Yum! Brands, Inc.'s (YUM) Taco Bell Breakfast: Good in Theory, Bad in Reality

Yum! Brands, Inc. (YUM) would have been better off letting Pizza Hut do breakfast

Jan 29, 2015 at 10:13 AM
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Breakfast from Yum! Brands, Inc.'s (NYSE:YUM) Taco Bell sounded like a great idea when it was first announced. The fast-food chain -- creator of fun, popular items such as the Doritos Locos Taco -- seemed like one that could really shake up the breakfast landscape.

Taco Bell has a cult following, and people needed more options for early food outside of McDonald's Corporation (NYSE:MCD) and Tim Hortons Inc. (NYSE:THI). We'll exclude Starbucks Corporation (NASDAQ:SBUX) or Dunkin Brands Group Inc (NASDAQ:DNKN) from this subject, since coffee is their No. 1 focus. Fast-food breakfast seemed like an area with room for another major player. Luckily for all those too lazy to make their own breakfast in the morning (me), Taco Bell made the jump in early 2014.

But, has the Taco Bell breakfast been a success? The initial numbers said "yes," with YUM's CEO praising the company's ability to launch a successful breakfast campaign, which is apparently hard to do. But could this "success" just be from initial curiosity, a premature excitement over new food that will soon fade? My answer is "yes."

Why do I say this? What do I see holding back Taco Bell's breakfast success? Well, the biggest issue Taco Bell may face is that none of the items on its breakfast menu are very good -- at least, not at the locations I've patronized. From my experience, the breakfast burritos taste like plastic, and the Waffle Taco -- while in theory a great idea -- is nowhere close to what it's cracked up to be. I'm no restaurant expert, but I think food joints need good food to keep making money.

As I said, the idea of Taco Bell breakfast is great, but the reality isn't pretty. Over time, I think people will begin to realize the fast-food chain's morning menu isn't what they hoped for.

From where I'm standing, YUM missed an opportunity here. The company is trying to reach millennials, Taco Bell's main demographic. It's trying to appeal to college kids, and other youngsters, who for whatever reason are out late at night, or are up extra early, or maybe simply still awake at 7 a.m., and need something tasty -- and filling, to fight off that hangover. Instead of coming up with all these wild ideas for a breakfast menu at Taco Bell, YUM should have just introduced breakfast through its other popular restaurant brand: Pizza Hut.

As a recent college grad, I can tell you that the one thing I probably had for breakfast more than anything else was cold, stale pizza. Mmm, now that's real breakfast. It would have been so easy, too! Pizza Hut could have just used its leftover pizza, threw it out on a table, and tacked up a sign: "Pizza, $2 a slice." Put out some already-opened packages of ranch dressing and other random condiments left behind on tables by yesterday's patrons, and now you have the attention of millennials everywhere.

But seriously, as much as it disappoints me to say it, Taco Bell's breakfast was a flop for my taste buds. We'll hear more about the numbers next week when Yum! Brands, Inc. (NYSE:YUM) reports its fourth-quarter figures. Maybe it'll give even more positive highlights from its breakfast foray. However, I'm still short Taco Bell breakfast in the long term.

Daily chart of YUM since July 2014

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