Yum Lays Out Plans to Finally Go Big With Taco Bell Overseas

  • Brand will go from 280 to 1,000 international stores in 2020
  • Chain is opening twice as many non-U.S. locations this year

Taco Bell, facing an increasingly saturated U.S. fast-food market, is ramping up restaurant openings overseas.

The Mexican-themed chain will expand from about 280 locations abroad now to 1,000 in 2020, said Melissa Lora, Taco Bell’s president of international markets. This year, Taco Bell is doubling its international restaurant openings to about 40 from fewer than 20 in 2014. Even more new ones are planned for next year.

“There’s a really strong pull for Taco Bell to come to different countries,” Lora said in an interview. “There is a growing familiarity outside the United States with Mexican food.”

Taco Bell, owned by Yum! Brands Inc., is boosting its international expansion as the U.S. restaurant market becomes overrun with new and expanding chains. Domestically, fast-food sales growth is projected to slow to 1.7 percent in 2016, the smallest gain in seven years, according to data from researcher IBISWorld. That’s why Taco Bell is increasingly focused on overseas markets, such as Japan, where it opened its first location earlier this year.

The chain said last year that it wanted to reach about 1,550 international restaurants by the end of 2023. That goal still stands.

The company probably will test Taco Bell in China in the next year, said Micky Pant, head of Yum’s China unit.

“We see no reason why we shouldn’t be able to give that its first shot,” he said in an interview. “Taco Bell will test where the most obvious opportunity is, which would be one of the large cities.”

International Forays

In 1977, Taco Bell opened its first location outside the U.S. in Guam. Since then, it’s expanded in countries including Guatemala, Costa Rica, the U.K., Spain, South Korea and most recently Japan, where it sells cheesy fries and shrimp-and-avocado burritos. Taco Bell is opening a second location in Japan this month, which will serve breakfast because it’s near office buildings. The chain is focused on expanding in Asia and Europe, Lora said.

Still, Taco Bell’s international presence is tiny compared with Yum’s other brands, KFC and Pizza Hut, which have thousands of locations across the globe. That’s because Mexican fare isn’t as familiar as pizza and chicken outside the U.S.

The company also is coping with broader challenges, including the rocky economy in China. Yum on Thursday said that while it expects KFC’s fourth-quarter same-store sales in the country will rise, Pizza Hut’s will fall. Yum announced in October that it’s spinning off its China unit into a separate publicly traded company.

Yum Brands fell 0.8 percent to $73.19 Thursday in New York. The Louisville, Kentucky-based company’s shares are little changed this year.

Smaller Menu

To help customers better understand nachos and burritos, Taco Bell enters new countries with a smaller menu, offering just the basics as founder Glen Bell did when he opened the first location in 1962. The chain’s new international locations feature an open kitchen so diners can see their food being made.

Social media, including Instagram, also is fueling a better understanding of Mexican food abroad, said Lora, who’s active on the photo-sharing app.

“They don’t always understand what the food is, or how to order the food, or what the ingredients are,” she said. “It takes the mystery out of it.”

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