Taco Bell Introduces $2 Combo Meal

The fast food wars are heating up.

This weekend, Taco Bell (Stock Quote: YUM) will begin advertising its new $2 combo meal in an attempt to undercut competitors like McDonald’s and attract cash-strapped consumers. However, the combo meal actually went on sale yesterday.

According to its Web site, Taco Bell is offering four different combination meals for $2 (plus tax). On the list, there’s the Grilled Chicken Burrito, the Gordita Supreme, the Double Decker Taco and the Beefy 5-Layer Burrito. Each of those entrees will come with a bag of Doritos and a fountain drink on the side. And each one of those sounds more decadent and unhealthy than the next.

Yet, when I spoke to a cashier at a Taco Bell on 14th Street in Manhattan, they said the price of the combo may vary from store to store. This particular store is selling it for $4. (Now you know why the cost of living is so high in NYC.)

Still, ABC News notes that at $2, this new deal will be the cheapest combo meal among the major fast food companies, beating out McDonald’s (Stock Quote: MCD) where you can get three items from the dollar menu for, you guessed it, $3. “The restaurant industry has struggled throughout the recession and recovery to respond to consumer demands for cheap eats. Pizza Hut is selling $10 any-size pizzas. T.G.I. Friday's briefly offered $5 sandwiches last year. Denny's recently rolled out $4 all-you-can eat pancakes,” ABC reports.

If you’re wondering how the chain can afford to do it, ABC has the answer. “The 150 million bags of Doritos it expects to sell this year will come from former parent and current supplier PepsiCo. Beverages typically cost chains pennies on the retail dollar.”

While Taco Bell pushes prices lower, McDonald’s is becoming more upscale, renovating restaurants and introducing pricier meals. It remains to be seen which strategy will win out in the end. All I know is if some stores can charge up to $4 for this combo, I’d rather just get the all-you-can-eat pancake deal at Denny’s instead.

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