Taco Bell to Test Delivery to Some of Its Most Loyal Customers

NEW YORK (TheStreet) -- Taco Bell may have found a way to keep up the strong sales growth it's seen from its popular new breakfast and dinner items.  

The division of YUM Brands (YUM) said Wednesday it will be testing delivery on college campuses, where its cheap, late-night fare has long been a staple. 

Making delivery available, possibly via a third party partner, could eventually lead to significant additional revenue for Taco Bell. According to the most recent data from the U.S. Department of Education, some 21 million students attended American colleges and universities last fall.

Delivering burritos and nachos to hungry college kids could help Taco Bell take a bite out of the lucrative pizza delivery market, which accounted for approximately $10 billion in sales last year, according to Domino's Pizza (DPZ). It remains to be seen, however, whether Taco Bell can deliver its food quickly enough so that it remains fresh and doesn't get soggy.

Taco Bell's same-restaurant sales rose 6% for the second straight time in the first quarter, a solid result that came despite inclement weather, which hurt traffic at restaurants from fast casual Chipotle (CMG) to sit-down eatery Brinker International (EAT). YUM's stock is up 20.6% over the past year, compared to 10.6% for the S&P 500

Creed also didn't rule out bringing delivery to chicken chain KFC. "Temperatures for buckets of chicken hold up very well," said Creed, concluding "I am very excited about delivery."

KFC's U.S. operations notched a 7% same-store sales improvement in the first quarter. Demand for KFC's new $5 fill-up bowls, released last summer, continued to be the main sales driver. The bowls take aim at price-conscious, calorie-counting millennials that tend to order salad and burrito bowls from the red-hot Chipotle.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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