1. No category

IT 6683/4683 CASE STUDY
CASE 2-1
TACO BELL INC. (1983-1994)
Cynthia Nunnally
Debbie Rollins
Julius Robinson
Steven Wall
Shashank Trivedi
Lucas Varner
OUTLINE


Introduction
 The Case Studied
 Case Overview
Strategy
 Business Model
 Before (Concept, Capability, & Value).
 After (Concept, Capability, & Value).
 Strategic Planning
 Strengths and Weaknesses.
 Opportunities and Treats.
 Tactical Steps
 Steps Taken and Role.
 Value.
OUTLINE (CONT.)





Factors
 General Technology Factors
 K-minus
 POS Systems
 Non-Technology Factors.
 Management Roles.
 Incentive Change.
 Implementation of Safety Nets.
Information Technology
 IT and Support of Business Model and Processes
 TACO & TACO II.
 Pillars of IT in the Case.
Recommendation
 Solution Recommended.
 Justification.
 Does it Match?
 What would you do differently.
Lessons Learned from the Case for Today’s IT Manager
References and Bibliography and Acknowledgements
THE CASE STUDIED







F.A.C.T. Fast.Accurate.Clean.Temperature
Taco Bell Inc.
1983-1994
Location: United States Nationwide Fast-Food Chain
Case 2-1
297-312
Major Sources:


Applegate, L. M., Austin, R.D., & Mcfarlan, F.W. (2003). Corporate Information Strategy
and Management: Text and Cases (6th Edition). New York, NY: McGraw-Hill/Irwin.
Vlessing, E. Taco Bell Corporation. Retrieved from
http://www.referenceforbusiness.com/history/St-Th/Taco-Bell-Corporation.html
CASE OVERVIEW

Problem







Background


Current labor was intensive.
The company had no technology; manual plastic boards were used.
Employees were required to create large amounts of operational paperwork as part of their job.
The employee turnover rate was at 220%.
No drive through windows.
Managers and crew members spent a lot of time cleaning and preparing ingredients.
Taco Bell is a fast food restaurant chain that typically served Mexican food but in later years was
reengineered to appeal to the American general public. In a period when most other fast food chains
experienced flat domestic sales and declining profits, Taco Bell was profitable and increased its market
share.
Pivotal points



1983-1988: Modernize the physical units
1988-1991: Transforming the Business
1991-1994: Creating the Learning Organization
BUSINESS MODEL
BEFORE

Concept




A successful Mexican fast food chain trying to find its market identity.
Had a large share of Mexican fast food market (40%) but small percentage of total fast food.
Labor intensive process to provide a fresh product with little use of technology
Capability

District manager, restaurant manager, assistant restaurant manager






Unrewarding and stressful relationships leading to high turnover
Store operations- plastic ordering boards, clean and prep of ingredients
Food prep/cooking take up 70% of space
Manual creation of employee work schedules by managers
Paper intensive data collection
Value

Small market share of fast food industry.



$700 million with 1,489 restaurants
Potential for sizeable stake in the rapidly expanding fast food industry.
Rising brand recognition
BUSINESS MODEL (CONT.)
AFTER

Concept




A rapidly growing fast-food chain aimed at dominating the industry through competitive
business practices and changing the scope of the fast food industry
Expansion of brand into retail supermarkets and spread to other countries.
Streamlined operations providing FACT (Fast, Accurate, Clean, Temperature) products to
customers
Capability

Taco bell restaurants


Store operations



Consolidated cook and prep space and procedures
TACO II, voice-mail, information infrastructure
Marketing


Market managers, restaurant general managers, team-managed units
Customer service phone-line, questionnaires, surveys. Expansion of Taco Bell brand.
Value





Brand recognition
Expansion into different markets: international, retail supermarkets
Increased customer satisfaction
Total sales ~$4 billion in 1993
Increased fast food market share
STRATEGIC PLANNING

Strengths

Production Speed

Convenience

Technology Advantages

Customer Loyalty

Brand Recognition

Management

Pricing

Advertisement

Weaknesses

Awareness

Franchise Management

Availability of Desserts

Poor nutritional value

Bad Publicity
STRATEGIC PLANNING (CONT.)

