EXECUTIVE SUMMARY FOR TACO BELL BREAKFAST AD TEST: MARCH 2014

PROJECT BACKGROUND GutCheck would like to gauge reaction to Taco Bell’s new breakfast menu, in particular its advertisement surrounding the new offering. In addition to understanding consumer expectations of the breakfast menu, this research will gauge reactions to the advertisements as well as impact on purchase interest.

OBJECTIVES ü Understand consumer expectations for a Taco Bell breakfast menu, including current purchase interest ü Explore initial reactions to the “Ronald McDonald” advertisement, focusing on: - Likes and dislikes - Areas of improvement - Impact on purchase interest

METHODOLOGY & SCOPE Instant Research Community (IRC) with 26 consumers who had purchased breakfast from a QSR in the past 3 months, and who were non-rejecters of Taco Bell. For more information on respondents see Appendix A.

SUMMARY OF KEY FINDINGS & IMPLICATIONS Understand consumer expectations of the Taco Bell breakfast menu Given what they know about the Taco Bell lunch/ dinner menu, most respondents said they expect the breakfast menu to include Mexican items. The most commonly mentioned items were breakfast burritos and breakfast tacos, though in a broader sense, people also said they would expect spicy and savory vs. sweet foods. Concerns stemmed from the menu perhaps not offering enough “conventional” breakfast options, or the options being low quality or too unhealthy.

Before seeing the advertisement, the majority of respondents expressed some interest in trying the breakfast menu.

Explore initial reactions to the “Ronald McDonald” advertisement In general, respondents liked the “Ronald McDonald” ad and felt the use of those real life Ronald McDonalds was cute or funny. However, A portion of respondents also felt that the ad had a slightly negative tone, and they expressed a disapproval of this particular method.

Additionally, several respondents expressed disappointment in the food item highlighted (the breakfast waffle), and many were unhappy that the commercial did not focus more on menu options or the food items themselves. While interest stayed high, a handful of respondents shifted to lower interest after seeing the ad, stating that the breakfast waffle did not seem appealing. Respondents requested better insight into the menu items and more images of the food offered.

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DETAILED FINDINGS This section expands on the Key Findings and includes verbatim responses from respondents. Findings here are broken out by objective. All verbatims are (sic).

1. Understand consumer expectations of the Taco Bell breakfast menu

The majority of respondents had positive expectations of the Taco Bell breakfast menu, most of which were centered on Mexican-centered options like breakfast burritos or breakfast tacos. Other commonly mentioned food items were “spicy” options like seasoned potatoes and peppers. Respondents also often mentioned that they would expect the breakfast options to be convenient, portable (easy to eat on the go) and affordable or inexpensive. In general, respondents expressed excitement at the new menu, even when they were not sure how to reconcile Taco Bell tacos with a breakfast menu. That said, the largest concern was that there would not be enough options that fit with Taco Bell’s Mexican theme, that the restaurant would not offer “traditional” breakfasts (biscuits or pancakes, for example), or that the options offered would be too different or “unconventional.”

These reactions were mirrored in polling, when respondents were asked their likelihood of trying the new menu. Rejection of the Taco Bell breakfast centered skepticism that Taco Bell, known for fast tacos, could not make a quality breakfast, or offer any healthy options.

Poll choice Responses I am very likely to try the new Taco Bell breakfast menu 14 I am somewhat likely to try the new Taco Bell breakfast menu 8 Neither likely nor unlikely, not really sure 2 It is somewhat unlikely that I’ll try the new Taco Bell breakfast menu 1 It is not at all likely that I’ll try the new Taco Bell breakfast menu 1

“I'm not sure what to expect, but I suppose it would be Mexican-themed breakfast food like breakfast burritos. It could be a good fit for Taco Bell if the foods are appealing and seem normal, but if the foods go too far into strange ideas, it might be a bad fit.” – Caucasian male, 32, Washington DC

“i would expect that the breakfast would be "taco like" but would hope that they would expand and do egg,cheese and sausage and bacon biscuits as well. it seems a little odd that we can get breakfast at taco bell but i think its about time they got into the breakfast routine!” – Caucasian male, 31, Florida

“I expect that there will be some pretty cheap choices, like dollar breakfast burritos and cinnamon tortillas. I think breakfast will be a good fit for Taco Bell because they will be able to offer inexpensive choices that are filling.” – Caucasian female, 33, Pennsylvania

“I think it is a great idea for Taco Bell to start a breakfast menu and will be interested to see what all they have to offer. I just hope that they don't completely change what they are known for and go a completely different route. Keep it fast Mexican food and not become only breakfast items about eggs, potatoes and tortillas like everywhere else. “ – Caucasian female, 34, Texas

“It seems like somewhat of a strange fit. The food I normally find at Taco Bell is not what I usually associate with breakfast. If they're going to do this they will have to offer the usual breakfast staples like egg dishes and combos with egg, cheese, and breakfast meats. They will also have to do something different to draw

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customers away from the usual breakfast spots. Tacos for breakfast don't really work for me. I imagine there are breakfast foods unique to Mexican cuisine, so I would expect to see something like this.” – Caucasian male, 29, Pennsylvania

