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TACO WAR : Fast-Food Chains Battle for Lucrative Market

September 11, 1988|MARY ANN GALANTE | Times Staff Writer

Do you like your chicken fajitas made with dark meat or light meat?

And what's the best way to whip up a batch of guacamole or salsa?

If you've ever had an argument in the kitchen over a recipe, you'd probably appreciate the battle brewing in the corporate offices--and over the stoves--at the giants of California's Mexican fast-food market: Del Taco and Taco Bell.

Things have been heating up since restaurant magnate Anwar Soliman bought both Del Taco and Naugles last March. The two chains' 366 restaurants will soon be combined under the Del Taco banner as they try to unseat industry giant Taco Bell, a subsidiary of Pepsico.

The fight is for the bulk of the lucrative California market. It is by far the most valuable market for the $2.5-billion-a- year Mexican fast-food industry. And it seems to pit the corporate size and savvy of Pepsico and Taco Bell against the roll-up-your sleeves know-how of Soliman.

The two companies, both headquartered in Orange County, are making changes in their menus, advertising heavily, spiffying up restaurants and taking shots at each other's operations and even their food.

"Our biggest issue with some of our competitors, candidly, is that their mom-and-pop approach to business is giving Mexican food a bad name," sniffs Taco Bell President John Martin. He tells how his chain distributes partly premixed, quality-controlled guacamole and salsa that assure consistent flavor and avoids possible food poisoning.

But Del Taco's Soliman brags that each outlet of his Costa Mesa-based chain makes its own fresh guacamole and salsa on the premises.

"Pepsico is a huge corporate environment," Soliman said. "Their approach is: what's best for the corporation."

Once the Del Taco and Naugles merger is completed--probably by early next year, California's fast-food connoisseurs will see a greatly expanded menu and a stepped-up promotional push.

Even so, Irvine-based Taco Bell executives claim that they don't take competition from Del Taco all that seriously. With 2,712 restaurants and 60% of the Mexican fast-food market nationally, Taco Bell says its targets are the leaders of the entire fast-food--not just Mexican--industry.

"I don't waste a minute wondering what Soliman's doing," Martin said. "My competition really is McDonald's. People are still going to go there or to Wendy's and Pizza Hut, but we'd just like them to go to Taco Bell more often."

Whether Taco Bell can indeed challenge McDonald's and the other fast-food heavyweights--or whether it needs to worry about Del Taco--is up for debate among industry observers, too.

"It depends on how well (Del Taco executives) have done their research," said George Rice, president of GRD Enterprises, which publishes the Crest consumer report on eating trends. "But nationally, the Taco Bell folks are big and they've got momentum. . . . Del Taco could make a run at them on a store-by-store basis. But on a corporate level, it's almost mathematically impossible."

"Soliman has the locations, he's got the convenience. And he's got a sophisticated audience that's hep to Mexican food," said Brian Foulke III, chairman of Taco Villa, a Ft. Lauderdale, Fla., chain with 60 fast-food restaurants. "If he comes up with something bigger or better or both . . . his menu could really give Taco Bell fits."

Dark Meat

Indeed, both of these chains have plenty to say about the menu--what to serve, how to cook it, how big the portions and how much to charge. And they don't always agree. Consider the flap over chicken fajitas, those grilled strips of chicken mixed with salsa, onion and cheese.

Del Taco executives make a point of complaining that Taco Bell has been turning the dark meat in its fajitas white by marinating them in a citric acid. According to Del Taco, the lemon marinade does help keep Taco Bell's meat juicy, but it also "bleaches" the dark meat.

And Del Taco, of course, boasts that it serves only white breast meat in its chicken fajitas.

Taco Bell admits it uses dark meat in its fajitas, but says that's because customers prefer dark meat. The company says it knows about the preference for dark meat because it spent part of its annual $2-million marketing research budget asking about chicken in California, Kentucky and Florida.

The debate about consumer preferences, though, doesn't end with chicken.

Separate interviews with Del Taco's Soliman and President Wayne Armstrong, as well as Taco Bell President John Martin and marketing Vice President George Reynolds, yield a sort of disdain-contempt, point-counterpoint perspective to the world of tacos and burritos.

While Del Taco has its corporate officers testing food, Taco Bell has four on-site laboratories in constant operation. While Del Taco talks of expanding menus and larger portions, Taco Bell talks of limiting choices and carefully controlling price and quality.

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