Taco Bell Is Bullish On Its International Growth Plans. Here’s Why

Yum Brands opened a new restaurant about every two hours during 2021, setting a new company and restaurant industry record.

That momentum is likely to continue, especially given the massive white space potential of its Taco Bell International business. Consider its sister chains for context: KFC has about 23,000 restaurants in markets outside of the U.S., while Pizza Hut has about 11,000.

By comparison, Taco Bell currently has about 789 restaurants internationally, and more than 160 of those were opened just last year.

“Taco Bell International is probably one of the most exciting stories we have right now,” Yum CEO David Gibbs said during the company’s Q4 earnings call last week, pointing out last year’s 26% growth. “That’s pretty impressive and you see that accelerating.”

During a recent interview, Julie Masino, president of Taco Bell International, said the brand is on pace to operate more than 1,000 restaurants outside of the U.S. this year.

“So many things right now give me confidence–digital, our franchisees, our fans. We’re harnessing all of that. We’re only getting started,” she said.

Taco Bell technically got its start overseas in 1973, but it took 36 years for the brand to hit 160 stores–the same number it hit last year alone. There are several factors driving the brand’s current momentum and that digital piece is among the biggest.

Taco Bell now generates 20% of its sales through digital channels, which translates particularly well in markets that are a bit further along on this trend. About 60% of the brand’s sales in the United Kingdom come from digital, for example. As such, the UK is a priority market for expansion and will be “crossing a big threshold this year,” Masino said.

“This brand internationally is so digital forward and we’re really driving that hard,” she said. “Digital is one piece, but we look across a variety of other factors. We also look at markets that have a good population for QSR, so we are in places where we know we can get to scale. We want to get to scale.”

In a two-plus-year crisis environment, scale has largely insulated major brands from many challenges hindering the industry like inflationary and supply chain pressures. Taco Bell is starting to achieve that scale objective in a few of its international markets, including Spain which recently surpassed the 100-unit mark.

“We believe this development threshold unlocks accelerated growth, fueled by the benefits of scale, including supply chain advantages, as well as marketing and brand awareness. We’re confident in what the future holds for Taco Bell International, particularly as scale ties directly to profitability,” Yum CFO Chris Turner said during the company’s earnings call.

Casual Brands Group, led by Ignacio Mora-Figueroa, operates Taco Bell’s restaurants in Spain and opened 25 restaurants across 17 regions in 2021, illustrating the intentional geographic proliferation of the brand.

“A key strategic decision for us is we are focused on getting into key markets to scale rather than flag planting. In Spain, the brand isn’t just in Madrid and Barcelona. The team has done a wonderful job growing the brand across the market,” Masino said. “We’re focused on making sure our franchisees are in a good place, they’re making money and they’re getting some benefits across their operations.”

Spain will continue to be a priority market, as well the UK, Australia and India. The latter market is expected to reach 600 units in the next 10 years, for example. Further, Taco Bell just entered Malaysia last year and hit its fifth restaurant in the market earlier this month. As it continues to push the gas on international expansion, Taco Bell will lean into perhaps its biggest asset–the brand.

In the U.S., Taco Bell is a perennial favorite among younger consumers and has solidified itself as a marketing giant with products like the Doritos Locos Tacos and gimmicks like the Taco Bell Hotel & Resort. Globally, that signature brand is just starting to resonate and last year, the chain launched its first-ever global campaign, the “Taco Moon.” Masino said a “new take” on this campaign will debut in a few weeks.

In the meantime, she’s confident the brand will speak for itself as it continues to grow at an accelerated pace throughout the world.

“There are two types of people in this world, those who love Taco Bell tacos and those who haven’t had Taco Bell tacos. We are making sure we get Taco Bell tacos to that second group,” Masino said. “Once we do that, we’ve got the distinctive brand and the right teams around the world who want to be a part of this brand and who are making magic. All of this makes us bullish.”