Jan. 10, 2013 at 8:00 AM ET
Last week, Taco Bell dropped a diptych on their Facebook wall that got over 132,000 likes and in excess of 12,000 comments. “Anything could happen in 2013,” read the text above the photo. On the left, a bag of Cool Ranch Doritos. On the right, a taco.
“I'm absolutely stoked,” for the new Cool Ranch flavor of the Doritos Locos Taco, a taco inside in a shell made from a Doritos chip, Robert Checkal, 25, a public relations account executive in New York City, told TODAY. He found the first nacho flavored Locos taco “surprisingly delicious,” he said. “You think, it's probably terrible for me, it looks nasty, but it sounded new and exciting.”
It sounds like a gag-inducing gimmick, but experts say it’s sheer brilliance.
“Co-branding” like the Taco Bell/Doritos partnership represents a delicate alchemy where the qualities of two different brands are fused together and something greater than the sum of its parts is teased out. A special kind of something that also happens to pay a nice licensing fee dividend.
There have been successes like Eddie Bauer edition Ford trucks, and recently Jimmy Choos designed some Uggs. The annals of marketing history are also littered with brand extension fails. Remember McDonald’s venturing into apparel in the '80s?
This co-branding endeavor, though, is a no-brainer. Essentially Taco Bell is just changing up who supplies their crunchy taco shells, and to a supplier with which they share a corporate family history. Pepsi-Co spun off Taco Bell as part of Yum brands, and owns Frito-Lay, which owns Doritos.
The chain also already exclusively sells Pepsi at the fountain. Taco Bell gets buzz, sales, foot traffic and upsell opportunities. Doritos gets to plow a huge volume of their chip product in a restaurant setting. A Doritos Locos Taco runs $1.29, and $1.69 for a Supreme. A regular crunchy taco costs $.99, and a Supreme costs $1.39.
Macy Koch, a social brand strategist in Iowa, whose friends love Taco Bell so much they go there for their birthday parties, doesn't care that the Locos tacos cost more. “I don’t even look at the price,” she said.
“If Taco Bell just said ‘We're offering nacho and cool ranch flavored tacos,' I don't think people would care,” said Ronald Goodstein, an associate professor of marketing at Georgetown University. Nor would it would move the needle if the chips were instead made by, for instance, Utz.
But are diners eating the actual flavor, or are they eating the brand?
“It’s the same,” Goodstein said.
At this point, “Doritos” is a flavor, one that consumers are apparently excited to have surrounding their taco.
However, Jake Hamilton, a 23-year-old web developer in Indiana — and self-described fast food connoisseur — is cool on Cool Ranch. The Locos Taco's "dusty shell doesn't have any of the same flavor as a real Doritos chip," he said.
I recently sampled a Locos Taco and likewise found the Doritos dust on the crunchy shell was much less concentrated than a regular Doritos chip. I believe as a result it packed a more muted flavor than I expected. Still, I ate the whole taco. Then I tried it again on two separate occasions weeks later. Just to be sure.
When a CivicScience online poll with a sample set of 2,503 conducted last week asked “How likely are you to try Taco Bell's new Cool Ranch-flavored Doritos Locos Tacos?” only 6 percent said “very likely,” and 73 percent said “not at all likely.”
However, when the sample set was filtered for self-identified “Taco Bell Lovers,” 36 percent said “Very likely.”
“It's the exact opposite of the health trend,” said Goodstein. Instead, Taco Bell lasered in on its core customer base, figured out what they love, and gave them more of it. More flavor. More “excitement.” 50mg more sodium.
At a meeting with investors in May 2012, Nation's Restaurant News reported Taco Bell's CEO Greg Creed told the audience that its customers have changed their thinking from “food as fuel” to “food as experience.” Creed said, “to be a better Taco Bell, the obvious solution was the Doritos Locos Tacos.” Qithin 10 weeks of their launch, The chain sold 100 million Locos Tacos
Creed added, “People love it, it’s driving frequency among our heavy users, and we’re selling it at a 30-cent premium. … It’s really a platform we can build off, not a one-off LTO [limited time offer]."
The CEO announced Taco Bell will launch “Flamas” flavored Doritos Locos Tacos in the latter half of 2013. He predicted selling 300 million Locos Tacos next year.
Therefore, Taco Bell doesn't care if you think all this is gross. For years now, fast-food chains have been honing in on the loyal subset of their customer base that drives most of their sales.
In restaurant-speak, these are the “heavy users” and “super heavy users.” Burger King's research showed that their top 15 percent of customers drove 40 percent of their sales, prompting a focus on the “superfan” and launching such culinary creations as the 1,310 calorie BK Ultimate Breakfast and “Stackers,” with double, triple and quadruple patties, heaped with yet more meat.
Playing directly to the hungers of this hardcore user base is like fast-food chain “Moneyball" — a reference to the 2003 book and 2011 movie of the same name that tell the story of how the 2002 Oakland A's beat their richer competitors by tossing out conventional measurements of player performance. Instead the A's front office honed in on numbers like on-base percentage and slugging percentage. Their analytic approach, also known as "sabermetrics," showed these statistics were the real drivers of what truly wins ball games: scoring the most runs.
The analog for fast food is that chains have figured out it isn't customer service, great specials, or fast, friendly, service that really gets customers coming back. It's more bacon. Or slapping two kinds of junk food together into an irresistible, crave-inducing combination and charging a markup.
"[Taco Bell] hit the grand slam," Rob Stone, vice president of licensing at Excel Branding, told TODAY. "They can just work on this project for the next 10 years."