Taco bell Franchise Cost and Profit Analysis Today

 

Taco Bell is considered one of the most renowned and instantly recognizable brands in the United States, which means you may have an advantage over the competition. They are also aggressively growing into the global market which may present an excellent chance for businessmen all around the world to start a Taco Bell franchise near them. Taco Bell might be one of the best franchise businesses to open, whether you live outside or in the United States.

If you want to open a restaurant or begin your own business, a Taco Bell restaurant franchise may be the answer. Everyone, no matter how busy they are these days, needs to eat. Taco Bell restaurant franchises provide an excellent opportunity to satisfy people’s hunger while also satisfying your desire for fortune.

What is the Taco Bell?

Taco Bell is the world’s largest provider of Mexican cuisine, offering everything from a sizzling chalupa to its distinctive sauce. Taco Bell, one of the biggest quick-service restaurant franchises, is known for offering Mexican-style food fast and affordably. Their scrumptious tacos are available in over 7,000 locations across 30 nations.

Taco Bell is owned by Yum! Brands, Inc., which also operates several other well-known franchises. Yum! Brands Inc. has approximately 43,000 restaurant outlets in 135 countries and territories. As an American fast-food restaurant chain, it is known to serve the best tacos, burritos, quesadillas, and nachos.

Taco Bell opened its first location in 1962 and started franchising two years after that. It has subsequently become one of the world’s most recognizable brands. They serve almost 45 million people per day. This restaurant chain has a strong presence in the United States, as well as outlets all around the world. Not to mention that independent franchisees operate more than 90% of their restaurants.

Is Taco Bell a Franchise Opportunity?

Yes, Taco Bell is a franchising business opportunity. The various kinds of facilities granted by the franchisor to potential franchisees are 

• Traditional Units

These are free-standing, permanent structures of various configurations and sizes that serve the entire Taco Bell menu. A kitchen facility where food is produced and processed, a counter where orders are placed and paid for and food is delivered, tables and chairs for customers, and a drive-thru are all part of the structures.

• In-Lines

Locations with or without a drive-through also have the other features listed above. End-caps are in-line units that have a drive-through.

• Power Pumpers

Structures feature several of the aforementioned features that occupy a building with a gas station and convenience store.

• Taco Bell Express (Custom Facades)

Simpler facilities with a restricted selection of products from the entire Taco Bell menu. Custom Facades include stand-alone units built on sites within bigger buildings as well as permanently built installations of various designs that take advantage of available space in a range of environments.

Facts That Nobody Told You About Taco Bell 

• The company is named after its founder. 
• The original price of a taco was 19 cents.
• It is known to be the first fast-food chain to hire women as its managers. 
• The company was sold to Pepsico in 1978. 
• It serves beer and wine now. 
• It originally did not start with tacos. 
• The company petitioned the government to bring back bills worth $2. 

Taco Bell Franchise Review and Information
Industry Type	Food Franchise Opportunities
Sub Category	Mexican Food Franchises
Year Established	1962
Company Name
Founder/Management Head	Mark King, CEO
Franchising Started	1964
Franchise Expansion Plan	Canada, South America, Asia, Middle East, Europe (Western and Western), Central America, Australia/New Zealand
Number of Units	8,320 units (As of 2023)
Number of Franchise Units	7,435 units
Social Media Handles	Facebook
	Twitter
	Youtube
	Instagram
Company Office location	Irvine, California

Taco Bell Franchise Requirements

Franchisees must give their entire time, best efforts, and continual personal attention to the day-to-day operations of the unit. 

If the franchisor has authorized franchisees to appoint an employee as the unit’s supervisor, that individual must finish the training program and commit their full time, best efforts, and continual personal attention to the everyday operations. 

Unless otherwise specified in the Franchise Agreement, a franchisee or qualified restaurant managers must keep their residence well within one-hour driving distance from the unit.

During the term of the Franchise Agreement, a franchisee and its immediate families, shareholders, employees, and others connected with the franchisee or the franchise must not serve Mexican-style menu or food items at the unit or elsewhere, except for Taco Bell themselves including their Mexican-style menu or items. Franchisees must offer and sell only the beverages, food, and other items mentioned in the manual.

 

How much does a Taco Bell franchise cost

The franchise requirements to become a successful franchise owner of Taco Bell are 

• Initial franchise fee: The standard franchise fee for an initial Taco Bell franchise is $45,000, whereas the initial license fee for an express franchise is $22,500.
• Initial investment: The projected total investment required to initiate a Regular Taco Bell Franchise falls within the range of $1,298,600 to $3,370,100. In comparison, the corresponding cost for an Express Franchise is $227,500 to $590,100.
• Net worth: $5,000,000
• Cash requirement: $2,000,000

Further, the royalty fee and advertising fee to become a franchisee is 5.5% and 4.25% respectively. 

How much does it cost to franchise a Taco Bell in the United States?

