The name of the chic, cantina-style Mexican restaurant that recently opened in Shanghai’s Pudong district might surprise you: Taco Bell. After a difficult—and ultimately unsuccessful—first attempt to crack the Chinese market in 2008, the familiar fast food brand is ready to give it another go.

Spun off from the parent company Yum Brands, the new Yum China Holdings is moving forward quickly, opening both an upscale Taco Bell and a new Pizza Hut concept restaurant within a stone’s throw of each other in Shanghai. The company hopes to lure members of the upwardly mobile Chinese middle class to embrace foreign flavors as this group begins to travel more frequently than ever before and fulfill their hunger for something exotic and new.

Although the brand’s name may be familiar already, Yum China Holdings has researched and fine-tuned the Taco Bell experience to ensure that it will appeal to more than just business travelers and expatriates. The menu has been adjusted for local tastes, capitalizing on the rising popularity of avocados in Chinese culture (or butterfruit, as it is locally known) and familiar sources of protein such as shrimp. Local beverage offerings, including oolong milk tea, green tea with calamansi citrus fruit, the Japanese brand Asahi beer, and frozen alcoholic beverages, have also been added. Food comes in plastic, reusable baskets (not wrappers), and the restaurant’s kitchen is designed to be open and stocked with baskets of fresh fruit. The experience is decidedly upscale, especially in comparison with the usual Taco Bell restaurant experience in the United States.

Although the company’s long-term success in the Chinese market remains to be seen, the Taco Bell brand has bold plans for an aggressive international expansion. In particular, the company hopes to increase the number of restaurants outside of the United States from 300 to 1,000 by 2022. China is a prominent feature in those plans, and if it can achieve a successful rollout of the Shanghai location, Yum China Holdings is confident that it can plot a road map to make further inroads throughout the country in the future.

Discussion Questions:

1. What challenges do retailers face when they try to expand a well-known brand into a foreign market?
2. What unique features of the Chinese market represent opportunities or threats to Taco Bell’s expansion there?

Source: Angela Donald, “5 Things That Will Surprise You about Taco Bell’s Relaunch in China,” Advertising Age, January 12, 2017