Taco Bell expands citified colossus, in The Urbane Franchisor
Photo by Nicholas Upton
Four years ago Taco Bell’s leadership issued a historic decree to its real estate team: bring us your tired, your urbane, your affluent huddled masses yearning for tapas, frozen margaritas and glistening pints of beer. This quest to reach urban cowboys in places where drive-thrus are prohibited or prohibitively expensive was the start of Taco Bell’s citified Cantina concept that first appeared as an intriguing flash in the pan.
Now on the cusp of a new decade, the Cantina lives on as these urban casual restaurants are thriving, proliferating and still evolving. Likely a relief to Yum Brands’ upper management, big-city residents and workers have taken a shine to these cooler Taco Bells with big-screen TVs, alcohol, tapas and locally-inspired decor that are intended to be the antithesis of mass-produced chain ambiance.
Authenticity and familiarity have been pillars of the company’s plan from the start. Now there are 23 Cantinas in the United States, and Taco Bell and its early-adopting franchisees are still tweaking the concept based on the feedback they’ve gathered from this most urban of franchised experiments. After encouraging franchisors to unlock the potential of urban markets in these very pages, Taco Bell’s Cantina remains the best example of modern thinking in an industry that’s still largely stuck out in the ‘burbs.
Just before the holidays, Taco Bell further upped the ante with the announcement it opened three new Cantinas in Manhattan, an applause-worthy milestone in light of the countless brands that have tried their best, and ultimately failed at carving up the Big Apple.
Taco Bell’s new Cantina at 500 8th Avenue is one of several locations in NYC and a good example of the concept’s urban aesthetic.
Step inside a Cantina and you’ll see nothing unexpected for a fast-casual-slash-casual concept with a liquor license: nicely finished wood accents, funky artwork, Edison-bulb light fixtures, and pre-existing niceties like tin ceilings or brick walls saved whenever possible. This is boilerplate modern restaurant design, but then you remember you’re technically in a Taco Bell—and it’s leagues more pleasant than anything connected to a drive-up window.
The Cantinas have also proven an ideal laboratory for Taco Bell to try out other high-tech upgrades, which has so far included kiosks, mobile ordering and third-party delivery partnerships.
So far, the company has found success in a variety of urbanized settings, from stadiums and college campuses to central business districts teeming with collared shirts and disposable income. The Cantina off the Las Vegas Strip even has a DJ booth, VIP lounge and a small wedding chapel, proving that all ideas are truly on the table at Taco Bell HQ.
“We figured out it works in the high-density traffic areas, and that open kitchen and that experience we’ve created inside the restaurant works really well,” said Mike Grams, chief operations officer and North America GM at Taco Bell. He noted there’s even a tiny 1,200-square-foot beachy Cantina in Newport Beach, California, right next to a fishing market, donut bakery and Crab Cooker.
Zeroing in on the Northeast, Grams said that area was part of the Cantina’s genesis, as the company and its franchisees were brainstorming about how to reach consumers who harassed the company on social media requesting a Taco Bell in their own neighborhoods—places were drive-thrus were a clear no-go.
“Vegas would not have been successful if I didn’t have a franchisee on the other end of that who has actually helped us develop it,” Grams said. The same thing goes for Brooklyn and the New York suburbs. He added the company is working on a third version of the concept, but declined to get into specifics other than saying “the idea will still be the same.” The corporate office has also drawn on learnings from its international locations that have several similarities to the Cantinas.
Like any experiment, there have been some adjustments. Two Cantina test locations closed “when the test concluded” in Fayetteville, Arkansas, and Royal Oak, Michigan. With different traffic patterns and customer behavior in downtowns versus suburban power centers, Grams said Cantinas aren’t judged solely by their profitability. “That’s where delivery comes in,” he said, suggesting that delivery has significantly expanded day parts in the majority of its urban locations.
Whether it’s the Cantina or Taco Bell’s other riffs on city concepts going forward, Grams said he could see 300 locations from sea to shining sea in the United States, but was careful to hedge that could include future variants or a “Cantina light” iteration that’s yet to debut.
Building out Chicago
Illinois franchisee Neil Borkan owns 62 Taco Bells across the Midwest, five of which are Cantinas in the Chicago metro. He recalled an early conversation with former Taco Bell CEO Brian Niccol, who was convinced an urban format would go gangbusters in Chicago’s densest neighborhoods—especially where drive-thrus aren’t possible due to economics or municipal codes.
“You just couldn’t afford the lot to build a drive-thru, so he said, ‘Neil, let’s put some things on paper and see how it goes and where it goes,’ so that’s really how it was born,” Borkan said.
His first Cantina—the second ever built—opened in December of 2015 in the Wicker Park on the northwest side of the city. He has another one in the South Loop, along with one in Logan Square and the newest in Lincoln Park, which opened at the end of December.
Borkan added that the Cantinas are significantly less expensive than building new freestanding stores with a drive-thru, but his favorite part is the flexibility afforded when designing the interiors, with all putting their own spin on the Cantina concept.
Drinks are the first thing most Yelp-ers mention after strutting into their first Cantina, but food has remained the largest item on the P&L. Borkan’s first Cantinas saw alcohol sales as high as 30 percent when those locations were new, but alcohol sales have since settled down closer to 10 to 12 percent of sales, an amount he categorized as a very minor part of the business, “but people like the fact that it’s there.” His Cantinas serve three beers, a wine-based drink and a frozen cocktail base that can be juiced up with rum, tequila or vodka. The company so far hasn’t gone for his idea to add a coffee drink with Baileys or Kahlúa.
Choosing suitable locations has been the biggest challenge for his operation, and Taco Bell’s headquarters staff provided significant resources to help select locations with the proper visibility, demographics and foot traffic. “They really put the resources into finding how many people walk by, what’s the intent to walk in and what would make a successful Cantina and what wouldn’t,” he said. “Don’t even bother if it’s marginal.”
Tom Kaiser, pictured on previous page, is senior editor of Franchise Times and writes about urban tales in franchising in each issue. Send story ideas to firstname.lastname@example.org