Opportunities

Threats

Venture into newer markets


New flavors/ recipes


Focus on health Friendly
Ingredients
Competitors
Awareness of info on food
menu items that have
harmful impacts
Employee retention, high
turnover rate

Extended Hours of
Operations

TACTICAL STEPS

Steps Taken
Expand Market into
different countries
 Upgrade technology
 Modernize physical
units
 Adding new menu
items
 Revamping
Operations


Role
Increase sales world
wide
 To make customer
orders more efficient
 Remodeling
restaurants
 Expanding Customers
 Replacing parallel
food assembly lines
with double assembly
line

TACTICAL STEPS (CONT.)

Value





Continue to make Taco Bell a worldwide franchise and
expand upon consumer base
Decrease expenses required in remaking of orders and
improve upon customer loyalty by offering not only speed
but accuracy when it comes to completing orders
Increasing seating capacity, adding more convenience
with the inclusion of drive through windows, providing
the option to dine in.
Providing more options to current customers and
attracting newer ones.
Easier to serve drive through window/ improved product
flow speed and capacity
GENERAL TECHNOLOGY FACTORS

K-Minus
 Referred
to the reduction in kitchen size by
converting it into primarily a heating and assembly
station. Created larger area for customer dining as
well as space for drive-through customers

Electronic POS systems
 Tracked
ordering, sales, and product data.
NON-TECHNOLOGY FACTORS

Management Roles






Instigated FACT (Fast, Accurate, Clean, Temperature) in response to customer
preferences.
Management strategy based on high turnover rate.
Restaurant managers (RM) and assistant restaurant managers (ARM) in charge
of daily store operations. RMs reported to the district manager who required
very strict audits of the RMs managing abilities creating tension. RM was
changed to restaurant general manager (RGM) to encourage independence and
the idea of self-sufficiency.
New training programs implemented focusing on leadership and management
abilities (5 days of leadership training).
District manager role changed to marketing managers emphasizing coaching
and developing RGMs. Taco Bell took dramatic step by looking outside of the
fast food industry to find talent.
Later developed team-managed units (TMU) which were designed to manage
stores in the absence of the RGM.
NON-TECHNOLOGY FACTORS (CONT.)

Incentive Changes



Implemented raise in salary for RGMs from $28,700 to $32,000 with a
potential bonus of $12,000. Later expanded to potential earning power
of $60,000.
Market manager salary restructured to appeal to talented individuals.
Increased average salary from $38,000 (with a $5,500 average bonus)
to $48,000 with a potential bonus of $1,200 per store supervised.
The new structuring also provided opportunities for career advancement
within the company



International marketing manager
Managing more profitable markets
Product Business management
NON-TECHNOLOGY FACTORS (CONT.)

Implementation of Safety Nets



Created a toll-free customer service number as a way for people to
comment on the quality of service and food.
Mystery shoppers were introduced to indentify issues, gather
information, as well as a way to reward RGMs bonuses.
Marketing surveys were conducted by Taco Bell employees who would go
to individual stores and ask customers to fill out questionnaires. This
data was used in determining a stores value in its current market as well
as a market manager’s bonus.
IT AND SUPPORT OF BUSINESS
MODEL AND PROCESSES
TACO: Total Automation of Company Operations
-Personal computer in every store that is linked to a local
point of sale (POS system)
TACO II: Same as TACO, but designed for crew members
-New and more user friendly computer system that was
designed to provide crew members with the information
needed to make decisions and take appropriate actions
TACO and TACO II brought a change from “0.5 percent meat
variance” to “300 tacos” – information that the crew members
can easily interpret and quickly act on.
PILLARS OF IT IN THE CASE

