A subsidiary of Yum! Brands, the largest quick-service restaurant company in the world, Taco Bell serves more than 2 billion customers each year in more than 6,500 restaurants.
Key to Taco Bell’s continued success is its ability to transform raw data into meaningful customer experiences and profound strategic insights. Here is a look at how data science has permeated it’s business strategy in every area from marketing to operations to logistics.
Personalized, AI-Powered Menu Recommendations
In early 2020, Taco Bell announced they would be partnering with omni-channel personalization company Certona to provide its 5 million+ app users with personalized menu recommendations. These suggestions will not only be based on the user’s past purchases and browsing history, but also on time of day, location, day of the week, weather and other various factors that could influence sales.
“Instead of displaying generic, or static, product recommendations, we use Certona’s AI engine to determine what the best products are to display to a customer. So, for example, if it is a first-time user, we are mostly factoring in overall sales data, such as what four items best sell with the item currently being viewed,” Derrick Chan, Taco Bell’s director of e-commerce, frequently told Forbes Magazine. He also added, “With that personalization and relevancy comes exposure to new menu offerings, customizations and opportunities for our fans to engage with the brand in a new and innovative way.”
Social Media & Marketing Analytics
Since Taco Bell rose to national prominence in the 1980’s, its won over customers with its clever marketing campaigns and slogans such as “Yo Quiero Taco Bell” and “Think Outside the Bun.” This acute marketing savvy has continued in the digital age with Taco Bell’s mastery of social media and online advertising.
In order to deepen their competitive advantage in the digital realm, Taco Bell’s parent company, Yum! Brands announced it was acquiring AI-based consumer insights and marketing performance analytics solution provider Kvantum, Inc. In a nutshell, Kvantum develops and deploys algorithms and AI models to help brands understand consumer behavior and implement informed media and calendar decisions.
As Clay Johnson, Chief Digital and Technology Officer, Yum! Brands explained in a press release announcing the partnership, “Kvantum is an innovator in data analytics and marketing optimization and has a proven track record of delivering significant value to several of our international markets by enabling data-driven marketing decisions to increase sales and better leverage media budgets.”
Yum! Supply Demand Algorithm
Throughout the pandemic, the food industry has experienced a major increase in supply chain disruptions. This “national ingredient shortage” made it difficult for Taco Bell and other Yum! Brand franchises to procure many of their staple items such as chicken, beef and hot sauce.
As these supply chain disruptions are expected to persist for the foreseeable future, Yum! Brand data scientists developed a new, more effecient supply/demand algorithm that accurately predicts and suggests orders. This insight gives restaurant managers the ability to order only what they need and anticipate potential ingredient shortages down the road.
According to the Yum! website, “Because the algorithm is complex, it was taking 15-plus hours per day to run in development – leaving little room for error and making experimentation difficult. By engineering a new solution via leveraging the cloud’s capability to elastically scale, we’ve been able to reduce run time by over 90%, ensuring we’ll always finish our forecasts on time and allowing our scientists to iterate much more rapidly.”
Predictive Market Mapping
Location, location location. Few variables are more integral to a restaurant’s success than where it is located. In the past, Taco Bell franchise locations would be determined by the amount of sales and foot traffic other nearby restaurants generated.
However, now with the use of advanced data and analytics, they can predict to the dollar how much revenue a restaurant will generate and the percent of sales it may take from neighboring restaurants to avoid cannibalization. According to the Yum! website, “we do this by tracking the area population, ascertaining its household income and unemployment rate and calculating foot traffic by the hour. From this, we’re able to identify high potential areas and can recommend that the company develop more restaurants in those areas, positively impacting the bottom line overall.”