IRVINE, Calif. — Taco Bell is going all-in on beverages, starting with the Live Más Café concept.
of yum brand Last December, the chain announced a drink-focused store format with its first location in Chula Vista, California. Ten months later, a second location opened near the University of California, Irvine campus. By the end of the year, Taco Bell plans to have 30 Live Mass Cafes in its portfolio across Southern California, Dallas and Houston.
Unlike McDonald’s now-defunct CosMc spinoff, which had its own standalone locations, Live Más Café is located within an existing Taco Bell restaurant. Customers can order at a kiosk and watch as ‘Veristas’ assemble their drinks from behind a designated counter that occupies a prime location in the store. The drink menu has a wide selection from blended coffee to lemonade bases.
The beverage-focused concept should help the Mexican-inspired chain reach its goal of generating $5 billion in beverage business by 2030. Taco Bell first revealed its goals at an investor day in March, where the chain shared more details about its plans to continue growing while driving Yum’s operating income growth.
So far this year, Taco Bell has sold more than 600 million drinks, an increase of 16% from the same period last year, the company said. Taco Bell says more than 60% of the chain’s orders this year include a drink.
“I think beverages are hot right now because I think people are craving unique and interesting flavors in their drinks. We hear that from consumers all the time,” said Liz Matthews, Taco Bell’s global chief food innovation officer.
center stage
Taco Bell’s Live Mass Cafe.
Provided by: Taco Bell
The Live Más Café drink station is the first thing you’ll notice when you step inside the Irvine location.
Most self-ordering kiosks are located in front of long counters at stations. Customers are free to watch the “Veristas” make the specialty drinks, unlike other restaurant employees who assemble Crunchwrap Supremes and Chalupas in secret.
Digital menu boards throughout the restaurant highlight the beverage offerings. The drink menu spans four different categories: churro chillers, specialty coffees, refresca, and “Belista Favorites.”
Churro Chiller is a creamy, cold milkshake topped with churro chunks. Specialty coffee can be hot, iced, or blended as a “chiller.” Brightly colored refrescas use either lemonade, green tea or Rockstar energy drink as a base for fruity flavors like strawberry passion fruit and mango peach. “Verista Favorites” also includes seasonal menu items such as the Fall Caramel Apple Empanada Churro Chiller, which is blended with blocks of Taco Bell apple empanadas.
When creating the menu, Matthews and her team tried to stay true to the chain’s Mexican-inspired roots, but she said Taco Bell will always have a “playful spirit.”
And while Live Más Café offers a wide variety of flavor options, Taco Bell offers minimal customization options.
“What we found when we talked to consumers is that they actually really want us to curate drinks for them,” Matthews said.
To date, the Irvine store’s best-selling drinks are the Mexican Chocolate Churro Stiller, Dirty Mountain Dew Baja Blast Dream Soda, and Mango Peach Agua Refresca. Six of the top 10 best-selling beverages at this location are chillers. Matthews said this is a reversal from the first test site in Chula Vista, where there was similar demand across all drink categories.
Taco Bell says the Irvine location has sold more than 900 drinks per day since opening. More than a third of orders include items from the Live Más Café menu.
Meanwhile, nearly a year after opening, the Chula Vista store is selling more than 750 drinks per day, exceeding initial sales projections by four times, the company said. According to Taco Bell, a quarter of all transactions involve Live Más Café beverages.
“Given what we’re seeing right now from our business results, that payback looks very attractive and in line with what franchisees would expect from something big, but there’s still a lot to learn,” said Taylor Montgomery, Taco Bell’s global chief brand officer.
“A little reward”
The hottest trend in fast food this year wasn’t chicken sandwiches or plant-based burgers. Instead, beverages of all strengths, colors, and nutritional values are gaining traction.
for example, shake shack is selling lemonade with mini raspberry popping boba, inspired by the success of bubble tea. Panera Bread is testing Fresca and Energy Refresher in select bakery cafes. Chick-fil-A plans to open Daybright, a drinks-focused restaurant serving specialty coffees, smoothies and cold-pressed juices, in Hiram, Ga., later this year. And McDonald’s this summer ended a spinoff called CosMc’s that focused on drinks and snacks, but also tested new coffee drinks, soft drinks and flavored sodas at more than 500 U.S. restaurants.
