The Tacos Are on Top!

Taco Bell has been #1 on Entrepreneur's Franchise 500 list for two years in a row. What is the brand's secret hot sauce? Everything starts with letting the franchisees push innovation.

- By Maggie Ginsberg

If you want to glimpse Taco Bell's vision of tomorrow, head to the frozen tundra of Brooklyn Park, Minnesota. There, just after the snow melts this spring, a sleek new building called Defy is expected to open-but consumers won't be coming in. The place features no dining room; instead, it will hover over four drive-thru lanes like a spacecraft. Up inside, team servers will cook up tasty Gorditas, Chalupas, and Burrito Supremes and send them down to customers through an innovative food lift system, Jetsons-style.

The Defy building will be the first one in the U.S. where you actually see the future of what the category will probably look like, says Mike Grams, Taco Bell's president and global COO. And it was not a corporate idea. It came from one of our franchisees.

That's typical for Taco Bell, which has a long history of listening to its franchisees-a group that now owns more than 90% of the brand's 7,000plus locations worldwide. Even though the franchising industry at large often favors uniformity, Taco Bell has a somewhat different philosophy: So long as the food and service are brand-consistent, any idea is at least entertained, Grams says. Franchisees are closer to their customers than a corporate headquarters could ever be, the thinking goes, which means they see problems first and can develop game-changing solutions, plus capitalize on whatever makes each local market unique. There are some guardrails, but they don't come across as handcuffs, Grams says. And since the pandemic, Taco Bell has learned that it can move on new ideas more quickly than ever. If you're a brand that's looking to go back to normal, you're going to be behind, he explains. It's going to be constant iteration and change moving forward.