Dive Brief:
- Taco Bell is adding cold brew coffee and three flavors of cold foam to the permanent menu at its Live Más Cafés in the Houston, Dallas, Las Vegas and Southern California markets, according to a Thursday press release.
- The chain is building a beverage lineup capable of generating $5 billion in annual revenue by 2030.
- Live Más Cafés serve as the brand’s “playground for beverage innovation,” the chain said. The spinoff brand allows it to test operational complexity, fan response and other key aspects of performance before wider beverage rollouts.
Dive Insight:
The deployment of cold brew coffee increases Taco Bell’s ability to compete with beverage-centric concepts, like Dutch Bros, 7 Brew, Dunkin’ and Starbucks. Last year, the brand added its version of refreshers — Refrescas — to its menu, widening the appeal of its drinks menu. Sister chain KFC is also in the process of expanding its beverage options through Kwench, a beverage system similar to the Live Más Café, though the U.S. is not an early market for Kwench.
Taco Bell expanded the Live Más Café concept to Texas late last year following successful performance in California. Live Más Café locations sell approximately 25% more drinks than standard Taco Bells, a brand spokesperson said in an email, and the addition of the cafe option grows store-level sales by double-digit percentage points. Expansion of Live Más Café, or of beverage lineups developed at the concept, could end up being a powerful sales driver for the chain.
Beverage innovation, particularly in cold, caffeinated drinks, has been a major focus for QSRs in recent years. Drinks themselves are often higher-margin than food items, while caffeine can help develop consumer habits. New flavors create craveability and aesthetically pleasing beverages can market themselves through social media virality. McDonald’s, which used its now-defunct CosMc’s spin-off as a proving ground for premium beverages, recently launched refreshers and dirty sodas, signaling that industry-leading brands are treating beverage innovation as a key point of competition.
