Why Taco Bell Failed In Dubai

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..

As found on YouTube

Why Taco Bell Failed In Dubai

Taco Bell is huge in the United States. The Mexican-style fast-food chain has nearly 6,500 stores across the United States. While Taco Bell has had tremendous success at home, the company has had trouble taking off abroad. Watch this video to find out why the American company had to pull out of the Dubai market after four years.

Elsewhere, Taco Bell will start testing its first vegetarian menu later this year. Offering a vegetarian menu will help the Mexican fast-food chain cement itself as the go-to option for nonmeat eaters, who often struggle to order a meal at fast-food restaurants that only sell hamburgers or chicken tenders. Five percent of Americans identify as vegetarians, according to a July poll conducted by Gallup.

Taco Bell, which is owned by Yum Brands, is already known for being vegetarian friendly. Customers have been swapping out meat for beans in their tacos and burritos for years, and the American Vegetarian Association even certified some of Taco Bell's vegetarian alterations in 2015. The new menu will include a mix of old and new vegetarian items, said Polly Zintak, a spokeswoman for Taco Bell.

The menu could also grow Taco Bell's relationship with its younger customers. Vegetarianism is slightly more popular among Americans younger than 50 years old, Gallup found.

While Gallup said the number of vegetarians has remained relatively unchanged in recent years, sales of plant-based food have been growing significantly. A Nielsen study found that sales of plant-based meat substitutes grew by 30 percent in 2017. Americans might not be opting out of meat all of the time, but a vegetarian menu will also appeal to more health-conscious diners.

The risk for Taco Bell in taking this step is limited as the chain already had ingredients like vegetables and beans on hand.
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Why Taco Bell Failed In Dubai