Did Demolition Man Predict the Future of Taco Bell?

Yum! Brands YUM, the parent company of Taco Bell, will report its earnings for the quarter on Tuesday after the market closes. Analysts expect an EPS figure of $0.97 on revenues of $3.64 billion. Even for investors not involved in shares of Yum, the report could be interesting as it might shed some light on the state of China's economy. Yum Brands is directly exposed to China through its Chinese KFC outlets, which are increasingly popular among the large Chinese consumer base. Yet what ultimately could be most interesting might be comments from the subsequent earnings call. Look for Yum management to give guidance for the company's future plans, particularly its Taco Bell franchise. So where does Sylvester Stallone and Demolition Man come in? In the 1993 Sci-Fi action flick Demolition Man, Stallone plays John Spartan -- a Los Angeles cop who awakes in the future to find the world significantly different from the way it was in the 1990s. Humorously, Stallone comes to find out that Taco Bell is the only restaurant option in the future version of the world, and what's more, it is now an upscale place requiring formal attire (the entire film is available for instant streaming on Netflix NFLX). All kidding aside, Taco Bell might seriously be headed in a more upscale direction. According to the Denver Post, the company recently unveiled a prototype store in Commerce City, Colorado. The new store is described as sleeker and more “hip,” and features modern artwork and an aluminum exterior. This followed Taco Bell's move to release an expanded menu over the summer. The new menu is priced above the chain's traditional offerings and is composed of more expensive ingredients. Last week, noted hedge fund manager David Einhorn argued that Taco Bell's new strategy was likely to hurt Chipotle CMG. Einhorn recommended that investors short Chipotle, as Taco Bell's premium menu would have a negative impact on shares of the burrito-maker. Taco Bell's new-look building might be yet another step in a shift towards re-establishing Taco Bell as a premium brand. If the strategy continues, Einhorn's call may prove particularly prescient. In that case, Taco Bell might also weigh on shares of Jack in the Box JACK, which owns Qdoba -- a direct competitor to Chipotle. Of course, supporters of Chipotle might point to the recent shift at McDonald's MCD and its effects (or lack thereof) on Starbucks SBUX. In recent years, the hamburger giant has expanded into the coffee realm, offering mocha lattes and other fancy coffee drinks while still serving up its classic Big Macs and french fries. McDonald's, like Taco Bell, even went so far as to redesign many of its stores with a more coffee-shop orientated and upscale feel. Yet, despite the shift in McDonald's strategy, Starbucks has remained resilient. If history repeats itself, the market might have room for both Chipotle and a reinvigorated Taco Bell.