HCI : The use of POS (Point of Sale) system, CAT (Customer Activated
Terminal) and extension of e-mail systems and computer conferencing

Programming : No real information about programming given, but
programming was a part of building an Intellectual Network and the
Infrastructure

Networking : Building a network to maintain a sense of community within
the organization

Database : Shared databases incorporating “best practices” information on
a wide variety of subjects

Web : With the use of web, the company was able to expand the access to
critical information
RECOMMENDATION

Solution recommended






Justification


Focus on managing the business by using real-time information to ensure the information is useful
and focuses on action to help with decision making and strategic planning.
Ensure the information is reliable and accurate to help with sales and marketing.
Focus on growth strategies.
Focus on target customers, cultures, and customer relations.
Focus on innovation.
Focus of the layout was completely changed to benefit the company’s efficiency and customer base.
The configurations changed to a 30% kitchen and 70% customer service area called K-Minus. This
enabled food processing to be handled on a corporate level and delivered to individual stores.
Customers demanding FACT (Fast, Accurate, Clean, Temperature) so changes implemented to maximize
on these four points.
Does it match what happened?

Yes because Taco Bell was reengineered from the ground up to provide faster service and better quality
of service for future innovations.
RECOMMENDATION (CONT.)

What would we do differently given what we know today
(update the case)





Strive for future innovation which includes a testing site for new ideas such as a kiosk or
cups with bar codes that could provide the younger generation with popular music and
videos.
Provide for on-campus vendors for college students.
Implement touch screen ordering systems as well as online ordering capabilities ("New
technology makes," 05).
Evaluate the importance of the expansion into International markets and how to further
expand. $275 million in sales in international markets in 2011 (Novak, 2011).
Look at the impact of rising health concerns about food and its preparation in conjunction
with customer surveys and questionnaires
LESSONS LEARNED FROM THE CASE FOR TODAY’S IT
MANAGER




Understand the relationships that exist in your management hierarchy and
how people feel about them. Don’t associate harsh rules and policies with
the most effective form of management.
Know where you stand in your market and be able to indentify your niche
and the best ways to take advantage of it.
Constantly evaluate how your company is using technology and recognize
when capabilities need to be expanded.
Don’t assume HCI makes sense to everyone. Sometime systems need to
adapted to be more user friendly as evident from experiences with TACO and
TACO II.
REFERENCES AND BIBLIOGRAPHY
Applegate, L. M., Austin, R.D., & Mcfarlan, F.W. (2003). Corporate Information Strategy and
Management: Text and Cases (6th Edition). New York, NY: McGraw-Hill/Irwin.
Bhasin, H. (2011, November 22). Swot of taco bell. Retrieved from http://www.marketing91.com/swottaco-bell/
New technology makes fast food faster; fgcu graduates hired. (2009). Retrieved from
http://www.benseron.com/Blog/tabid/75/EntryId/1/New-technology-makes-fast-food-faster-FGCUgraduates-hired.aspx
Novak, D. (2011). Annual report. Retrieved from http://www.yum.com/annualreport/
SHVILKA. (2012, March 07). Overall swot analysis of tacobell. Retrieved from
http://takoringsabellinhungary.wordpress.com/2012/03/07/overall-swot-analysis-of-tacobell/
Taco bell. (n.d.). Retrieved from http://www.mbaskool.com/brandguide/food-and-beverages/635-tacobell.html
Vlessing, E. Taco Bell Corporation. Retrieved from http://www.referenceforbusiness.com/history/StTh/Taco-Bell-Corporation.html
ACKNOWLEDGMENTS
We would like to thank Professor Rich for his help
and guidance in completing this case study. His
assignments and breakdown of IT management
concepts paved the way for our success.
 Lastly, we would also like to extend our gratitude to
all of our other classmates and team members
which provided thought provoking dialogue and
insight into the world of IT management.
