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Taco Bell is huge in the U.S.
The American Mexican fast food chain is one of America's top
five fast food companies by sales.
And over the last decade it's added another 1300 stores.
While it had tremendous success at home Taco Bell has had a lot of trouble taking off abroad.
Taco Bell has over 400international locations which is well below that of its rivals.
And having a whole lot of trouble finding a following in one
the world's fastest growing cities, Dubai.
It has the highest concentration of restaurants in the world
and the population generally loves American brands.
But Taco Bell called it quits in Dubai after just four years
In 2008, Taco Bell was killing it in the United States.
Its profits were higher than ever and it was Yum Brands
second most profitable chain in the U.S.
So its parent company Yum Brands decided to test out the Mexican food chain in Dubai.
In November of 2008, Taco Bell opened its first Middle East location in the Dubai Mall.
Keep in mind, in Dubai shopping malls are a major part of the Emirati culture.
With temperatures hitting 120 degrees Fahrenheit in the
summer, it's not unusual for Emirati to spend hours trolling the malls.
And these aren't your typical malls.
Malls in Dubai have indoor ski slopes, shark tanks and Olympic sized ice rinks.
The Dubai Mall spans over 5.9 million square feet with over
1300 stores and more than 200 food and beverage options for locals and tourists.
The mall alone contributed 5 percent of Dubai's GDP in 2015.
At the time Taco Bell entered the city the Dubai Mall was
one of the largest shopping malls in the world.
So Taco Bell wasn't a prime location.
According to the franchise owner Taco Bell's initial launch
showed promising results for the company.
The owner said that the initial success was behind its
reason to start expanding to other locations in the UAE in 2009.
Taco Bell in Dubai reportedly adjusted its menu to be halal
certified so it can adhere to Islamic dietary laws.
By 2012 talk about how expanded its footprint to two other
of Dubai's mega malls but Taco Bell's franchise owner
Americana group made the call to exit Dubai in early 2012.
Taco Bell did well in the Dubai Mall. They had one location in the Dubai Mall that
was pretty well and it was a pretty amazing location.
The Dubai Mall is quite a touristy mall.
And their other locations
didn't quite do so well and there are multiple reasons for that.
I think the quality isn't quite what the people expected.
And I think the actual owners wanted more than just
one successful site they wanted multiple.
I mean they just struggled to deliver that.
During its time in Dubai, Taco Bell's parent company Yum
Brands was the number one fast food company in the UAE.
And KFC and Pizza Hut top the UAE brand ranking.
In Dubai, there were 31 KFC stores and 20 pizza stores.
So why is it that Taco Bell couldn't match the same success
of its fellow Yum Brand companies?
First, it's partly to do with local tastebuds.
Emirati don't have much of an appetite for Mexican food.
During Taco Bell's time in Dubai, out of all of the money
the fast food industry made in the UAE, the Latin-American
inspired food category came in dead last.
On average latin foods accounted for just 0.14 percent of
all fast food sales in the UAE each year between 2009 and 2013.
Meanwhile the burger category accounted for nearly 30
percent of retail sales.
Secondly, Taco Bell also lack the international brand
recognition of its sister companies.
KFC and Pizza Hut already had stores around the world long
before Taco Bell's first attempt to expand abroad.
KFC launched internationally in 1953 in Canada and by 1971
KFC was in 48 countries.
While pizza has been a global brand since 1968 and
specifically in the UAE since 1979 but Taco Bell its first
ever expansion outside of the U.S. began in 1979.
Its global expansion has been slow going and not always successful.
It's tried and failed in several countries from Singapore to Mexico.
As of 2019, Taco Bell has over 400 international stores
which pales by comparison with its sister companies.
KFC has nearly 18000 stores and Pizza Hut has nearly 9000.
According the Gulf Business back in 2012. The former Yum
Brands CEO said this about Taco Bell's international troubles.
What we do with Pizza Hut and KFC is to bring a unique image
to a known quantity. Whereas with Taco Bell you have a
unique brand and an unfamiliar food category. So it's a
little bit harder to establish Taco Bell than KFC or Pizza Hut.
Another possible factor playing against Taco Bell in Dubai,
its physical store layout.
Even though Latin American foods ranked last in the UAE fast
food sales Mexican-American sit down chain Chili's has been
in the UAE since 1997.
It's added at least two stores every year since entering the country.
In fact full service restaurants like Chili's performed
better than fast food outlets during the same time Taco Bell was in Dubai.
Full service restaurants had a 30 percent hold over the total market.
So why did full service restaurants perform better than fast food chains like Taco Bell?
It has a lot to do with culture.
Emirati consumers consider going out not merely as a
convenience but as a social event with family and friends.
I think Chili's has quite a wide menu they have more than just Mexican.
It caters for the
family in the malls and at a different price point, where its much more about quantity
Local chain Taqado is another popular Mexican food option in Dubai.
They entered the market the year after Taco Bell left and it
now has 13 locations across Dubai offering everything from
burritos to tacos to even breakfast.
But taco bell hasn't entirely given up in the Middle East.
The fast food chain has actually taken off in Kuwait. Its
first location opened in 2010 and the Gulf nation has seven
Taco Bell locations as of 2019.
A part of his success can be attributed to its menu and
specialized campaign directed towards locals.
Its restaurants there are 100 percent halal certified.
And the company has a campaign directed towards locals
called "Aco Taco" which translates to do you have tacos.
The campaign capitalized on the hype that Taco Bell created
before entering Kuwait.
CNBC reached out to both Yum Brands and Americana group Taco
Bell's franchise partner in the UAE. But neither respond to
questions about why they pulled Taco Bell out of Dubai.
But Taco Bell did tell CNBC that the company is always
looking for possibilities to expand into different Middle
Eastern markets with the right partners.
As of 2019, there are nearly 6500 Taco Bell's in the U.S.
and over 400 stores across 27 countries and the brand is
planning a massive expansion overseas.
Taco Bell is promising to step up international growth by
reaching 500 units by the end of 2019 and 1000 units by 2022.
Given Taco Bell's success in Kuwait and the Middle East
status as a booming market for fast food it remains to be
seen whether Taco Bell was stage a comeback.
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Why Taco Bell Failed In Dubai

262 Folder Collection
PENG published on April 14, 2019
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