Taco Bell Franchise Initial and On-going Franchise Cost
Taco Bell Franchise Fee	$22,500-$45,000
Taco Bell Franchise Cost	$1,298,600 to $590,100
Royalty Fee	5.5%
Advertising Fee	4.25%
Term of Agreement	25 years
Is franchise term renewable?	No

Is the Taco Bell worth the investment?

Every year, the Taco Bell franchise network generates more than $10 billion in revenue. Taco Bell franchise sales averaged roughly $1.6 billion across all locations. 

Taco Bell might prove profitable, but it is advisable that as a potential franchisee, you go through FDD about all the necessary details of the franchise. Further, remember to cross out all the financial requirements off your list. 

Taco Bell has a well-established business strategy that is perfect for potential franchisees. While the initial investment may be significant, the Taco Bell brand is powerful and well-known around the world, so there is the potential for good returns.

Taco Bell Training to Franchises

All new franchisees must take the franchisor’s “Starting Bell” brand immersion course at the restaurant support facility in Irvine, California. 

This course is independent of and in addition to the compulsory restaurant training. It is a three-day course in which new franchisees will learn the tools and techniques necessary to become effective Taco Bell franchisees. Additionally, the franchisor expects that franchisees and a manager satisfactorily complete its training program. 

The management training program available on an as-needed basis is known to last at least seven weeks. The training period may be extended to eight weeks depending on the size and geographical location of the business of the franchisee. 

Taco Bell Franchising Operations 

Taco Bell’s Franchising Operations involve the management of a chain of restaurants. The franchisor, Taco Bell Corporation, selects and trains the franchisees who operate the restaurants. The franchisees provide menus, marketing, and operational services to the restaurants. Taco Bell Corporation provides the food, fixtures equipment, and management services to the franchisees.

How is Taco Bell Territory Granted to Franchises

The Franchise Agreement does not give franchisees any territorial protection or exclusivity, though the franchisor may provide such rights temporarily in different transactions or by the policy. The franchisee’s rights provided under the Franchise Agreement are non-exclusive and fail to include the right to prohibit any other use of trademarks or the system by any person or entity, irrespective of how close they are or will be to the unit.

What is Taco Bell Franchise Term of Agreement and Renewal?

The franchise agreement has an initial period of 10 years for a new In-Line or End-Cap Unit, 25 years for a new Traditional Unit, and 20 years for a new Power Pumper Unit.  Taco Bell does not provide franchisees with renewal rights under their Franchise Agreement. 

However, the franchisor currently has a Franchise Agreement Expiration Policy in place, which may be modified or canceled at any time under which it may agree to enter into a new agreement with franchisees for a term ranging from 10 to 25 years, based on the type of restaurant and the necessary asset upgrade.

Does Taco Bell provide Financial Assistance to Franchises?

YUM! Brands, Inc. is known to be the ultimate corporate parent of Taco Bell.  For qualified minorities, YUM offers an optional financing assistance program. 

If franchisees meet YUM’s criteria for the YUM Minority Lending Assistance Program and YUM agrees to let them participate in its sole discretion, YUM’s financing assistance will take the shape of YUM assuring 25% of the principal of their franchise agreement business loan of $3,000,000 per loan or franchisee. 

YUM reserves the right to terminate the YUM Minority Lending Assistance Program any time.

Pros & Cons of owning a Taco Bell franchise

PROS

• Multibranding
• Strong Track Record
• Absentee Ownership
• Strong Parent Company Network 
• Store Options

CONS

• High Costs
• High Overhead
• No Territorial Protection 
• Not A Lot Of Financial Assistance 

How much do Taco Bell franchise owners make?

Initial midpoint investment	% Profit margin of average franchise sales	Estimated profits	Time to recoup investment
$2,334,350	10%	$161,788	17 years
15%	$242,682	12 years
20%	$323,576	9.5 years

What is the Taco Bell franchise profit?

Taco Bell is a fast-food industry giant. As a result, it is a successful brand with excellent financial possibilities for its franchisees. The entire net is worth billions of dollars. They believe that the average Taco Bell franchise profit per unit is roughly $1.5 million in annual sales. The annual income of the unit owner ranges between $80,000 and $100,000.

Taco Bell franchisees frequently make the authorized amount of money during their initial year of ownership due to the company’s popularity and the marketing techniques it employs.

What are Taco Bell franchise reviews?

There is usually a steady flow of consumers. When you operate a Taco Bell restaurant franchise, you run a business with consistent consumer traffic. Customers who dine in, take their food to go, order from the drive-thru, or purchase online for delivery are all included. That simply means you have many money streams flowing in throughout the day.

Taco Bell is an excellent example of a fast-food franchise that is open and active seven days a week. As with any franchise, it is critical to understand what can be expected from the franchisor, this includes education requirements,  fees and costs, and other safeguards. 

You should research the complete cost of a franchise and do not forget to take into account real estate for a Taco Bell outlet.

