Taco Bell Thinks Fresh

January 20/Chicago/Reuters -- Yum Brands Inc.'s Taco Bell will begin testing an expanded, more upmarket menu that focuses on fresh on January 26 in Louisville, Kentucky, and Bakersfield, California.

If it is a hit, the chain's so-called Cantina Bell menu could be offered in Taco Bell's U.S. restaurants by the end of the year.

Taco Bell's sales at established restaurants were flat in the first quarter, fell 5% in the second and were down 2% in the third. It should get some help from the national debut later this year of Doritos Locos Tacos -- the shells are made from the popular nacho cheese snack chips -- and the introduction of breakfast in 800 restaurants in the U.S. West later this month.

However, the real opportunity for Taco Bell and many other restaurants is in serving "fresh" food to a growing number of diners who are willing to pay a bit more for it.

The roughly 5,600-unit chain's Cantina Bell test menu was created by Miami chef Lorena Garcia, who appeared alongside Chipotle founder and co-chief executive Steve Ells on the reality television show "America's Next Great Restaurant." It includes $5 tacos, burritos and bowls. Those items also are staples at Chipotle, where they cost around $8.

Other Cantina menu offerings will be familiar to Chipotle devotees: black beans, cilantro rice and grilled corn salsa.

Restaurants that sell food made with fresh, higher-quality ingredients are a bright spot in the otherwise stagnant restaurant industry, whose overall sales are expected to lag population growth this decade.

Chipotle, which uses hormone-free meats and organic produce when possible, is a good example. It reported industry-leading same-restaurant sales growth of 11.3 percent in the latest quarter, compared with Taco Bell's 2 percent decline in the third quarter.

Taco Bell said its Cantina menu was designed with fast-food diners in mind and that testing suggests it can broaden Taco Bell's customer base without turning off the hungry young men who frequent the brand.

While Cantina menu prices are higher than the $1 to $3 items commonly found on Taco Bell's menu, $5 is not a new price point for the chain. Taco Bell combo meals and premium products -- like the XXL Grilled Stuft Burrito and the Fiesta Taco Salad -- can cost $5 or more.

Wall Street analysts are reserving judgment, since Taco Bell has had a history of misses with diet and healthy fare. 

"You can be a little ahead of your customers but not so far away that you can't even nudge them in that direction," said Sanford C. Bernstein analyst Sara Senatore.

Regardless of the outcome of the test, Garcia will leave her mark on the chain. This summer, Taco Bell will start using her guacamole and fiesta salsa in its food.

Wall Street analysts said meaningfully different food product launches have been too few and far between at Taco Bell in recent years. At the same time, the dismal U.S. economy prompted other restaurants to invade the low-price arena that is Taco Bell's sweet spot.

 From the January 23, 2012, Prepared Foods' Daily News.