FROM HANDSHAKE DEALS TO EXPERIMENTS AT HOME DEPOT, THE HISTORY OF TACO BELL'S DISRUPTIVE FAUX CHEESE-DUSTED TACO.
In early 2009, three years prior to Taco Bell's 50th anniversary, CEO Greg Creed was already experiencing something of a midlife crisis. I said:
"Our target audience is [customers] in their 20s. Turning 50 makes us sound old, and I didn't want to sound old."
Creed explains.
" 'When we have our birthday, I don't want a cake or a celebration.'"
So he issued a bold directive to his team instead: "I said, '[let's] reinvent the crunchy taco,'" Creed recalls.
Taco Bell brand marketing director Stephanie Purdue, who helped Creed write the original team brief said.
"He was really looking for a big innovation to coincide with our anniversary."
Creed explains:
"If you look at all the buns the burger boys sell, and the bread at Subway, they are forever coming up with a new bread bun. The crunchy taco: It was yellow and made of corn. We sold a couple billion of them, but there had been no innovation."
He gave his staff until March 2012--slightly under three years--to pull off a complete rethink of traditional Mexican cuisine.
The team soon assembled for an all-day ideation session at Taco Bell headquarters, where 30 different product concepts were considered, Purdue says, including new forms of burritos, nachos, and taquitos. But one idea, from Doritos-maker Frito-Lay, stuck out: a Doritos-based taco shell pocketed with Taco Bell ingredients. Purdue says.
"It was basically an image [of this taco] on a piece of paper, with a written description. I don't know what technology they use. We didn't even taste it; it was just more of, 'Hey, this is what it could look like.' It was like, 'Holy crap!' Nobody had ever done this before: turning a Dorito into a taco shell. It was just mind-blowing at the idea stage."
Steve Gomez, Taco Bell's food innovation expert, recalls seeing the first mock-up. He says.
"Every day I see a lot of concepts--sketches on paper, written words about products--and my job is to turn those products into reality. But in all my years as a product developer, I've never seen a concept like this. The product didn't even exist yet, and already people knew this idea was going to be huge."
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Like any serious renovation, Taco Bell's started with a trip to Home Depot. It was April 2009. To show executives how the companies could fuse the flavor of Doritos with taco shells. Creed recalls, with a chuckle.
"The dev teams basically went out to Home Depot to buy a paint-spray gun, and then sprayed [Doritos] flavoring onto our existing yellow corn tacos. It was pretty funny watching people from behind glass spraying our tacos with a paint gun. But it was enough for us to know conceptually that we had a big idea."
Creed jokes now that,
"Really smart people got together with a spray gun and the rest is history."
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But that glosses over the true story behind the Doritos Locos Taco, as it came to be known. After the company completed a round of concept testing with 200 consumers, which indicated stellar demand for the Doritos Locos Taco, Gomez's team created an edible version using Taco Bell's yellow corn shell and Doritos' Nacho Cheese seasoning. Gomez recalls.
"The way you might put powder sugar on cookies, that's basically the way we applied this seasoning [to our tacos]."
At last, consumers got a taste. But after all the concept drawings and testing, trips to Home Depot, and prototype development, initial consumer taste tests flopped, to the disappointment of the team. Purdue says.
"They completely called us out."
Gomez recalls feeling crushed. He says.
"It was total buzzkill in the room."
Even though the first tests failed to impress sample consumers, Taco Bell had forged the foundation for its biggest innovation in decades: the Doritos Locos Taco--either a revolutionary product or a low point for fast food, depending on your perspective. But there's no debating the success of the DLT, as it's called internally. Since it launched in early 2012, Taco Bell has sold more than 450 million Doritos Locos Tacos. A Cool Ranch follow-up, introduced in March, has already sold millions of units. Creed says.
"We had to hire about 15,000 people last year--two to three per restaurant--in order to handle the sales growth and demand of the Doritos Locos Tacos business."
Taco Bell is now planning to roll out more Doritos-flavored products, and Frito-Lay has even announced that it will offer Taco Bell-flavored Doritos.
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The real tale of how the DLT emerged from disappointing tests to become a massive hit involves a range of challenges and innovations, especially in engineering and manufacturing. Creed says.
"We knew this was a breakthrough idea, so we put on our relentless hats and were determined to not let [this thing] beat us."
For the first group of testers, the problem was the taste. The combination of Doritos with Taco Bell's shells didn't capture either the zest of Doritos chips or the punch of Taco Bell's tacos. Rather, they formed a displeasing amalgamation of the two flavor profiles. Gomez says.
