Industry observers have mused for some time now that while quick service operators enjoy a large piece of the market share pie their dinner sales have traditionally been softer than they would like to admit. With the advent of fast-casual nipping at their heels and paring away sales it's not a total surprise that an traditional quick service company would finally develop a fast-casual concept.

Of course Chipotle was once a "twinkle in the eye" of industry behemoth McDonald's who took a long look at the concept before finally spinning them off but now we see Yum's Taco Bell developing a Latin themed fast-casual concept that's not designed to attract their core clientele but isn't too far from their comfort zone either.

So we leave you with the following article about this new entry to the fast-casual foray with the eternal Rod Serling-esque introduction, "Submitted for your approval."

Taco Bell develops new fast-casual concept

Nation’s Restaurant News – 4/24/14

Taco Bell Corp. is launching a new fast-casual taco concept designed to capture diners who are not likely to step foot in a Taco Bell.

Named U.S. Taco Co. and Urban Taproom, the new concept is scheduled to open in Huntington Beach, Calif., this summer offering a simple lineup of 10 premium tacos, thick-cut fries and shakes. Future locations will also include a menu of craft beer and wine.

Designed by an “intrepreneurial” team of young Taco Bell executives in a “secret war room” at the chain’s Irvine, Calif.-based headquarters, the new concept is nothing like the mothership brand — except that tacos are on the menu. There will be no fried shells dusted in Doritos flavors, no burritos, no “quesarito” hybrids or anything that looks like a Crunchwrap Supreme, and no drive-thrus.

And rather than going for an authentic Mexican theme, the new concept will tap regional American flavors, offering a playful menu of premium tacos in the fusion style of food trucks or the contemporary taquerias of Dallas or San Francisco’s Mission district.

“Taco Bell is Mexican inspired. U.S. Taco is American inspired,” said Greg Creed, Taco Bell’s chief executive, who is largely credited with piloting a dramatic turnaround for the quick-service chain over the past two years.

Creed said U.S. Taco Co. was born of a segmentation study conducted on Taco Bell that revealed a fairly large demographic that was not likely to use quick-service restaurants at all. Rather than spend millions trying to lure those potential diners into Taco Bell, Creed’s team decided to design a new concept that would appeal to that demographic, which includes an eclectic mix of generally higher-income foodies who are “edgy in how they live their lives but not necessarily in how they eat,” he said.

The project has been led by Jeff Jenkins, Taco Bell senior brand manager and “resident disrupter,” who is also leading the company’s mobile ordering initiative.

Also on the team is Rene Pisciotti as the brand’s executive chef and menu architect, along with consultant Max Schlutz, co-owner of the recently opened Sessions Sandwiches concept in Newport Beach, Calif., who formerly worked with the Domaine Restaurant Group on concepts like Red Pearl and 25 Degrees.

Following the “better burger” movement of the past decade, a “better taco” trend has been growing out of U.S. cities with large Hispanic populations to become more mainstream.

But Jenkins acknowledged that “everyone in fast casual is heading in the direction of burritos.” Deciding to “zig while everyone else zagged,” the team decided to take “the best of American cuisine and put it into a taco,” he said.

What's on the menu

On U.S. Taco Co.’s menu are offerings like the “Winner Winner,” which features Southern-style fried chicken breast with “SOB,” or “South of the Border” gravy, roasted corn pico de gallo with fresh jalapenos and fresh cilantro in a flour tortilla.

The “One Percenter” features fresh lobster in garlic butter with red cabbage slaw and pico de gallo on crispy fry bread.

The “Brotherly Love,” is a nod to the Philly Cheesesteak, with carne asada steak, grilled peppers and onions, roasted poblano queso and cotija cheese (rather than Cheez Whiz), and fresh cilantro in a flour tortilla.

On the side: “papas fritas,” which resemble steak fries, coated with habanero dust and dipped in housemade sauces such as ghost chile ketchup or roasted poblano crema. Guests can also order their fries loaded with taco ingredients sans tortilla as a “secret menu” option.

Customers will order at a counter, but the idea is not to build your own taco, as one might do at a Chipotle. The menu instead spotlights the chef-designed flavor combinations.

Most dishes will be prepared in-house, in glass-enclosed kitchens that allow guests to see meat grilling or tacos in the works — though a few ingredients will come from outside suppliers, like the Texas smoked brisket or Southern pulled pork.

The menu also includes shakes spiked with beer, such as the “Mexican Car Bomb,” featuring vanilla ice cream, tequila caramel sauce, chocolate flakes and Guinness Stout. The first location, however, a 1,600-square-foot unit on the beach-adjacent development known as The Strand, will not offer alcohol, Creed said.

But craft beers will be a vital component of future locations, including about four to six varieties on tap and roughly 50 types in bottles and cans. Don’t look for margaritas, however. “This is not a bar,” said Creed.

U.S. Taco Co.’s décor will include vibrant colors — red, white and blue — inspired by a Mexican Day of the Dead festival, with a prominent skull logo that will serve as a “beacon” of sorts. A 400-square-foot patio will offer outdoor seating.

The average check will likely be around $11.50 to $12 with a drink. Tacos are priced at about $4 each, two for $7, or three for $10. By comparison, Taco Bell’s average check is about $7.20.

Finding opportunity in fast casual

While the quick-service Taco Bell has already dipped into Chipotle territory with its more-premium Cantina Bell menu developed by celebrity chef Lorena Garcia last year, this is the first time the brand has attempted a direct challenge within the fast-casual arena.

Taco Bell parent Yum! Brands Inc., based in Louisville, Ky., appears to see the fast-casual space as an opportunity.

Last year, Yum began testing a fast-casual variant of the KFC brand called KFC Eleven in Louisville.

Earlier this month, Yum opened a fast-casual concept called Super Chix, offering “the last true chicken sandwich,” near the company’s Plano, Texas, facility that houses the global headquarters of sister brand Pizza Hut.

The innovation team there is also working on another fast-casual concept called Banh Shop, scheduled to open soon in the Dallas-Fort Worth area.

Super Chix and Banh Shop, however, have been described as potential growth brands for overseas markets specifically.

Creed said U.S. Taco Co. is being developed as a domestic brand, though it could also travel overseas, where TV shows like Guy Fieri’s “Diners, Drive-Ins and Dives” are raising awareness of classic American dishes.

Still, Creed was reluctant to give specifics on growth targets.

“We’re going to open a restaurant and see what happens,” he said. “I’d love to see 1,000 or 1,500 of these, but let’s not get ahead of ourselves.”

Meanwhile, the 6,000-unit Taco Bell will remain on its aggressive path of doubling sales from $7 billion last year to $14 billion by 2022, and adding about 2,000 restaurants in the U.S.

The new concept won’t take a dollar from Taco Bell, according to Creed. “We will have two incredibly well-positioned brands,” he said.