“Taco Bell’s two dollar value meal is potentially game changing,” says Gary Stibel, Founder and CEO of the Westport, Connecticut based New England Consulting Group. And Stibel should know because he was one of three New England Consulting Group partners who worked with Taco Bell when they were still owned by PepsiCo to create the original version of the modern day value meal (in the late 1980s).  “We were fortunate enough to have worked with Taco Bell on this project along with some of the best and brightest from both the restaurant chain and from PepsiCo corporate.”

Since then, value meals have become a mainstay of the industry, particularly during the recession.  Today, Stibel points out that “many restaurants are hooked on discount ‘heroin’ that is teaching guests very bad habits and restricting profits, particularly as the recession wanes”. “Therefore, the two dollar meal deal could be a transitional game changer for Taco Bell.  One dollar meals drastically limit the quantity a restaurant can offer and often leave consumers wanting.  This is strategic to Taco Bell because the bullseye of their target audience is the young male who doesn’t eat restaurant food, he ‘hoovers’ it. The five dollar footlong is one of several great examples of creative marketing at a very profitable price point that provides real value to the consumer.”

And Stibel goes on to point out that “price is not a number, it’s an equation!  Whether or not consumers could buy the contents of a value meal for the same amount of money has little relevance.  What is relevant is the fact that consumers derive great value from being able to go in, order a ‘bundle’ of products and services quickly and easily, and be satisfied with what they receive for what they pay.  This is true of value meals from Taco Bell, packaged minutes from cell phone providers, triple play options from cable operators, and much more.”

In fact, Stibel attributes analogue modeling from other categories as “the spark that ignited the original Taco Bell value meal.  Ditto the original cable triple play offering over ten years ago”. David Stone, a Managing Partner and Principal at the New England Consulting Group and the original Chief Marketing Officer of Taco Bell, points out that “one of the bases for PepsiCo’s acquisition of Taco Bell was the ability to deliver good tasting, filling foods to young men at prices that were attractive to the guest and profitable to the owner.  It is one of the strengths of Mexican food in a crowded QSR marketplace.”

Stibel goes on to point out that value is not isolated to QSR.  He specifically cites Olive Garden and Applebee’s as examples of chain restaurants who are delivering compelling value propositions at price points approaching double digits and still very profitable to the chains.”