A long way from Mexico: Company bets China has appetite for Taco Bell

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 America, Japan and Europe and look sceptically at what they see as poorer fare from other developing countries.
 
Then there is Taco Bell’s very American take on Mexican meals. Even among fans, many of its more artery-hardening menu items are best considered late-night guilty pleasures. “It’s like a dirty thing that I love Taco Bell so much,” the 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 Tex-Mex 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 America — 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 American firms are finding the going tougher than it used to be. The once seemingly insatiable appetite for all things foreign has stalled in a marketplace where domestic brands are catching up and consumers are richer, with more choices than ever.
 
Big American fast-food chains are now distancing themselves from their China operations. Yum Brands divested Yum China last year, while McDonald’s is selling a controlling 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 American 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 sceptical 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 fare 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 onetime 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 localisation: 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.

© 2017 The New York Times News Service