Taco Bell Adds Breakfast to Challenge Starbucks and McDonald’s

Taco Bell, famous for the fourth meal of the day, enters into the breakfast world. The restaurant chain introduced a breakfast menu today at about 800 restaurants. If all goes well its new breakfast burritos will be on menus nationwide by the start of 2014, said Taco Bell Chief Marketing and Innovation Officer Brian Niccol. Taco Bell is a subsidiary of Yum Brands Inc. (NYSE:YUM) who also own KFC and Pizza Hut.

Taco Bell’s breakfast menu will include burritos with eggs and either sausage, bacon or steak; sausage and egg wraps; hash browns; hot or iced coffee, and orange juice. Taco Bell is working with recognizable brands such as Johnsonville and Seattle’s Best — look out Starbucks (NASDAQ:SBUX) and McDonald’s (NYSE:MCD). Menu items range from 99 cents to $2.79.

Taco Bell’s break into breakfast realm comes at a time when restaurants are in competition due to recession, but it’s known that the morning meal is very important. According to research firm NPD Group, over the past five years, breakfast and snacks made up almost all of the industry’s growth. “Right now, we’re not getting our fair share of that,” Niccol said. “We want to get our fair share and then some.”

Last year Taco Bell was hurt by a lawsuit claiming that its seasoned beef filling did not have enough beef. Taco Bell said the claim was not true and spent millions in advertising to preserve its image. The suit was dropped three months after it was filed. Taco Bell has struggled to bounce back since. Taco Bell accounts for about 60 percent of the profit for Yum, but revenue at Taco Bell restaurants dropped in each quarter since the suit was filed.

Some Taco Bell restaurants are open around the clock, while others open around 8 or 9 a.m. That’s later than most other fast-food chains open for breakfast. It’s a reflection of Taco Bell’s core customers — the 18- to-20-something crowd that’s usually not up early. “What we found is, they’re not the customer that shows up at 6 a.m. for breakfast,” Niccol said. “We can get those guys on board, they become the evangelists and then we can start adding additional hours for people that want breakfast at 6 a.m. or 7 a.m.”