No matter how old you are or where you live, you probably eat fast food often in any given month.
The fast food market is huge, and there are brands worth tens of billions of dollars selling to millions of customers each day.
Taco Bell is one of the examples of this massive brand with thousands of locations across the globe.
Because they are so huge and have high brand awareness, you might have thought of owning a Taco Bell branch through franchising.
Luckily, you can own a Taco Bell franchise because they franchise to individuals in all countries they operate.
This article will examine Taco Bell’s franchise business and whether it’s worth owning one or not.
About The Taco Bell
Taco Bell is an American fast-food chain that specializes in Mexican-inspired foods such as tacos, burritos, and nachos.
They were founded in California, and they are still headquartered in Irvine, California.
Taco Bell is a popular destination for fast-food lovers, known for its affordable prices and unique menu items.
The franchise offers a variety of menu items, including breakfast items, vegetarian options, and value meals.
They are a subsidiary company of Yum! Brands that include other major brands such as KFC.
Taco Bell is one of the world’s biggest fast-food restaurant chains, with over 8,000 stores worldwide. 90% of their stores are owned and operated by independent franchisees.
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Taco Bell History
Taco Bell originally first started as a hot dog stand with the name Bell’s Drive-in California by Glen Bell.
He saw that Mexican food was quite popular around his neighborhood, so he learned some recipes and changed his hot dog stand to a taco stand.
Later on, he switched his stand to an actual store in 1962, California. This was the first Taco Bell in history.
The company decided to quickly start franchising in 1964, with its first franchise store opening in Torrance, California.
Thanks to franchising and popularity, they grew quickly and opened their 100th restaurant in 1967.
Taco Bell changed hands a couple of times, first with PepsiCo and later on with Yum! Brands.
Taco Bell introduced new menu items, which helped to solidify the franchise’s place in the fast-food industry while they were changing hands.
The company last changed hands to Yum! Brands in 1997, and they are still owned by them.
Today, Taco Bell is one of the largest fast-food chains in the world, with a presence in over 30 countries and over 8,000 stores.
Franchise Model Table
| Initial Investment | $861,950-$2.4 million |
| Franchise | YES |
| Franchising Since | 1965 |
| Franchise-Fee | $12,500 |
| Royalty-Fee | 4-6.2% |
| Liquidity | $500,000 |
| Estimated Outlets | 3,560 |
How Much Does It Cost To Open A Taco Bell Franchise?
To open a Taco Bell franchise, the expected average initial investment is between $575,600 and $3.3 million.
This initial investment includes the franchise fee that you pay in a lump sum at the beginning. The franchise fee also varies between $25,000 and $45,000.
The biggest differentiator in the initial investment number is the location, size, and type of the store because you will need more employees and equipment, and the lease will be higher.
In addition to the initial investment, Taco Bell also expects you to pay 5.5% of gross sales as a royalty fee and 4.25% as the marketing fee.
Taco Bell Franchise Requirements
Taco Bell mostly focuses on the financial requirements of the franchisees rather than their personal background.
You do not require to have a specific set of skills personally or experiences to be approved, but you need a certain amount of financial capability. The financial requirement focuses on net worth and liquidity mostly.
You need a net worth of $1.5 million and liquidity of $750,000 combined with your partners.
In addition, you also must be able to finance the initial investment besides having these two requirements.
On the personal side, it’s not a necessity, but it’s a plus if you have restaurant management or leadership skills from either food or another industry.
Taco Bell Profit & Revenue
Taco Bell’s parent company is Yum! Brands that manage more than several companies, such as KFC, Taco Bell, and so on.
That’s why it’s hard to find out the numbers for Taco Bell only because of Yum! Brands release their total earnings combined with other brands.
However, there are some numbers released to the public that we can get some ideas about.
In 2021, Taco Bell made a total revenue of $13.2 billion through system sales. In the same year, Yum!
The brand’s total revenue was $58,18 billion. Out of the $13.2 billion revenue, Taco Bell made a net operating profit of $225 million in 2021.
Yum! The brand’s total profit was $2 billion. Taco Bell is the highest-profiting brand under Yum!’s management.
We also have reports about how much a Taco Bell branch makes annually. In 2020, which was the latest report about this, an average Taco Bell branch made about $1.6 million in revenues.
This means that, on average, a Taco Bell branch owner could make an average of about $90,000-$100,000 a year in profit.
