AP NewsBreak:
Taco Bell enters breakfast arena

[January 26, 2012]  LOUISVILLE, Ky. (AP) -- Taco Bell, the fast-food chain that caters to late-night snacking, is making a play for the breakfast crowd.

The Mexican-style restaurant chain introduced a breakfast menu Thursday at almost 800 restaurants, mostly in nearly a dozen Western states. The rollout adds to the scramble among fast-food heavyweights competing for the morning allegiance of on-the-go consumers.

If the launch goes as expected, the chain hopes its breakfast burritos will be displayed on store menu boards nationwide along with its regular line of tacos, chalupas and gorditas by the start of 2014, said Taco Bell Chief Marketing and Innovation Officer Brian Niccol.

"This is a very important launch for our brand," Niccol said.

The chain's breakfast staples include burritos stuffed with eggs and either sausage, bacon or steak; sausage and egg wraps; hash browns; hot or iced coffee; and orange juice. Taco Bell is teaming with such recognizable brands as Johnsonville, Cinnabon, Tropicana and Seattle's Best. Menu items range from 99 cents to $2.79.

Taco Bell is a subsidiary of Louisville, Ky.-based Yum Brands Inc., whose chains also include KFC and Pizza Hut. California-based Taco Bell says it serves more than 36.8 million customers a week in nearly 5,600 U.S. restaurants.

Taco Bell's foray into breakfast comes as restaurants are in stiff competition as recession-weary customers think twice about spending on dining out. And the industry knows that the morning meal is keenly important.

In the past five years, breakfast and snacks accounted for virtually all of the industry's growth, according to research firm NPD Group.

"Right now we're not getting our fair share of that," Niccol said. "We want to get our fair share and then some."

The breakfast menu comes a year after Taco Bell was knocked on its heels by a short-lived lawsuit claiming that its seasoned beef filling did not have enough beef to be billed as such. Taco Bell denounced the claim as false and spent millions in advertising to defend its taco filling and shore up its image. The suit was dropped about three months after it was filed by an Alabama-based law firm.

But Taco Bell has struggled to regain momentum since the publicity generated by the suit. Taco Bell accounts for about 60 percent of U.S. profit for Yum, but revenue at Taco Bell restaurants in the U.S. open at least a year have fallen in each quarter since the suit was filed.

Yum reports its fourth-quarter earnings on Feb. 6.

The breakfast rollout is in company-owned stores as well as restaurants owned by franchisees.

Some Taco Bell restaurants in the West already are open around the clock, Niccol said. Other stores will open their doors and drive-thrus at least one hour earlier to serve breakfast. For most, that means an 8 or 9 a.m. opening, with breakfast ending at 11 a.m. local time.

That's later than the start time for most other fast-food chains offering breakfast.

It's a reflection of Taco Bell's core customers -- the 18- to-20-something crowd that's generally not up at the crack of dawn.

"What we found is, they're not the customer that shows up at 6 a.m. for breakfast," Niccol said. "We can get those guys on board, they become the evangelists, and then we can start adding additional hours for people that want breakfast at 6 a.m. or 7 a.m."

The rollout is taking place in Alaska, Washington, Oregon, California, Arizona, Idaho, Montana, Utah, New Mexico, Nevada and Colorado, and there are a limited number of participating stores in Texas, Ohio and Oklahoma.

Breakfast has become a popular addition to fast-food chains in recent years as companies compete for diners.

Eating out for breakfast is often cheaper than eating out for lunch or dinner. Lunch sales also tend to track the employment rate, because people who aren't working generally aren't buying lunch.

Subway started offering breakfast in 2010, Wendy's is in the midst of trying to follow suit and McDonald's is expanding its menu.

Taco Bell tested its breakfast offerings in Bakersfield, Calif.; Oklahoma City; Tucson, Ariz.; and Dayton, Ohio.

[Associated Press; By BRUCE SCHREINER]

Associated Press business writer Christina Rexrode in New York contributed to this report.

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