Teen and tween retailer Five Below invested in a gaming infrastructure construction company and is building stores adjacent to the Localhost gaming hubs. Most recently, Target announced it had transformed its San Francisco concept store into a game room where all of the newest technologies are available to sample.

A chance to experiment

Taco Bell's president and global COO, Mike Grams said, "We are once again pushing the boundaries of the traditional QSR dining experience by setting the stage for our 'fast-social' restaurants, which introduce dynamic dining rooms and lean into social gatherings."

While liquor licensing could become a challenge for some of the restaurants -- it was shot down for one in one Detroit suburb -- they could also test unique menus in some of the locations. For instance, Grams told CNBC that restaurants might innovate by offering an all plant-based menu.

Perhaps what Cantinas offer Taco Bell and Yum! Brands most is the chance to stand out and differentiate its quick-serve offerings in a way few other fast-food restaurants can. It may be exactly what's needed to turn Taco Bell into a $20 billion business.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Yum! Brands, Inc. Stock Quote
Yum! Brands, Inc.
$113.39 (-0.08%) $0.09
Target Corporation Stock Quote
Target Corporation
$143.25 (-0.88%) $-1.27
Hasbro, Inc. Stock Quote
Hasbro, Inc.
$83.84 (-0.42%) $0.35
Chipotle Mexican Grill, Inc. Stock Quote
Chipotle Mexican Grill, Inc.
$1,285.49 (-0.26%) $-3.38
Five Below, Inc. Stock Quote
Five Below, Inc.
$117.16 (-1.92%) $-2.29

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.