Taco Bell and Competitive Advantage

When picking a company to follow, I looked at lists of growing companies, and big Fortune 500 names, but I felt that I’d be able to better speak to a large well-documented company that I personally am a big customer of.

Needless to say, I am a big fan of Taco Bell. My own history with Taco Bell is somewhat relevant here, because that restaurant has been a fast food destination in my life because of their appeal to those with dietary restrictions. My father and wife, for obscure unrelated reasons, do not eat beef or pork, and Taco Bell, with it’s menu offering a variety of bean, vegetable, potato, and chicken items was one of the few fast food destinations they appreciate as more than mere sustenance, and I’ve seen this sentiment shared among many vegetarians.

This past summer, however, there was some upheaval regarding Taco Bell removing potatoes items (among others) from the menu. Taco Bell had installed a new CEO in 2019, and this to me appeared to be an indicator of a strategic move towards increasing competitive advantage by reducing cost through simplifying the menu, reducing ingredient inventory, and simplifying supply chains.

However, this move greatly reduced the value of Taco Bell’s services in the eyes of many for whom Taco Bell’s niche in the fast food market had few if any substitutes.

As of earlier this January, Taco Bell has announced that they are reversing course and then some, bringing the potato back to the menu, and exploring more meat-free protein options, including Beyond Meat, indicating that simplifying the menu, while a bottom-line oriented cost saving measure, may have had impacts that simple accounting measures of value overlooked.