Taco Bell Bets Big on China

Will it fare better than McDonald’s has?

Doritos Locos tacos are arranged for a photograph at a Taco Bell restaurant, a unit of Yum! Brands Inc.
Patrick T. Fallon | Bloomberg | Getty Images
Doritos Locos tacos are arranged for a photograph at a Taco Bell restaurant, a unit of Yum! Brands Inc.

Taco Bell has entered a brave new world: China. The Doritos Locos taco inventor just unveiled a new store in in Shanghai and plans to have 1,000 restaurants operating internationally by 2022.

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This new push is a leap of faith for Yum China, which also oversees the KFC and Pizza Hut brands in the country. Yum previously operated a handful of concepts in China under the name Taco Bell Grande, but all closed by 2008. The menu at this new Taco Bell is different from the one fans in America are used to, with some of the well-known favorites getting "adapted to local tastes." Diners in China can expect to see some new sauces (like spicy Sriracha) alongside items like a shrimp and avocado burrito, spicy fried chicken, and Mexican fries.

This is the first step of a larger expansion plan from Yum China to add to its presence in China. The move comes as fellow fast-food giant McDonald's is in the midst of selling off portions of its business in China, as part of a larger overhaul that will cut back on company-owned restaurants and increase franchised locations. (The Golden Arches still has major expansion plans there, though, with plans for 1,500 new China and Hong Kong restaurants over the next several years.)

With more than 1.3 billion people and a huge emerging middle class, China represents massive growth opportunities for restaurant chains that can successfully crack the code of what Chinese consumers want. Starbucks already has more than 2,000 stores there and plans to open another 2,500 by 2021, meaning it will eventually be the coffee giant's biggest market, and if Taco Bell can win over customers, it could position Yum China to capitalize on more locations and continued growth.

Correction: Taco Bell has a global growth strategy of reaching 1,000 restaurants internationally by 2022, not just in China as stated in an earlier version of this article.