1 TACO BELL
STARTED FRANCHISING/1964 TOTAL UNITS/7,567 COST TO OPEN/$575.6K-$3.4M
If you want to glimpse Taco Bell’s vision of tomorrow, head to the frozen tundra of Brooklyn Park, Minnesota. There, just after the snow melts this spring, a sleek new building called Defy is expected to open—but consumers won’t be coming in. The place features no dining room; instead, it will hover over four drive-thru lanes like a spacecraft. Up inside, team servers will cook up tasty Gorditas, Chalupas, and Burrito Supremes and send them down to customers through an innovative food lift system, Jetsons-style.
“The Defy building will be the first one in the U.S. where you actually see the future of what the category will probably look like,” says Mike Grams, Taco Bell’s president and global COO. “And it was not a corporate idea. It came from one of our franchisees.”
That’s typical for Taco Bell, which has a long history of listening to its franchisees—a group that now owns more than 90% of the brand’s 7,000-plus locations worldwide. Even though the franchising industry at large often favors uniformity, Taco Bell has a somewhat different philosophy: So long as the food and service are brand-consistent, any idea is at least entertained, Grams says. Franchisees are closer to their customers than a corporate headquarters could ever be, the thinking goes, which means they see problems first and can develop game-changing solutions, plus capitalize on whatever makes each local market unique. “There are some guardrails, but they don’t come across as handcuffs,” Grams says. And since the pandemic, Taco Bell has learned that it can move on new ideas quicker than ever. “If you’re a brand that’s looking to go back to normal, you’re going to be behind,” he explains. “It’s going to be constant iteration and change moving forward.”
This is, for example, what already drove the creation of Taco Bell’s Cantina—the brand’s urban, alcohol-serving model that is now in 18 designated market areas and in 27 cities across the U.S. The brand also credits franchisees with massive and consistent growth: Taco Bell U.S. has been on a 14-year run of positive net new units. And through September, Taco Bell Division’s same-store sales were up 12% for 2021. That’s helped drive it to the top of the Franchise 500 list—landing at No. 1 last year, and now holding that spot for the second year in a row.
This same spirit of franchisee collaboration is now shaping Taco Bell’s future, including the development of Defy.
Brothers Jeff and Lee Engler, of Border Foods in Minnesota, came up with the idea for Defy, but it really started with a problem. The brothers have more than 200 restaurants across Taco Bell’s parent company, Yum! Brands, whose portfolio also includes Pizza Hut, KFC, and The Habit Burger Grill, and they were closely watching what they call “the turn-away factor.” “Customers see a long line of cars at a drive-thru and leave,” says Lee Engler. The Englers also realized that people now want a more contact-free, digital age experience. Taco Bell had already been exploring ways to improve the drive-thru experience, but the Englers wanted to reinvent it entirely.
“The Defy building will be the first where you see the future of what the category will probably look like. And it came from one of our franchisees.”
They took the idea to Grams, who was intrigued. Grams started at Taco Bell as an assistant manager in 1991, back when the brand was
