As tastes change, food companies try donning hipster guises

HUNTINGTON BEACH, Calif.—At a taco shop in Southern California, milkshakes are served in mason jars and a chalkboard menu lists “The 1%er” made with lobster meat.

The logo is a pink skull and instead of buzzers, customers are given license plates so servers can identify them when bringing out orders.

Nowhere is it evident that the U.S. Taco Co. is an outpost of a chain better known for cheesy gut bombs: Taco Bell.

Major companies are testing whether it would pay to tuck away their world famous logos in favour of more hipster guises: PepsiCo, for instance, introduced a craft soda called Caleb’s last year and McDonald’s opened a cafe that lists lentils and eggplant on its menu. The stealth efforts reflect the pressures on the country’s biggest food makers, which are contending with the surging popularity of smaller brands that position themselves as decidedly less corporate.

For big food companies, the low-key efforts are a way feel out changing tastes and cozy up to new customers, particularly those in their 20s and 30s. Among that age group, marketing experts say there’s a growing preference for qualities like “real” and “authentic.” Additionally, millennials aren’t as impressed by big brands when it comes to food, and instead take pride in discovering and sharing new places and products with friends on social media networks.

As such, Allen Adamson of Landor Associates, a brand consulting firm, said companies should keep the images for their latest efforts smaller and more niche: “You don’t want to scream from the mountain top that you’re Pepsi.”

Unlike Pepsi cola—which has suffered sales declines since 1998, according to Beverage Digest—PepsiCo’s Caleb’s Kola comes in a glass bottle and is sweetened with cane sugar instead of high-fructose corn syrup.

There are no signs the drink is from the maker of Mountain Dew and Gatorade, and the bottles bear the words “Honor In Craft.”

Nick Hammit, who heads Caleb’s Kola at PepsiCo, said Caleb’s was the creation of a group of “Kola Nuts” at the company who were passionate about making a cola that “takes pride in every little aspect.”

McDonald’s also decided not to use its name recognition when it opened The Corner late last year.

The restaurant in Australia has a minimalist white exterior and serves dishes like Moroccan roast chicken, chipotle pulled pork and lentil and eggplant salad. The only sign it’s owned by McDonald’s is the “McCafe” in small print at the bottom of the restaurant logo.

McDonald’s spokeswoman Becca Hary said in an email the location is a “learning lab” for testing “new and different food and beverages never before seen in our restaurants.”

The Corner comes as McDonald’s suffers ongoing sales struggles, with global sales down 1 per cent last year at established locations as customer visits declined in regions around the world.

For its part, Taco Bell said in an emailed statement that U.S. Taco’s opening was the result of a “segmentation study” that found some people just don’t want to eat at traditional fast-food chains.

So instead of trying to win them over with Taco Bell, a team known as “intrapreneurs” at the company came up with an entirely separate concept, which charges about $3 to $4 per taco.

The shop in Huntington Beach, California caught the attention of Christina Kaoh, a 30-year-old research co-ordinator who was in the area paddle boarding with friends.

“I figured it’s going to be a hip version of tacos,” Kaoh said.

She only learned it was owned by Taco Bell after reading an article that mentioned the link in Mother Jones. Kaoh said she wouldn’t go back since she tries to support independent establishments, and didn’t particularly enjoy the food.

The ownership of smaller brands by major corporations isn’t a deal breaker, of course. In the beer industry, Anheuser-Busch InBev in 2006 created Shock Top. Harry Schuhmacher, editor of Beer Business Daily, said most people probably don’t realize it’s owned by the maker of Bud Light.

Even if they did, he said it wouldn’t matter now that Shock Top is established enough to have its own following.

In other cases, companies acquire smaller, fast-growing rivals to tap into trends. But acquisitions can be costly and come with risks, particularly at a time when food trends seem to be changing at an accelerating pace. By developing a brand in house, companies can test the waters without making as much of a financial commitment. If they’re lucky, it takes off and becomes a hit.

Still, the manufacturing of authenticity can get clumsy.

Yum Brands, the parent company of Taco Bell, as well as KFC and Pizza Hut, last year opened a Vietnamese sandwich shop in Dallas, Texas. The shop’s red star logo—a common symbol of communism—immediately upset the local Vietnamese community.

A food blogger for the Orange County Register called the goof by Yum “unbelievable,” noting that most the Vietnamese living overseas are refugees from the Vietnam War and hate the country’s communist government.

Yum quickly apologized and removed the logo.