Taco Bell is venturing into new territory: Japan.
The fast food chain, a member of Yum! Brands (YUM), signed a franchise agreement with restaurant operator Asrapport Dining Co to open Taco Bell restaurants across Japan, according to a press release.
While there are more than 6,000 Taco Bell locations worldwide, only 250 are international. The company plans to increase international stores by at least 1,300 locations by 2023.
Yahoo Finance Senior Columnist Michael Santoli thinks that expansion to Japan will prove a challenge.
“Japan is packed with plenty of international fast food options,” he says. “Obviously all new chains have to adapt their menus in Japan.”
However Asrapport, not Taco Bell, will do most of the legwork in Japan, Santoli notes.
“It's a company there that is going to franchise some Taco Bells. It's not as if Yum! Brands, the parent of Taco Bell, is saying this is going to be some kind of really great major growth initiative.”
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Santoli points out that Yum! Brands (YUM) has seen major success in bringing its fast food chain KFC to the international market.
“For Yum in particular it has been extremely important. It was considered one of the great plays on the Chinese consumer for a long time” he says. “KFC in particular, their fried chicken brand, was basically considered a luxury good in China for a long time.”
Taco Bell has also announced plans to expand to India, Peru, UK, and Korea. Santoli believes international growth should be a priority for fast food chains.
“Every intersection in this country is built out with almost as much as it can handle in terms of fast food outlets. So I do think the growth is in terms of everywhere else,” he says. “Here it’s a zero sum game: McDonald’s (MCD) has been losing, Chipotle (CMG) and the newer guys winning. It’s all about international. And it’s not clear how open that expansion opportunity is at this point.”
