Taco Bell Introduces New Design Formats for Next 1,000 Restaurants

Taco Bell is reinventing the drive-through loop. The fast food chain is pioneering new design formats in its next 1,000 restaurant locations, looking to balance technology and social experiences. The new formats will include innovations in both drive-throughs as well as eating areas in urban settings where customers are seeking a different experience.

The company began experimenting with new dining concepts in 2015 when it launched cantina-style eating concepts. However, the pandemic accelerated the need for new formats. In the last year, it has been experimenting with digital drive-throughs better suited to social distancing and safety. Now, it plans to build on these trends to drive modernization as the company’s portfolio expands.

The new concepts include a range of experiences. Taco Bell partnered with franchisee Diversified Restaurant Group to open the first ever drive-thru Cantina in Danville, CA. The concept, which includes an outdoor fire pit and game area, was a hybrid between the earlier eat-in cantinas and rising demand for drive-throughs. Once the dine-in reopens, it will also include a full bar. In Manhattan, the chain will soon launch a kiosk concept with a completely digital experience, and the brand will continue to evolve its Go Mobile platform, a sparse physical spaces with dual drive-thru lanes that launched last year.

Drive-throughs in particular have surged in popularity during the pandemic. Last year, drive-through revenue increased 5% while revenue from full-service restaurants declined 15%, according to research from CBRE. Leasing activity also boomed as a result. In Southern California, for example, leasing for drive-through properties totaled 147,000 square feet. Freestanding drive-throughs also took a bigger share of investment volume, up from 5.9% in 2019 to 7.1% in 2020. This is one of only a handful of retail segments that has outperformed the market through the pandemic.

Many of these properties have also seen record cap rates. A Chipotle Mexican Grill with a double-drive-thru in Lathrop, CA, traded hands for $3.2 million, or $1,371 per square foot, and a cap rate of 4.05% in a deal brokered by Hanley Investment Group. This was a record-low cap rate for a new Chipotle drive-thru in the US. Overall, single-tenant retail cap rates compressed thanks to the demand for drive-throughs and quick service restaurants.

This year, Taco Bell will expand its development pipeline. While the company says it has built in long-term flexibility, over the next decade, it plans to open 10,000 restaurants.