"This idea of merging a chip and a shell together--it sounds simple, but it's very hard to make a reality. To tackle this huge challenge, for months we shared know-how between the technical teams at Frito-Lay and Taco Bell."
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The central issue was that Taco Bell's shells used a different type of corn masa than Doritos chips. But it wasn't simply a matter of adjusting the recipe. In order to create the DLT, the teams had to consider everything from seasoning mechanics to the taco's structural integrity throughout 2010 and 2011. Creed says.
"Frito-Lay wanted what's called a 'teeth-rattling crunch,' so they wanted it to snap and crunch more than the current Taco Bell shell snaps and crunches. So we had to get that formula changed, then we had to find a way to deliver the flavoring, and then the seasoning. I mean, it was actually important that we left the orange dusting on your fingers because otherwise, we're not delivering the genuine Doritos [experience]."
All in, the teams experimented with more than 40 recipes over two years. During that time, the teams faced several roadblocks. Creed says.
"Remember, a taco shell has to bend, so we had to make this crispy [like a chip], but we also had to make it be able to bend so it didn't crack. This was a really big engineering challenge, [especially considering] we would have to make hundreds of millions of these shells."
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Gomez says.
"When you buy a bag of Doritos and you open it, and some of the corners are broken off, you're probably not going to be that mad, because they're still Doritos. But if our taco shells are broken in transit or in the restaurants, we can't do anything with them. That was a big obstacle for us. How do we make these shells chip-like, but also be able to ship them and still be able to build a taco without having them break? There were some [prototypes] where we would barely even touch them and the shell would break."
Seasoning was another major issue, which was as much of a challenge of taste as it was for manufacturing. Creed recalls.
"A Doritos chip is a flat triangle, and it gets seasoned by being tumbled around in a huge seasoner barrel that rotates. But we couldn't do that with a taco shell because they would break. We could get the seasoning to stick to the top but we couldn't get it to stick to the bottom--we just couldn't get it evenly coated. You don't want to take one big bite at one end, and it has flavor and the other end has nothing. We had to make sure it was evenly distributed."
Gomez says.
"That was the really tricky part. Just like anything in manufacturing, it's all about speed and efficiency. So our seasoner had to season shells fast and it had to season them right every single time. We had teams of engineers working day and night to get the seasoner working."
In fact, the companies ended up creating a proprietary seasoner in the process, not least because for workers on the manufacturing line, the plumes of Doritos seasoning would create an almost Nacho Cheese gas chamber. Creed says.
"We realized pretty quickly that we had to seal that all in, because in the facilities, we couldn't have all that stuff in the air. It would've been too much seasoning and flavor for our workers. We had to enclose it so the seasoning wouldn't escape. It would've been overpowering."
[Eds. note: Not a bad way to go.]
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Gomez admits to losing faith at times. He says.
"There was a tremendous amount of pressure. There were days when we would get bummed out and worried that this would be too hard to pull off."
But eventually his team refined and narrowed down the recipes to three prototypes, which were readied for market testing. Creed says.
"There's a little bit of black box magic that went into the final prototype of the DLT, which not many people have seen."
He won't elaborate, but regardless of the secret recipe, the true beauty of the DLT is its deceptively basic concept.
Creed says.
"It's really one of those breathtakingly simple but huge ideas. I remember trying to sell guacamole in the Midwest and people were like, 'What's all this green stuff in my burrito?' But this was a fastball, down the middle. It's what you'd expect from Taco Bell, but supercharged."
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By September 2011, Taco Bell had rolled out the DLT prototype at a handful of restaurants in a few cities around the country for testing. Soon, hype around the DLT spread like lukewarm baja sauce. Customers began blogging about their experience; a slew of video reviews hit YouTube; and one Taco Bell addict even drove 900 miles from New York to Toledo, OH for an early taste of the DLT. Stephanie Purdue says.
"They were just fanatical, and the results were off the charts. I've never seen so much word of mouth generated for one single product."
But while buzz for the DLT's national launch was locked in, a deal between Taco Bell and Frito-Lay was not. As Taco Bell legend has it, though the companies had spent years working together on the DLT, no official contracts had ever been signed. Taco Bell's 50th birthday was fast approaching when Greg Creed and then-Frito-Lay CEO Al Carey met in Creed's office to hash out final details. Creed recalls.
"We both realized that if we let the lawyers get involved, this thing would get slowed down and bogged down. So we did a handshake deal--that's all we had: You're going to spend the money, and I'm going to spend the money [on the DLT]. Everyone was like, 'You can't launch without a contract.' And we were like, 'Just watch us.'"
