At a time when higher costs are denting the profitability of most fast food chains, Taco Bell - the Mexican food chain of Yum! Brands, Inc. ( YUM ) - launched its Dollar Menu, according to media reports. The Dollar Cravings menu includes 11 items like mini chicken, beef quesadillas, cinnamon twists and spicy potato soft taco with a price tag of $1.
In fact, the Dollar Menu includes many items from Taco Bell's low-cost Why Pay More! line-up, including cinnamon twists and cheese roll-ups. Taco Bell believes that the Dollar Cravings menu will help diners customize their food.
Taco Bell has been focusing on menu innovation to attract new customers. The fast-food chain started a breakfast menu in March and launched a protein-heavy menu last month to cater to health-conscious customers. Last week, the company opened its first fast-casual restaurant taco concept - U.S. Taco Co. - in Huntington Beach to expand beyond the quick-service sector.
The new menu might also be a strategy to attract the youth, who had cut down quick-service restaurant visits in the past few years due to low-disposable income amid the sluggishly recovering economy. In fact, Taco Bell promoted its dollar menu, last week, on Snapchat, a popular photo messaging smartphone app.
The U.S. fast-food sector is an immensely competitive industry, with major players offering attractive pricing points to bring in more traffic.
In fact, last year, McDonald's modified its Dollar Menu - introduced in 2002 - to the Dollar Menu & More, which includes items for $1, $2 and $5. Among others, Burger King Worldwide Inc. ( BKW ) has also aggressively promoted its two-sandwiches-for-$5 deal.
Will Taco Bell' Dollar Menu make Yum! Brands, with a Zacks Rank #3 (Hold), stronger? We would like to wait and see.