Is the world ready for Taco Bell?

The Mexican QSR, a hot concept in the U.S., has been slow to expand internationally. That’s beginning to change, and here’s why.
Photograph courtesy of Taco Bell

Taco Bell has been one of the best, most consistent-performing chains in the U.S. in recent years.

The Irvine, Calif.-based chain’s strong marketing, low-priced fare and healthy franchisee base have helped its system sales grow 33% over the past five years, according to data from Restaurant Business sister company Technomic. That’s made Taco Bell the fourth-largest chain in the U.S.

That success has yet to translate outside our borders, however. It operates just 500 locations internationally, compared with more than 6,500 domestically. That sticks out at parent company Yum Brands, where sister chains KFC and Pizza Hut are global growth pioneers.

“I spend every waking moment trying to figure out exactly the question you just posed,” said Liz Williams, president of Taco Bell International, in an interview with Restaurant Business.

“We’re starting from a really good point,” she said. “The U.S. business being so strong really has been a gift in terms of a jumping-off point for the international business.”

Williams believes the world is finally ready for Taco Bell, and she believes that Taco Bell is finally ready to take advantage of it.

Earlier this week, for instance, the company inked a deal with Burman Hospitality Private Limited to build 600 locations in India over the next 10 years, potentially establishing that country quickly as Taco Bell’s largest international market.

Late last year, the chain made a public entrance into London, an obviously important market in Taco Bell’s plans to grow in the U.K., by making the under-construction Big Ben clock chime again. Taco Bell expects to have 50 locations in the U.K. by the end of the year.

Taco Bell also plans to keep expanding across Asia, notably in Thailand, and it expects to open its doors in Sydney and Melbourne, Australia, in the coming months.

“The Mexican category internationally is really hot,” Williams said. “It’s becoming much more well-known and picking up a lot of energy in terms of consumer pull. When you go to the market, they know about the Mexican category, making it easier to launch the brand.”

Williams said that Yum Brands has focused more of its attention on growing the Taco Bell brand internationally.

And Taco Bell has found the right formula for expanding in international markets. The company’s locations outside the U.S. are more like the Cantina locations the chain has opened in places such as Las Vegas and New York.

They are urban, in-line locations without a drive-thru that frequently sell alcohol. They also have kiosk ordering and digital menu boards. “The look and feel internationally is much more similar, by design, to our restaurants in Las Vegas and in New York,” Williams said.

Taco Bell’s restaurants have a more upscale look and feel in India, where some have table service. Customers “enjoy congregating” at the locations, Williams said. “We’re such a social experience.”

Taco Bell has the menu flexibility that it should be able to go into new countries and adapt more readily to local tastes. India is a case in point.

“Taco Bell is perfectly suited for India,” Williams said. “You can take any product and make it vegetarian, or nonvegetarian. India as a market is so heavily vegetarian. Half our food served there is vegetarian.”

The company has actually been in the country since 2010 and has been working in that time on “the right business model, the right expression of the brand.”

Williams said things came together about three years ago with the menu and brand positioning, as well as the look and feel of the market. She then said Taco Bell found “the terrific partner” in the Burman Group.

The chain has many of the same products in India, such as a chicken soft taco and a Crunchwrap. But it also has a Tikka Masala Burrito and a Potaco—a potato taco—that fit more with locally relevant tastes.

Indeed, tacos, more than burgers or other menu items, lend themselves to flexibility. “Over in China we’re about to start the most successful promotion of the year, the Crayfish Taco,” Williams said.

“I like to call those ‘bridge products,’” she added. “They bridge really nicely to adapt to local flavors.”

Yum Brands believes Taco Bell has considerable potential in international markets. While the QSR still has room to grow domestically, the rest of the world is virtually all white space. And now, Williams said, both Yum and those markets are ready for the brand.

Yum’s success with KFC, which operates 18,000 locations outside of the U.S., shows how big foreign markets can be.

“It’s a huge opportunity,” Williams said. “When you think about how big KFC is internationally, compared to just over 500 restaurants for Taco Bell, it’s a great opportunity. We have a great infrastructure in the U.S. We can leverage the scale of the fabulously strong U.S. brand.”

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