Legal wrangling aside, meeting demand for the DLT was another problem for Taco Bell. Purdue says.
"We were going from three cities to 6,000 restaurants. We didn't have the manufacturing capacity."
Adds Gomez.
"How do we stockpile millions of shells to be ready for a launch of this magnitude?"
Initially, the company thought its suppliers could build two dedicated DLT lines to produce enough shells to meet demand. Creed says.
"We built a pilot plant, but then we sold so many that we were like, 'Whoops, we got a problem.'"
Taco Bell's suppliers ended up building six dedicated manufacturing lines for the DLT, which are handled by roughly 600 employees. In fact, the Cool Ranch version of the DLT was originally supposed to launch late last year, instead of in March 2013, but it was delayed to add more manufacturing lines. Creed says.
"We realized we needed more capacity, because we couldn't slow down the Nacho Cheese line in order to create capacity for Cool Ranch."
When the DLT went nationwide, it was a smash hit, with millions of tacos sold in the first week on the market alone. Morgan Stanley analyst John Glass explains.
"When it launched, there was a significant impact--Taco Bell's [sales] numbers were up 13% in the second quarter of last year, which is big. Brands like Taco Bell or McDonald's or Wendy's--you just don't see double-digit [growth] in same-store sales."
Soon, a contract was written up between Taco Bell and Frito-Lay, according to Creed.
Creed recalls.
"When we met in my office [before launch], we said that if either one of us gets sacked or promoted, we would actually have to write a contract. When [then-Frito-Lay CEO] Al [Carey] got promoted to run the PepsiCo beverage business, I phoned him up and said, 'So I guess we better write that contract then.' Well guess what? We sold 100 million tacos in the first 70 days. If we waited for those contracts to be finished, we would've sold 100 million less."
After Nacho Cheese and Cool Ranch, a spicy Doritos Flamas-flavored taco is next on the docket. But that's not all the company has in the works. Creed says.
"Someone said to me, 'Well, when you launch three or four of these things you'll run out of ideas.' I'm like, 'Not really.'"
To Creed, the partnership between Taco Bell and Frito-Lay is more than a one-off collaboration. Like Android is to Google or iOS is to Apple, Doritos-based flavors represent a whole new framework for Taco Bell to build on. Creed beams.
"It's not just a product; it's now a platform--Nacho Cheese, Cool Ranch, Flamas. We're going to blow everyone away in the next few years in terms of how big this idea and platform will become."
The company is now considering crowdsourcing the next iteration of the DLT, and with 123 flavors of Doritos, there's certainly no shortage of possibilities. But perhaps more compelling than the company's innovations in taco shells are its plans to rethink what goes inside the DLT. Creed gives Fast Company the scoop:
"At the moment, all the ingredients we have inside these shells are the same. The shells keep changing, but the ingredients are still ground beef, sour cream, lettuce, tomatoes. Well, we got a load of other flavors at Taco Bell, and we could put a whole lot of different ingredients inside those shells that would create a different taste and sensation."
When pressed, Creed would only say it could be different "proteins or a special sauce." Additionally, customers themselves are already experimenting with their own reinventions of the DLT. Creed says.
"The Cheesy Gordita Crunch people are asking us to make one with either a Nacho Cheese or Cool Ranch shell."
That's likely to come down the road.
John Glass, the Morgan Stanley analyst, imagines there are more Doritos-based products on the horizon, but questions whether they will be as successful as the first Doritos Locos Taco. He says.
"I don't know how many variants there will be, but I think it's the type of platform that could come back year after year. It doesn't just have to be a taco. There's already a burrito with Fritos in it. Could you do Doritos nachos? A Doritos taco salad? Maybe. Creative guys will come up with different ways to use the same idea in ways we hadn't thought of before."
However complex the DLT line eventually becomes, the innovation behind the idea is its elegant simplicity, according to Creed. The combination of Doritos and Taco Bell, he says, is just so universally appealing that it's feeding its success in the market and driving its place in pop culture.
Creed explains.
"It's like sliced bread. If you like bread, why wouldn't you want it sliced?"
COMMENTARY: The Taco Bell Doritos Locos Taco -- the gift that keeps on giving. A very captivating story of how the DLT was created from ideation to finished prototype and how it was promoted during the launch. Anytime you can have that kind of success without a hitch, you are on to something. I think you can definitely say that the folks at Taco Bell are definitely "thinking outside the bun."
Courtesy of an article dated May 1, 2013 appearing in Fast Company
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