DOES CHINA HAVE APPETITE FOR TACO BELL?
COMPANY THAT OWNS TACO BELL TAILORS MENU FOR LOCAL TASTES
Until he was appointed manager of a Taco Bell in China, Will Cao had never seen a taco before. When confronted with its hard, U- shaped shell in Los Angeles last June, he wondered: How do you eat it?
“Everything was spilling all over the place,” said Cao, a 31- year- old Shanghai resident. “Then I looked at the other customers to learn that, actually, you are supposed to tilt your neck to eat it.”
Cao’s employer is betting that other Chinese diners will figure it out. Yum China, the company behind KFC there, last month opened the first Taco Bell in China in years, and says it plans to open an unspecified number more.
The company is turning to double- layered tacos and overstuffed quesadillas in hopes of regaining ground in a market where its fried chicken has shown the limits of its appeal.
It won’t be easy. First, there is the matter of what’s on the menu: Mexican food. Tacos and burritos are virtually unknown in China, where many diners prize aspirational noshes from Europe, Japan and t he United States, and look skeptically at what they see as poorer fare from other developing countries.
Then there is Taco Bell’s very American take on Mexi can meals. Even among fans, many of its more artery- hardening menu items are best considered latenight guilty pleasures. “It’s like a dirty thing that I love Taco Bell so much,” actress Anna Kendrick once said on Conan O’Brien’s talk show, adding, “it has to be under cover of darkness in my car.”
For its new store in Shanghai, Taco Bell is leaving behind some of those greasy American favourites, such as taco shells made out of Doritos or fried chicken cutlets.
Instead, as it once successfully did with KFC, Yum China is tailoring the menu to local tastes. It is offering basic, understandable TexMex fare such as a crunchy taco supreme and a chicken quesadilla. Other dishes made for the Chinese market include a shrimp and avocado burrito and a spicy fried chicken dish, a meal that has broader appeal with the Chinese.
And in a feature rare in the United States — perhaps for good reason — the China store offers Japanese beer and alcoholic slushes.
Yum China is aware of the magnitude of the challenge. Micky Pant, its chief executive, says eating a taco is “a whole new way of learning.”
The company is learning its own lessons. In the 1990s, Chinese consumers flocked to KFC and other Western fast- food chains, drawn by their clean bathrooms and air conditioning — a novelty in China at that time. But restaurants like McDonald’s and KFC have since struggled against increasing competition from quick- service Chinese restaurant chains and a shift toward healthier eating.
While China is still a lucrative market for companies including Apple, Nike and Starbucks, other U. S. firms are finding the going tougher than it used to be. The once seemingly insatiable appetite for all things f oreign has stalled in a marketplace where domestic brands are catching up and consumers are richer, with more choices than ever.
Big U. S. fast- food chains are distancing themselves from their China operations. Yum Brands divested Yum China last year, while McDonald’s is selling a control- ling stake in its business to a locally led investor group.
That led to Yum China’s gamble on Taco Bell. Instead of Taco Bell’s U. S. approach — quick, cheap, often unabashedly junky — the Shanghai restaurant seems intent on easing Chinese diners into ordering.
The menu in China features enlarged images of foods on a lighted board and a transparent kitchen, where skeptical customers can watch their food being assembled.
Yum dropped fajitas because focus groups said Chinese people did not like the “peppery type of spiciness that Westerners like,” said Jimmy Chen, senior director of Yum China’s brand development division. Chinese consumers wanted warm cheese on their tacos, not the cold grated variety offered in the United States. They asked for alcohol to be offered.
The bean burrito was “controversial,” Chen said; while some Chinese who had studied abroad considered it a must, others found two types of starches layered on top of one another unfamiliar. Ultimately the bean burrito was booted.
Said Chen, “We just need a little more time.”
Yum has tried Taco Bell in China before. In 2003 it opened full- service restaurants called Taco Bell Grande in Shanghai, then in the southern city of Shenzhen, offering higher- end f are like steaks and fajitas. But it pulled out five years later.
“They had little Chinese girls with sombreros on them looking ridiculous,” said Joel Silverstein, president of the consultancy East West Hospitality Group and a former senior executive with PepsiCo restaurants, the one- time parent of Yum Brands. “That was a complete disaster.”
Still, Yum once seemed to have cracked the China code. Since opening its first KFC near Tiananmen Square in 1987, Yum has grown into the biggest Western fast-food chain in the country, with more than 7,300 stores in over 1,100 cities, three times that of its rival McDonald’s. Part of the secret was localization: KFC offered fried dough sticks and congee for breakfast, while its sister brand Pizza Hut served pizzas topped with seafood and durian, a pungent fruit from Southeast Asia.
But in recent years Yum has grappled with a series of food quality scandals in China.
In 2012, Chinese news media reported that KFC c hicken s uppliers used antibiotics and growth hormones in their meat, news that hurt sales and prompted Yum to cut its number of suppliers. The company emphasized that its food was safe.
Two years later, a Chinese state- run broadcaster reported that a meat supplier used by Yum was suspected of selling expired meat. Yum terminated the supplier, which was later fined about $ 3.5 million by regulators in Shanghai. Sales growth weakened after both episodes, and by 2015 sales at stores that had been open for at least a year continued to decline.
Adding to the decline: an increasingly sophisticated customer base that eschews Western fast food for other options. “The biggest challenge is making the connection with the younger generation,” said Ye Liyan, marketing director in China for Pizza Hut.
In its own effort to refurbish, Pizza Hut is rolling out “concept stores” across China — in Shanghai, one features a robot waiter and a table with a built-in screen for customers to build their own pizzas.
Taco Bell may be an unlikely restaurant to connect. “Chinese people have mostly admired things from Europe and the United States,” said Darcy Zhang, a food blogger based in Shanghai. “But Mexico itself is a developing country, and so many Chinese people would wonder why they would have to try Mexican food.”
Yum China formally opened the Taco Bell on Jan. 9 in Shanghai’s prime Lujiazui area, a popular tourist spot. Former basketball star Shaquille O’Neal, who made the famous Taco Neck commercial in 1995, participated in a taco-eating competition.
On a recent Tuesday, the store was packed at lunch, with a 15- minute wait to get a table. Diners sat on chairs below surfboards suspended from ceilings. Workers in polo shirts served margaritas and draft beer.
“If you didn’t tell me, I wouldn’t even know this was Mexican food,” said Zang Jing, 30, a bank clerk, adding that she thought the food was “not bad.”
Liu Xiaoyi, chief editor of a local food guide, said she believed Mexican food could take off in China because people are “willing to try new things.”
“They are willing to listen to people telling them, ‘ You have to look at it from a different angle to appreciate it, it’s not the same as a Chinese meal but it’s also delicious,’” she said after photographing her burrito.
Her friend, Zhu Li, disagreed. “It really does not look good when you eat it,” said Zhu, 45, an insurance agent.
“It’s all over your hands and dripping on the table. It just makes me uncomfortable.”