Taco Bell makes first-ever move in fast-growing category

Taco Bell has built its brand around innovation, consistently introducing bold new menu items while keeping prices accessible. That strategy has helped the fast-food chain remain culturally relevant, keep the brand fresh, and maintain strong customer interest amid rapidly shifting consumer trends.

The approach has also helped Taco Bell outperform many competitors during a difficult time for the restaurant industry. Persistent inflation and broader economic uncertainty have pushed consumers to become more value-conscious, making them more selective about dining out and forcing restaurants to compete harder for fewer visits.

Prices for food away from home increased 3.6% during the 12 months ended April 2026, according to recent data from the U.S. Bureau of Labor Statistics.

At the same time, foodservice traffic declined 1% in the quarter ending June 2025, as consumers cut back on dining out, according to Circana. 

To combat those challenges, Taco Bell has increasingly leaned on beverages to drive growth, a strategy that many restaurants are now prioritizing as drinks become a larger contributor to traffic, profitability, and customer engagement.

Beverages are becoming a major profit driver for restaurants

Beverages are among the most profitable categories in the restaurant industry.

Restaurants typically operate on thin net margins of around 3% to 6%, according to industry data from Toast.

Drinks, however, can generate significantly higher margins, often between 60% and 80%, while food generally delivers lower gross margins of approximately 65 to 70%, according to KitchenNmbrs.

"Restaurants often generate significant profits from soda sales due to the low cost of production and high markup," beverage industry trade publication CySoda said.

"Typically, a fountain soda costs a restaurant only a few cents per serving, including the syrup, carbonated water, and cup, yet it is sold to customers for several dollars."

That profitability has prompted several major chains, including McDonald's and Chick-fil-A, to expand their beverage offerings and invest in drink-focused concepts.

Here's some of my previous coverage on fast-food capitalizing on beverages:

• McDonald's drops 6 new drinks and a surprising fashion collab
• Chick-fil-A launches a new drinks-based restaurant brand

Fast-food chains are also increasingly competing for morning traffic and premium beverage purchases, an area historically dominated by coffee-focused brands such as Starbucks and Dunkin'.

Taco Bell is taking a similar approach as it works to expand beyond its traditional late-night and value-centered identity.

Taco Bell launches permanent Cold Brew lineup

Taco Bell is expanding its coffee offerings with the launch of its first-ever Cold Brew lineup on May 21. The beverages will be available exclusively at all Live Más Café locations, according to a press release emailed to TheStreet by the company.

The lineup will become a permanent part of the menu and includes Taco Bell's signature Cold Brew alongside three flavored Cold Foam options:

• Purple Velvet Cream Cold Brew: Cold Foam infused with horchata-inspired flavors and a purple hue
• Caramel Dulce Cold Foam: Cold Foam infused with caramel notes and a light golden color
• Vanilla Cream Cold Foam: Cold Foam infused with vanilla flavor

"We've spent decades building a bold flavor legacy at Taco Bell, and now we're bringing that same innovative mindset to coffee at Live Más Café," said Taco Bell Global Chief Food Innovation Officer Liz Matthews in a statement.

"As we continue to build the Café experience, Cold Brew and Cold Foams felt like the natural next step – bringing a flavor-forward, premium coffee experience into fans’ everyday routines."

Each beverage is paired with Taco Bell's signature Cold Brew, which is made with a blend of medium- and dark-roast Arabica beans.

Customers can order a 16-ounce drink for $4.59 or a 20-ounce size for $4.99 at all Live Más Café locations through Taco Bell's store locator.

Cold Brew is part of Taco Bell's broader beverage growth strategy

The Cold Brew lineup launch is part of Taco Bell's broader initiative to build a $5 billion beverage business by 2030.

Its Live Más Café concept serves as a testing ground for beverage innovation, allowing Taco Bell to experiment with new flavors, formats, and premium drink offerings while gathering customer feedback in select markets before potentially expanding products nationwide.

Like many major restaurant brands, Taco Bell frequently introduces new menu items through limited-time offers or regional test markets before committing to a nationwide rollout.

This strategy allows companies to evaluate customer demand, refine recipes, and reduce financial risk before expanding a product to all markets. Test launches also help create consumer anticipation, which has become increasingly important as competition intensifies across the restaurant industry.

According to Taco Bell, more than 950 million beverages were sold in 2025, with drinks included in nearly 60% of orders.

The company also said 43% of specialty beverage purchases were standalone orders rather than add-ons to meals.

Taco Bell revealed Live Más Café locations are outperforming the broader system by:

• Selling approximately 25% more beverages than standard Taco Bell restaurants
• Delivering double-digit sales growth post-conversion
• Generating higher average unit volumes than traditional locations

Taco Bell's expansion into cold brew also aligns with broader consumer demand for premium coffee beverages.

The global cold brew coffee market was valued at approximately $506.1 million in 2023 and is projected to reach $1.75 billion by 2030, growing at a compound annual growth rate of nearly 20%, according to Grand View Research. The North American region dominated the market in 2023, accounting for 71.4% of the revenue share.

However, Taco Bell faces intense competition in the premium beverage category, where chains including Starbucks, Dunkin', and Dutch Bros. continue investing heavily in cold coffee innovations and specialty drinks.

Here's some of my previous coverage on menu innovations by rival chains:

• Starbucks brings back two viral drinks not seen in nearly a decade
• Dutch Bros. is adding breakfast to menus nationwide
• Dunkin' copies trendy Starbucks menu move

What is Taco Bell's Live Más Café?

Taco Bell opened its first-ever Taco Bell Live Más Café location in late 2024 in Chula Vista, California, through a partnership with Diversified Restaurant Group, one of the company's largest franchisees.

Since then, the concept has expanded to 38 locations across Houston, Dallas, Las Vegas, and Southern California.

The specialty beverage concept operates inside select Taco Bell restaurants and offers handcrafted coffees, energy drinks, dirty sodas, teas, chillers, freezes, agua refrescas, and other beverages alongside Taco Bell's traditional food menu.

The concept also reflects a broader industry shift toward beverage-led growth, as restaurant chains increasingly look to specialty drinks to boost margins, increase visit frequency, and attract younger consumers seeking customizable and premium drink options.

Taco Bell's strategy continued delivering strong results

Taco Bell's focus on value, innovation, and beverages appears to be paying off.

In the first quarter of 2026, Taco Bell parent company Yum! Brands (YUM) reported strong results for the chain:

• System sales increased 10% year over year
• Same-store sales rose 8%
• GAAP operating profit climbed 16%
• Taco Bell represented 39% of Yum! Brands' divisional operating profit
• The chain ended the quarter with 9,021 restaurants worldwide

According to company executives, Taco Bell's strategy of offering menu options across multiple dayparts and dietary preferences has helped strengthen the brand with consumers.

"These expanded perceptions show that Taco Bell is driving not only short-term sales momentum, but importantly, long-term brand strength," said Taco Bell CEO Chris Turner during the company's Q1 2026 earnings call.

"Taco Bell is battling for the future consumer by pairing unbeatable value and innovation with cultural relevance."

Turner added that beverages remain a key category for the brand's future growth, with Taco Bell continuing to prioritize drink innovation and deepen consumer engagement as it expands its beverage platform.

As fast-food chains increasingly compete on beverages, Taco Bell's investment in premium coffee and specialty drinks could play a larger role in helping the company diversify revenue streams, expand into new dayparts, and strengthen long-term customer loyalty.

Related: Starbucks rival launches breakfast deals under $4