Betting that the Chinese palate is now ready for something Mexican, Yum! Brands, owner of Pizza Hut and KFC, recently announced that it will open its first Taco Bell restaurant in China later this year according to Reuters.
Greg Creed, Yum! Brands Chief Executive Officer, made the announcement at a conference last Tuesday Reuters reports. The quick service restaurant's first China outlet will be located in Shanghai according to Creed but no definite date has been set yet.
Currently, Yum! Brands operate in 7,000 stores in the Asian country, consisting of Pizza Hut and Kentucky Fried Chicken (KFC) outlets. Yum also owns Taco Bell, although the brand is yet to open its first branch in China.
Last October 2015, the company hinted that it is mulling the introduction of Taco Bell to the Chinese market citing "the growth potential for the Mexican brand in China" according to a Restaurant Business Online article.
However, there was much speculation whether or not Yum! Brands really intended to push through with last year's plan given the group's below expectations performance last year in its Chinese division.
Overall global financial performance of the Yum! Brands group was dragged down by its Chinese operations according to Restaurant Business Online. The company's management reacted by creating a totally separate spin-off, a separate publicly-own entity named Yum! China. The new company will be debt-free and will have an exceptional cash flow according to company announced last year as reported by Restaurant Business Online.
Yum! Brands Chinese woes started back in December 2012, when a powerful media outlet reported on local KFC suppliers' liberal use of antibiotics in their chickens according to CNN Money. It took the brand almost a year before it completely recovered from the scandal.
However, an even bigger scandal erupted in 2014 when YUM was accussed of selling tainted meat in its KFC locations. Though the company immediately distanced itself from its supplier, Shanghai Husi, the public was not quick to forgive this mistake. With plummeting sales, the company had to launch an extensive marketing campaign to convince customers that their food is safe.
Perhaps the spin-off strategy that the company adopted last year is now finally bearing its first fruits. With a predominantly Chinese leadership team, YUM! China might just prove itself that it has the required understanding of the local Chinese market and finally succeed in China - YUM! Brands' last frontier.
