Redefiningg Value

Abstract

Taco Bell took the quick-service-restaurant segment by storm in 1989 when it launched its value menu and subsequently reengineered its operations. The moves were the continuation of a turnaround effort that began in 1983. Five years after value pricing shook up the industry and rocked competitors, however, Taco Bell was facing another crisis of declining sales. Price promotions were not sufficient to keep customers coming when the competition also introduced value pricing. Such reengineering moves as eliminating middle managers and instituting employee operating teams came apart when training efforts could not keep up with normal turnover. Other moves, such as depending on commissary-style food production, have helped keep costs low, but do nothing to enhance product quality. Taco Bell has rolled back its employee-team approach, added more managers, and, most recently, announced that it will concentrate on upgrading the quality of its menu items.