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Taco Bell Tests Subscription Pricing Model | November 2021

Published Date
Author Linda Ferrell

 

Taco Bell, one of the fastest-growing franchises in the United States, began testing a monthly taco service in select restaurants in Tucson, Arizona.

Taco Bell Engages in Test Marketing

This is an example of test marketing where a company executes a trial minilaunch of a product or service in select areas that represent the potential market. This allows a thorough test of the marketing strategy in a natural environment and allows Taco Bell to identify weaknesses and adjust accordingly. By the time the test ends on November 24, it will have spanned roughly ten weeks.

Taco Lover’s Pass

The app-based subscription program, which is being tested in about 20 restaurants, is priced between $5 and $10 per month, depending on the location. This monthly fee gives subscribers one taco a day, offering a variety of tacos to choose from, including a soft taco, spicy potato soft taco, crunchy tacos, and its Doritos tacos.

Normally, the tacos included in the Taco Lover’s Pass are only a few dollars each, making the program a good value for consumers who visit often. This could increase customer frequency as people head to the restaurant for their daily taco. Plus, many people taking advantage of the program will likely order additional items beyond their subscription taco. This could increase average ticket totals.

Subscription-Based Pricing Models

Subscription-based pricing models where customers pay a weekly, monthly, or annual fee in exchange for a product or service are seen with entertainment streaming, software, fitness services, and more. Recently many restaurants have experimented with the pricing strategy. For example, Panera Bread introduced an $8.99 per month coffee program.

Taco Bell hopes the program will turn casual customers into regular customers and grow digital sales. Digital sales are a core focus for Yum! Brands, Taco Bell’s parent company. Digital sales are particularly valuable because restaurant owners are provided with more data about their customers such as ordering habits.

In the Classroom

This article can be used to discuss price (Chapter 11: Customer-Driven Marketing), test marketing, and pricing strategy (Chapter 12: Dimensions of Marketing Strategy).

Discussion Questions

  1. What is a subscription pricing model?
  2. How could Taco Bell benefit from a taco subscription program?
  3. Would you consider subscribing to your favorite restaurant? Why or why not?

This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell and Linda Ferrell.

Sources:

Amelia Lucas, "Taco Bell Tests 30-Day Taco Subscription to Drive More Frequent Visits," CNBC, September 13, 2021, https://www.cnbc.com/2021/09/13/taco-bell-tests-30-day-taco-subscription-to-drive-more-frequent-visits.html

Jordan Valinsky, "Taco Bell Wants to Sell You a 30-Day Taco Subscription," CNN, September 14, 2021, https://www.cnn.com/2021/09/14/business/taco-bell-subscription-trial/index.html

Saahil Desai, "It Has Come to Subscription Tacos," The Atlantic, September 16, 2021, https://www.theatlantic.com/technology/archive/2021/09/taco-bell-subscription-netflix-for-tacos/620109

About the Author

Linda Ferrell is the Roth Family Professor of Marketing and Business Ethics in the Raymond J. Harbert College of Business, Auburn University. She was formerly Distinguished Professor of Leadership and Business Ethics at Belmont University. She completed her Ph.D. in business administration, with a concentration in management, at the University of Memphis. She has taught at the University of Tampa, Colorado State University, University of Northern Colorado, University of Memphis, University of Wyoming, and the University of New Mexico. She has also team-taught classes at Thammasat University in Bangkok, Thailand.

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