According to Technomic, the number of drinks sold at the top 500 chains increased by more than 9% last year. Beverage innovation is booming with the rapid expansion of numerous specialty drink chains, from startup 7 Brew Coffee to dirty soda inventor Swig.
”[Quick-service chains] “They have a huge opportunity across all generations and we’ve seen how they’re interested in that ‘bite snack’ culture,” said Clare Conaghan, trendologist at Datassential, which tracks menu trends. “There’s also the option to move beyond the core meal focus and really tackle the snacking moment.”
Gen Z and Millennials are driving this trend, said Balkasvi Singh, food service analyst at Mintel. Younger generations enjoy customizing their food and drink orders.
“Eating at fast food is considered a luxury, but also an experiment and novelty, especially among younger consumers,” Singh said. “They’re pretty open to trying upscale menus and customizing their orders, whereas older generations, who have long associated fast food with being very affordable, are a little more critical about how expensive fast food has become for them.”
For Taco Bell, turning to beverages and creating Live Mass Cafes is part of a broader plan to appeal to younger consumers whose purchasing power is expected to increase rapidly in just a few years.
“For the past five years, we’ve been thinking really hard about the transition of the brand and how to position it with Gen Z, and the cafe just came out of that,” Montgomery said. “I think about 60% of Gen Z consumers go to restaurants and eateries. [quick-service restaurant] For an afternoon treat. ”
Montgomery said Taco Bell chose to place sub-brands within existing restaurants, rather than creating standalone live mass cafes, in part out of “humility.”
“Today, we’re still not known as a drinks destination,” he told CNBC.
Live Más Café can also support Taco Bell more broadly.
“This also serves as a test market where we can get more real-time data: Which combos do people do best?” Conahan said. “Which customization is most important? Do you need all types of milk alternatives, or just one or two of these? Do you need all 15 types of energy refreshers?”
It’s already starting to happen. Taco Bell’s Agua Fresca started as a menu item at Live Más Café and has since been released nationwide.
“These are one of our best-selling products and we couldn’t wait to expand the cafe,” Montgomery said. “We have promoted them in all of our restaurants and have had success there.”
Additionally, the coffee options on the cafe’s menu are part of Taco Bell’s plan to make breakfast even better. The chain started serving breakfast more than a decade ago, but last year told franchisees they could opt out of breakfast. For some fast-food restaurants, opening early isn’t profitable, and there’s the added challenge of finding staff to work the morning shift.
Taco Bell has already had some success with other sub-brands. Its cantina format, often found in urban areas, features custom menus, alcoholic beverages, and seating designed to encourage customers to linger. Since opening its first location in Chicago 10 years ago, Taco Bell Cantina has grown to include dozens of restaurants.
Overall, sales are up as Taco Bell focuses on new menu items even as inflation-weary consumers cut back on spending. Earlier this year, the company announced plans to double its innovation in 2025. Taco Bell prices have increased 75.5% since 2019, according to Technomic’s Ignite Menu. Still, customers keep coming back.
In recent years, Taco Bell has been a gem in Yum’s portfolio, typically outperforming both Wall Street expectations and its sister chains KFC and Pizza Hut. Executives cite the chain as one of the company’s key growth drivers. In the second quarter, Taco Bell reported a 4% increase in same-store sales, while many fast-food competitors reported sales contractions.
“From a portfolio perspective, we represent a significant portion of Yum’s operating income, but we’re also learning a lot from other brands,” Montgomery said.
Yum is scheduled to report third-quarter results before the bell on November 4th.
Watch the video to learn more about why Taco Bell is betting on drinks.