Taco Bell Franchise Training and Support
Taco Bell provides extensive management training to the franchisee, either to the branch owner or a designated manager.
The management training comes on an as-needed basis and lasts at least seven weeks. It could be extended to eight weeks, depending on the size and the location of the branch.
The training comes in two forms, one classroom and one on-the-job training, teaching both theoretical and practical information.
Classroom training could also happen online, but on-the-job training must take place in a physical location.
The franchisor requires either the franchisee or at least one designated manager to complete the training successfully.
Taco Bell Franchise Terms of Agreement and Renewal
The initial term of the agreement for a Taco Bell franchise is 25 years for new traditional units, 20 years for a Power Pumper Unit, or 10 years for an In-Line or End-Cap Taco Bell Unit.
This agreement you sign, whatever the type, gives you the right to use the brand’s name for the specified date.
Depending on the type of your branch, you can’t sign it any longer than what the rules are.
Taco Bell doesn’t guarantee any kind of renewal right to the franchisee, no matter the type of store.
There is one condition where you can get a 10-year renewal if you sign an In-Line agreement that grants you an additional 10-year term under specific conditions.
For any kind of other agreement, there is an Expiration Policy in effect that grants you the right to enter into a new agreement with terms ranging from 10 to 25 years.
Taco Bell Franchise Obligations and Restrictions
The branch owner must spend their constant effort all the time for the daily operations of the franchise branch.
In cases where the franchisor authorizes the branch owner to have an employee as a supervisor, they can.
However, this employee must pass the management training program successfully.
Also, the person responsible for the daily operations must live within one hour’s driving time from the branch.
No one associated with the franchise, including the immediate family and employees of the franchisee, can’t associate themselves with any kind of Mexican restaurant except for Taco Bell.
The franchisee is restricted to selling only the items and services that Taco Bell provides in the franchise manual.
Taco Bell Franchise Financial Assistance
Taco Bell doesn’t directly offer financial assistance, but there might be cases where they can find lenders willing to help the franchisees.
This happens periodically and is not guaranteed by the franchisor as an introduction to the lender.
In addition, the connection made by Taco Bell doesn’t mean immediate approval or a referral for any kind of financial agreement.
The possibility and the terms of any kind of financial agreement will be made by the lender and the franchisee.
Franchisor, Taco Bell, will only make the connection and let the financial lender make the final decision.
Taco Bell Comparison
| Company | Franchise Fee | Royalty Fee | Initial Investment |
|---|---|---|---|
| Del Taco | $35,000 | 5% | $812,700-$2.4 million |
| Qdoba Mexican Eats | $15,000-$30,000 | 5% | $252,800-$1 million |
| Taco Bell | $25,000-$45,000 | 5.5% | $575,600-$3.3 million |
Conclusion
Taco Bell is a major fast-food restaurant chain focusing on Mexican foods in over 30 countries with thousands of stores.
They make tens of billions of dollars of revenue each year, leveraging a high-profit number for each Taco Bell store owned by franchisees.
This shows that they are a great business to own if you are looking to expand your franchise business.
They provide training, ongoing support, financial assistance via 3rd party sources, and many other help to their franchisees.
This makes it easier for the franchisees to start, operate, and make a profit from their stores.
That’s why we believe that Taco Bell is a great choice in terms of easiness to run and how much profit you can make.
FAQ
Who is the CEO of Taco Bell?
Mark King is the current CEO of Taco Bell as of May 2023. He has been holding that spot since August 2019.
Can anyone open a Taco Bell franchise?
If one can complete the necessary financial and personal requirements, then yes, anyone can open one.
If you don’t have the necessary requirements, you will not get the approval.
How much does it cost to open a Taco Bell?
On average, the expected initial investment is between $575,600 and $3.3 million.
This number changes depending on the location, size, number of employees, and other details of the store.
Sources
https://deltacofranchise.com/costs-fees-investment
https://en.wikipedia.org/wiki/Taco_Bell
Amit Gupta is the founder of DrFranchises – a digital marketing agency that helps brands rank better on Google Maps through local SEO strategies. Amit has over 11 years of experience in digital marketing, SEO, email marketing, and social media marketing. He’s also the owner of multiple franchises and has helped countless brands achieve success online. When he’s not working, Amit can be found playing with his dog.