“I would not purchase breakfast from Taco Bell. To me Taco Bell is fast and cheap mexican food. I would think the Taco Bell breakfast menu would contain breakfast burritos. I do not think Taco Bell would offer a variety of options or a healthy breakfast on the go. If I am going to choose a unhealthy breakfast I would prefer a coffee and muffin.” – Caucasian female, 26, Pennsylvania

2. Explore initial reactions to the “Ronald McDonald” advertisement

In responses to the “Ronald McDonald” advertisements, consumers generally liked the concept of using different men named Ronald McDonald and felt it was funny, though some were quick to mention that the waffle taco featured did not sound immediately appealing. Though some expressed an interest in a waffle taco, many respondents felt this option was not something they would try, and expressed a desire to see more offerings. The majority of respondents also said the ad failed to show the food item up-close, which was disappointing to those who wanted to see the actual menu options more prominently featured.

Polling administered after the ad was seen showed similar trends — while a couple expressed a more extreme interest in trying the breakfast menu, others were turned off by their first peek at the waffle taco.

Poll choice Responses I am very likely to try the new Taco Bell breakfast menu 16 I am somewhat likely to try the new Taco Bell breakfast menu 4 Neither likely nor unlikely, not really sure 2 It is somewhat unlikely that I’ll try the new Taco Bell breakfast menu 3 It is not at all likely that I’ll try the new Taco Bell breakfast menu 1

“my first impression after watching this ad was "jajajajajjaja the mcdonals family is taking taco bell for breakfast". i liked the way they used those names and i love these type of ads” – Hispanic male, 22, New York

“I really like the fact that they used people with the name ronald mcdonald i think it is very wity and just that alone makes me want to try it a little bit more. i also like that some of the guys describe the waffle taco but i dislike how you don't get to see it.” – Caucasian female, 19, California

“The ad informed me about what ingredients they added into the waffle Taco. At first I was skeptical about cheese being added, but I know now that the waffle, sausage, bacon, syrup & eggs are a good match” – African American female, 30, Florida

“Liked - The message was clear that Taco is offering new breakfast package. Disliked - couldn't see enough of the food. Lacked enough visuals of the product that they were offering.” – Asian male, 31, New York

“Although the choices are new, I feel the brand has moved away from it's traditions of more hispanic cuisine. Also, the menu choice mentioned did not seem healthy.” – Caucasian female, 23, Illinois

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“I like the play on Ronald McDonald but I do not think I would try the item they are discussing. It does not sound appealing and does not seem like a food you would see at Taco Bell. “ – Caucasian female, 34, Texas

“i didn't really like it. first off, did i just miss it or did the commercial barely show what this waffle taco looked like. before i order something, i need to see it first. and, i don't really see taco bell and waffles. a breakfast burrito, i would have tried. a waffle taco, i more than likely will not try. and, what did ronald mcdonalds have to do with taco bell???” – Caucasian female, 32, Missouri

While most respondents saw the use of various Ronald McDonalds as funny, cute or clever, a portion said they felt this was a negative choice or an attack on McDonalds, which was not appealing or effective. Given the option to offer suggestions for improvement to the ads, however, the most common request was a better understanding of the other food options available, and a better picture of the actual foods (and beverages) that they could expect.

“I think it's clever. Ronald McDonald is a name every one knows, and it's funny to think of him preferring a different brand's food, even if "he" is really just everyday people. “ – Caucasian male, 32, Washington DC

“I think he use of the people named Ronald McDonald was a smart advertising idea. When you think of Ronald McDonald you think of McDonald's, so I guess what they're trying to get at is that even McDonalds fans would like this new breakfast.” – Caucasian female, 33, Pennsylvania

“In the ad Taco Bell should have educated the consumer on all options taco bell will offer for breakfast. So far I have only heard about a taco waffle that I will not be trying.” – Caucasian female, 26, Pennsylvania

“Taco Bell should have shown some more close ups of the food as that can tempt the taste buds further. it should have shown some close ups of biting into the food as that is always very enticing.” – Asian female, 25, Virginia

“I think the commercial is cute; however I am not a fan of Taco Bell being negative towards McDonalds. Both serve fast food dishes for people on the go at an affordable price.” – Caucasian female, 23, Illinois

“They could have shown the product they were offering with lot more focus rather than going for cheap stunts of The McDonalds” – Asian male, 31, New York

“first, not cut down their competition. that is showing people that taco bell is desperate and i lost respect for them. second, make the breakfast more desirable. taco bell is mexican food. they should have made an egg burrito with salsa or something. i don't know what waffles have to do with mexican food.” – Caucasian female, 32, Missouri

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APPENDIX A: RESPONDENT INFORMATION ü A total of 26 respondents were included in this study ü All were age 18-35 ü All reported to have purchased breakfast from a quick service restaurant in the past 3 months ü None were classified as Taco Bell rejecters (all would consider purchasing food from Taco Bell)

APPENDIX B: STIMULI USED

Taco Bell Ronald McDonald Ad https://www.youtube.com/watch?v=k7o6AVGgM4g Dir.: Errol Morris Agency: Deutsch L.A.

Scope of Analysis As with all qualitative research, the findings reported here should be considered directional and not serve as a means of statistical significance.

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