Taco Bell Franchise Rankings

• Ranked #1 in Mexican Food in 2023: Best of the Best
• Ranked #1 in 2024: Franchise 500
• Ranked #8 in 2023: Fastest-Growing Franchises
• Ranked #3 in 2023: Top Global Franchises
• Ranked #1 in Mexican Food in 2022: Top Food Franchises
• Ranked #1 in 2023: Top Brands for Multi-Unit Owners

Franchise Deck Analysis and Overview

Overall, while Taco Bell’s franchise growth rate is very high, it has been slowly but steadily falling over the last three years. However, there were 214 new outlets anticipated, compared to 19 in 2019. In the meantime time, Taco Bell has been closing more locations throughout the years, although not by a significant amount.

Purchasing a Taco Bell franchise has both advantages and disadvantages. Taco Bell is a profitable business, but it is uncertain whether this profit applies to individual franchise units. After all, the absence of detail in their financial records means that the only obvious source of income is from franchise and license fees which, when combined with Taco Bell’s relatively high royalty rates, can prove to be a red flag for potential franchisees.

Taco Bell, on the other hand, has seen tremendous expansion in the number of franchised restaurants. They are opening substantially more stores than they are closing, which may indicate a successful business plan.

Is the Taco Bell Franchise Profit Worth the Franchise Cost?

Despite the lack of financial details in their FDD, Taco Bell is owned by Yum! Brands is a multibillion-dollar public business that also owns KFC, Pizza Hut, and The Habit Burger Grill.

We will only propose this brand for experienced operators or individuals who have managerial experience at a location, due to the large investment range. While Taco Bell is a major brand that should provide consistent returns in any economic scenario, it might be difficult for a new franchisee to obtain ownership unless they are already within the system.

Taco Bell Franchise Success and Failure Rate

The below table will highlight the Taco Bell franchise success and failure rate for the last 3 years. This will supplement your decision-making process.

Year	Format	Start	End	Change
2019	Franchise Owned	6,446	6,622	176
Company Owned	462	467	5
2020	Franchise Owned	6,622	6,679	57
Company Owned	467	475	8
2021	Franchise Owned	6,679	6,863	184
Company Owned	475	462	13

Competition Analysis of Taco Bell Franchise
Taco Bell	Cost to Franchise	Franchisee Fees	Royalty + Ad fees	Expected Profit	Recoup of Capital	FD Rating
Taco Bell  Franchise	$1,298,600-$590,100	$22,500-$45,000	5.5%+4.25%	$1.5 million	9.5-17 years	3.9/5.0
McDonald’sFranchise	$1,366,000 to $2,450,000	$45,000	4%+4%	$150,000	8.5 years	4.1/ 5.0
Taco John’s	$942,000 to $1.388 million	$25,000	5%+4%	$25,294.68-$628,000
Del Taco	$862,700-$2,136,500	$35,000	5%+4%	$310,774	7.5 years
Taco Cabana	$1,177,300-$2,620,600	$45,000	5%	$56.5 million

The Franchise Deck rating for the Taco Bell franchise is 3.9/5.0.

 

Conclusion 

For those with an entrepreneurial spirit who do not wish to start a business from scratch for a variety of reasons, opening a franchise can be an excellent option. Opening a Taco Bell franchise, like other franchises, allows franchisees to start a business inside the framework of a bigger business.

Read the franchise disclosure document (FDD) carefully to ensure you have the most up-to-date information on obligations, fees, and requirements. While Taco Bell is a solid franchisor and has a great financial position, the Taco Bell franchise does not appear to be profitable. The express industry is weakening and declining rapidly.  At present, it is believed that the cost of a Taco Bell franchise is extremely expensive.

During your discovery period, try to speak with as many existing and former Taco Bell franchisees as possible. This is the greatest way to learn exactly what it will be like to run your own Taco Bell franchises.

Entrepreneurs who want to open a franchise in the donuts and desserts  franchise opportunities categories can look at

1. Del Taco
2. Taco Cabana
3. Taco Jonh’s
4. McDonald’s Franchise
5. Domino’s Franchise
6. Dunkin’ Donuts Franchise
7. Wendy’s Franchise
8. Moe’s Southwest Grill 
9. Jersey’s Mike Subs Franchise
10. Freshii Franchise

Frequently Asked Questions (FAQs)

1. Is the Taco Bell franchise profitable?

A Taco Bell franchise is a profitable franchise when compared to any of its competitors. The average sales per unit in 2017 were $1.5 million, however, contacting franchisees as part of a franchise study is the best approach to find out how much they make.

2. Can you make money owning a Taco Bell?

Yes, a franchise owner can make money owning a Taco Bell franchisee. 

3. Is Taco Bell a franchise?

Yes, Taco Bell is a franchise. The brand started franchising in 1964. 

4. How much is the Taco Bell franchise?

To open a franchise, a potential franchise is required to have the following: 

• Initial franchise fee: $22,500-$45,000
• Initial investment: $1,298,600 to $590,100
• Net worth: $5,000,000
• Cash requirement: $2,000,000