Creator1

In the late 1990’s and early 2000’s Taco Bell, long known for providing fast, cheap late night tacos and burritos, was struggling. During this time, Taco Bell employees cooked the food and assembled it to order.

As you could imagine, this would result in long wait times for meat to cook, lettuce to wash, beans to mash, etc. This would result in poor worker utilization and significant amount of waste, both of materials and time. This reliance on cooking also hurt Taco Bell during lunch rush hours, they could only keep so much food ready before it began to go cold or bad. Another issue was at the time, a large portion of the meals were customized and less standardized, meaning it was more difficult to predict what the demand for the lunch rush would be like.

One thing Taco Bell (and their parent company, Yum) did have was volume. They order over 290 million pounds of beef per year from their suppliers, similarly huge numbers for all other things like shells, lettuce, soda, etc. Taco Bell made an unusual demand to their suppliers:

‘We want you to do all the cooking!’

Taco Bell had a significant sway given their purchasing power with the suppliers, who obliged after a renegotiation of the contract price. Taco Bell told supplies exactly how they wanted every single bag of beef to be prepared and seasoned (ensuring the products were completely standardized across all locations), they instructed on the lettuce and tomato cuts, and every precise detail they could think of. Now, instead of having to employ chefs and cooks, Taco Bell only needed to hire people to assemble food packs and deliver it.

This made a significant impact, they no longer had to pay for food handling certifications (the same level needed for cooking the food, that is). They also no longer had to manage any of the logistics of fresh food, the time to cook that food, the energy it took to make it, the space to store all the food on hand, etc.

Mistakes dropped by a dramatic 84% on average with standardization, their time at drive through windows reduced increasing store capacity.

Taco Bells no longer needed nearly as much space and there was a significant effort to relocate and down size the store locations (further reducing cost.) The money saved for not having to cook was in the millions. To highlight energy savings, in 2017, Taco Bell wanted to swap out the grills they used for heating the food to a more energy efficient system, this change saved each store roughly $6,000 a year and conserved 100kWh per day!

Perhaps most amazing, is the dramatic increase in management capacity. With having to deal with all things related to food cooking, handling, and logistics, middle managers could only oversee 2 to 4 locations. With this change, the average middle management could oversee 28-32 locations!

It’s interesting how a small shift in a company’s operations can make drastic lasting changes.