Scott Mezvinsky is a Yum Brands veteran, having served with the company for nearly 20 years in roles with KFC, KFC Latin America & Caribbean, Yum Russia, and KFC Iberia. He moved over to Taco Bell in early 2021 as chief strategy and financial officer and then onto managing director, North America in early 2023.
His robust international experience should come in quite handy right about now. In February, Mezvinsky’s scope was expanded to include the chain’s international division, a nominal part of the business, but one with much potential. The company now has over 1,100 restaurants overseas, which surpasses its initial goal of 1,000. For context, the U.S. system includes nearly 7,500 restaurants and generates 75% of Yum’s U.S. divisional operating profit. During a recent interview, Mezvinsky said his role was expanded because one of the company’s objectives is to become more global, an objective Sean Tresvant expressed when he moved into the CEO role last year.
“Our business is heavily skewed toward the U.S. right now, but can we be one big global brand? Part of that is acting as one enterprise,” Mezvinsky said during a recent interview. “I get really excited about the international prospects of Taco Bell. We’re a long way from where we want to be, what the potential is. Certainly, our sister brands, KFC (30,000 global restaurants) and Pizza Hut (about 19,000 global units) show us what’s possible. I feel good and positive about the prospects for Taco Bell international. The world needs more Taco Bell.”
There are four priority markets currently targeted for the brand’s growing global presence – China, India, Spain and the UK. The markets that perform the best, Mezvinsky adds, are those with established franchisee partners who share the company’s vision to build international markets and teach the consumers what the brand is about. That’s not to say the company is only focused on those four markets, however.
“One of our ambitions now is not only to make sure we get the brand right in those four markets and that we continue to grow in those four markets, but what are the next markets that make sense for us to enter with the right franchisee partners so that we can have those wider footprints and hopefully get some scale from a geography perspective?” Mezvinsky said.
Scale at this point means reaching a 100-unit milestone in a market. If the company doesn’t think it can get to that benchmark, “then we shouldn’t be in those markets,” Mezvinsky said, adding that he’d rather grow more restaurants in fewer markets than just plant flags aimlessly.
“The evolution of that strategy is we’ve gotten to 100 restaurants in four markets, so now let’s make sure the brand’s working and doing what it needs to be doing from an economic perspective, from a brand consumer perspective. How do we get to 250 restaurants? What are the next stages?” he said. “In parallel, what are the next markets that we should be thinking about to get to 100 restaurants? It’s an ‘and’ not an ‘or.’”
As Taco Bell begins to scale in certain international markets, more franchisees have started to show interest. Some operate Yum’s sister concepts, some don’t. The best partners, Mezvinsky adds, are those that come to the company and not vice versa.
“That means they’re committed,” he said. “Most of the franchisee partners are usually somebody that has had some influence and experience in the U.S. They see what the brand could be in the U.S., but they're from a local market and want to be the person or the group that brings what they see to their own country.”
What those franchisees “see in the U.S.” has been consistent sales and unit count growth throughout the past several years, as well as a tremendous amount of brand momentum in general. Indeed, Taco Bell has been a star for Yum Brands of late as one of its growth engines alongside KFC International. Last year, the chain opened 207 net new units in the U.S., the most it has opened since 1999. The driver of that growth, Mezvinsky says, is franchisee excitement for the brand’s unit economics, which include mid-20% profit margins and over $2 million AUVs, according to Technomic Ignite data. As long as the company maintains those metrics, it should continue growing consistently in the U.S., he said, despite a bevy of headwinds such as high labor costs and interest rates.
“The one thing we can do is control what is in our control and from a brand perspective, it’s how we continue driving topline growth while we maintain margins for our company stores which will translate hopefully to maintaining margins at the franchisee level,” Mezvinsky said. “If we do that, our bottom lines are going to grow and that’s what’s going to drive the excitement.”
He adds that strong unit economics also help offset some headwinds, including California’s higher minimum wage rate that went into effect April 1. California is not only a top market for Taco Bell, but also home to the brand’s headquarters. To manage the 25% increase on the labor line in that state, Mezvinsky simply said the company is working with its franchisee partners to make sure they’re still making an adequate return while providing consumers with the right value proposition. Having company-owned stores in the state (and most states) also gives the company some credibility, he adds.
“Whatever challenges come and go in whatever state, I think we’re a brand that can weather that storm.”
Contact Alicia Kelso at [email protected]