Caixin Hot Pot: Yum Cooks Up Made-in-China Mexican at Taco Bell in Shanghai

(Shanghai) — In a nod to increasingly international palates in China’s commercial capital, fast-food giant Yum China Holdings Inc. rolled out its first Taco Bell Mexican restaurant in Shanghai at the start of the year, complementing its more established KFC and Pizza Hut chains.

But fans of the U.S. chain will be surprised to find the Chinese rendition is more upscale than its American cousin, and includes many tweaks to its traditional menu. The first concept store, which will ultimately be followed by more, pays tribute to Southern California culture, including a motif of surfboards on the brightly lit ceiling.

Another unique feature is the restaurant’s transparent kitchen, and also the inclusion of alcoholic beverages. The store’s opening in Shanghai’s Lujiazui financial district marks a second try at China for the chain, following a previous attempt about a decade ago with a more traditional sit-down format and table service.

A half-year after its grand opening, store manager Will Cao sat down with Caixin Global in the trendy eatery to talk about his experience overseeing the restaurant’s rollout. A native of Shanghai, he started working at KFC after graduating from college in 2007 and has been a fast-food fan ever since.

Cao stands in front of Taco Bell’s restaurant in Shanghai’s Lujiazui financial district. The store is the US fast food chain’s second try in the city, following a previous attempt about a decade ago. Photo: Yang Ge/Caixin

Cao: Mexican food was a foreign concept to me. I was previously a KFC store manager. I like to try new things, sample new foods. Whenever new stores open, I will often go to try them out. A manager from KFC once asked me if I wanted to join a new chain, so I went in for an interview. In the end, they chose three of us for different positions. I got picked as the restaurant manager.

Caixin: How are Taco Bell and KFC different?

Cao: First off, there are KFCs everywhere in China; it’s a very common brand. To let us get a sense of Taco Bell culture, they sent us to the U.S. for six weeks. During that time, we learned about their products. I thought it was really cool and innovative. The two brands are quite different. At that time we went to California, where young people would come by for a bite after surfing, so it felt quite young. This is what we’re trying to do here. The interior design also has a California feel.

Caixin: Is the China Taco Bell the same as in the U.S.?

Cao: It’s not the same. The design style is different, and the food also has some changes for local tastes. For example, U.S. Taco Bells use cold, shredded cheese in their products. In our tacos here we use hot, melted cheese. Our customers here like to get a mouthful of thick, gooey cheese when they take a bite. So we changed many of our products like this. When we began we just put a spoonful of cheese in our products. But then customers would say to us: “Why is there so little cheese?” So we put two spoonfuls. We also discovered customers like cheese that’s long and stringy.

Caixin: Any other menu modifications?

Cao: Products like shrimp avocado rolls — you won’t find these in America. This is our process of localization. In fact, you could say that all of our products aren’t completely different from the U.S. They tend to borrow some American methods in how they’re created. But, for example, the mozzarella cheese in this taco is based on local tastes.

Caixin: Your soft taco shells are also different from American ones. The shells in America are thin, whereas the ones here are quite thick, more like pitas. Why did you make this change?

Cao: In making a taco meal, we needed some tacos that were crispy and some that were soft. So the first kind we called beef crispy tacos, and the second type we called spongy tacos that would be soft and chewy to bite.

Taco Bell Shanghai’s transparent kitchen puts a new twist to the upscale restaurant. The Chinese menu also includes alcoholic beverages and melted, gooey cheese to better suit local tastes. Photo: Yang Ge/Caixin

Cao: Right. But even here, when I was in America they would add rice and beans. In China, we don’t add rice and beans into the burritos because we discovered that Chinese people don’t like to mix these kinds of staple items with their main dishes.

Caixin: In terms of store design, did you completely redo the Taco Bell concept for China?

A: Our entire store design is a bit more modern. But it’s still in line with our brand concept, which is a Mexican food restaurant from California. It’s very sunny, American Mexican food.

Caixin: Have you made any adjustments since opening the store in January?

Cao: Recently, we’ve added two new drinks — one is a cocktail, one is a smoothie. The cocktail is selling quite well now. Customers like to take pictures and post them on their WeChat Moments, because we make our drinks very attractive. Customers give us a lot of suggestions on (restaurant ratings site) Dianping, including about the music we play.

Caixin: Besides the cocktails, what other products are selling well?

Cao: Beef tacos and the double taco meal.

Caixin: What kinds of people typically come here to eat?

Cao: Most of them are white-collar workers from the surrounding office buildings, like the Ping An Bank and Citibank towers. About 20% to 30% of our customers are foreigners. There are also lots of tourists. But the majority is white-collar workers. At lunchtime it’s white-collar workers; in the afternoon it’s tourists. In the evenings, it’s white-collar workers and tourists.

Caixin: Do customers like to sit and linger?

Cao: That depends on the time. For example, from 11:30 a.m. to 1 p.m., customers pretty much just eat and leave. In the evening customers like to have a glass of wine and chat for a while.

Caixin: Are there any differences between the work environment here and at KFC?

Cao: Each brand has its own culture. Our partners here are younger, more “cool.” It’s the same way for the activity level. The emphasis of the two brands is different.

Caixin: What are Yum’s plans for Taco Bell in China?

Cao: The development team is already looking at locations in Beijing, but there are still no specific plans. We still have a lot of work to do. It’s not like KFC, which can quickly expand after selecting new locations and outfitting the stores, then bring in people and it’s set to go. Taco Bell is a new concept right now. Our products and beverages, including alcohol, are different from Yum’s other brands.

Contact reporter Yang Ge (geyang@caixin.com)

Caixin Hot Pot is a regular feature that introduces you to the colorful array of players in today’s China – from the leaders of top U.S. companies doing business here to the migrant woman selling noodles from a push-cart.