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From Hot Dogs to Tacos

Taco Bell founder Glen Bell returned to San Bernardino in 1946 after serving in WWII, having decided to make his living as the owner of a single-location drive-up restaurant that served hot dogs.  He later opened a few more spots and added hamburgers to his menu, but the cross-town success of two brothers named McDonald forced him to find another way to compete in the quick-serve lunch and snack field.  He settled on tacos, choosing to make and sell them in volume rather than one at a time, which was the habit of most Mexican restaurants in those days.  He was so successful that he dropped all non-Mexican menu items and renamed the venture Taco Tia (“Aunt Taco”), which became El Taco before expanding into the more lucrative Los Angeles market and sporting the name we know today- Taco Bell.

Taco Bell Franchise Review

The original owner began to franchise his concept in 1964.  In 2002, Taco Bell’s parent company recast itself as Yum! Brands Inc.  The corporate umbrella includes such fast-food icons as KFC and Pizza Hut, plus A&W and Long John Silver’s.  PepsiCo had accumulated these entities individually in 1978, which then spun them off into their own group in order to separate them from the beverage division.  That’s why you will never see a Coca-Cola dispenser there!  It is not unusual to have two or more of these restaurant concepts under one roof, which means that variety is one of the main attractions of owning a Taco Bell franchise.  In 2008, there were 4,200-plus U.S franchises (most own far more than just one location), plus more than 230 franchises in 17 different foreign countries.

Taco Bell Franchise Information & Costs

The prospective Taco Bell franchisee will be asked to pay a one-time $45,000 franchise fee to enjoy the opportunity to open one or more locations.  One’s net worth must register $1 million, with at least $360,000 of that in ready cash.  Your total investment will probably range from between $1.1 million and $1.7 million.  The difference will depend upon such variables as real estate expenses and square footage of the building.  Nearly every Taco Bell occupies a stand-alone edifice, although a form factor known as Taco Bell Express can be opened up inside a mall’s food court or as part of a strip mall.  Some are even located inside airports.  Once open for business, franchisees also pay a 5.5 percent annual royalty, based upon gross sales.  This money goes toward corporate operations as well as the maintenance of nationwide marketing campaigns.  Franchisees pay no additional marketing fee.

Read the Fine Print

Taco Bell is among the most profitable fast-food operations around.  Becoming a franchisee means you can take advantage of amazingly high name recognition, top-of-the-heap marketing campaigns – “Run for the Border,” “Think Outside the Bun” and “Yo quiero Taco Bell” are but three brilliant slogans the company has created in recent years – as well as significant home-office support in the form of ongoing training and state-of-the-art back-office computer systems.  However, Taco Bell is also a very expensive franchise to run.  Each store is required to have a minimum of 25 employees on its staff, which can lead to higher-than-average overhead.  And while absentee ownership is not frowned upon, new franchisees are expected to take a very hands-on approach in the early stages of running the business.  Finally, the corporation offers neither self- nor third party financing, which may create a cash crunch for franchisees who have only the minimum required funds at hand.  Nonetheless, Taco Bell has been ranked first in its category four of the past five calendar years.  The company boasts annual earnings of more than $22 billion.  You could buy a lot of bean burritos for that kind of money, even with extra onions.

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