Key takeaways:
- PepsiCo’s Shanghai Lay’s restaurant marks a clear shift from product-led innovation to experience-led brand building.
- The concept is designed as a test-and-learn platform, prioritising consumer engagement and insight over immediate sales.
- If successful, the strategy could reshape how snack brands expand beyond retail into culture, occasions and new consumption spaces.
PepsiCo isn’t new to restaurants. Its Madrid concept, Pilla Tortilla, opened in March and marked a cautious first step into hospitality – using Lay’s as an ingredient within a familiar format to explore the away-from-home channel without straying too far from its core.
Shanghai is a very different move.
This time, PepsiCo isn’t testing how crisps fit into food. It’s testing whether Lay’s can become something much bigger than a product altogether. The company describes the restaurant as “designed first and foremost as an immersive, limited-time brand experience that brings Lay’s to life beyond the chip aisle, using menu innovation, design and culture-led collaborations to create moments that are meant to be experienced, shared and remembered.”
Yes, that’s classic press release language, but the strategy underneath it is clear. This isn’t really about selling food. It’s about turning a snack brand into something consumers can step inside, document and circulate – a marketing channel you can book a table in.
“As part of PepsiCo’s growth strategy, we’re connecting our brands to the food experiences consumers are increasingly seeking – creating new ways to enjoy Lay’s beyond traditional snacking and helping unlock new occasions in the away-from-home channel,” said Nina Mu, chief marketing officer, Greater China Foods, PepsiCo.
That shift speaks to a broader pressure facing brand owners. Shelf presence alone is no longer enough to drive growth. Consumers are harder to reach, more selective with their attention and increasingly drawn to experiences over products. The question isn’t just what people eat, but how, where and why they engage.
PepsiCo is using Shanghai to explore that shift in real time. Not through a campaign or a limited-edition launch, but through an environment consumers can step into, interact with and share. Crucially, it’s doing so as a temporary activation. The restaurant is “built as a test-and-learn platform – with learnings that can inform future activations across markets.” In other words, a field trial.
What that looks like in practice is far more elaborate than a branded dining concept. The space is built around a ‘farm-to-table’ narrative that traces the potato’s journey from planting to finished chip, woven through both the menu and the physical environment. Dishes reinterpret Lay’s flavour cues using a mix of Eastern and Western techniques, spanning appetisers, mains, desserts and even beverages, while Shanghai-exclusive mashed potato dishes pair a creamy base with ingredients such as strawberry, mango, shrimp and octopus to blur sweet and savoury boundaries.
Second attempt, very different playbook
The contrast with Madrid shows how quickly PepsiCo’s thinking is evolving.
Pilla Tortilla kept things relatively contained: Lay’s as an ingredient, slotted into a recognisable format, testing the away-from-home channel without straying too far from what the brand already does.
Shanghai throws that caution out. This isn’t just about eating Lay’s differently; it’s about interacting with the snack differently. PepsiCo says the restaurant brings together multiple touchpoints – food, space, partnerships, merchandise – to test how consumers engage with the brand when it’s removed from its traditional context.
That ambition extends well beyond the plate. The opening menu was developed in collaboration with Michelin-starred chef Francesco Bonvini and chef Tian Shuai, following the potato’s journey from raw ingredient to finished chip. Around it, the environment has been designed as a multi-sensory experience: fashion label 8ON8 has created installations, including façade characters that visualise the transformation from potato to crisp, while interiors use texture and layout to reinforce the ingredient as the centrepiece.
Upstairs, the storytelling continues, with displays tracing the farm-to-factory process, alongside terrace space and private dining rooms designed for social sharing. A dedicated retail zone offers limited-edition merchandise and co-branded items, extending the experience beyond the visit itself.
Sales, too, aren’t the primary objective. “While there is a retail zone and the experience can drive commerce, the primary focus is on building the brand and generating learnings that help unlock new occasions in the away-from-home channel,” said a company spokesperson.
That’s the more provocative point for brand owners. If the goal shifts from selling product to building relevance, then the metrics – and the investments – have to shift with it.
Why China is the testing ground
PepsiCo has done its homework and chosen a market where the behaviour already exists, noting that “consumer trends in China are increasingly experience-led – with priorities shifting from ownership to moments that feel tangible, shareable and emotionally meaningful.”
That dynamic is visible globally, but in China it’s more mature, more competitive and more culturally embedded. Shanghai, in particular, offers the right conditions. It’s a thriving, trend-forward city where themed dining, brand collaborations and immersive retail aren’t novelties but expectations – making it a useful stress test for a concept that relies on consumers actively choosing to engage.
The restaurant format allows PepsiCo to bring multiple elements together in one place, combining “a potato-led menu that reimagines Lay’s flavor cues, immersive spatial storytelling and co-creation through chef and fashion collaborations.” In effect, it becomes a controlled environment for testing how different aspects of the brand resonate.
Just as importantly, it allows the Lay’s brand owner to observe behaviour. PepsiCo says it’s focusing on “which parts of the experience drive the strongest engagement”, including “how consumers move through and use the space [and] how the experience translates into repeat visitation and advocacy.”
That last measure is critical. It’s one thing to get people through the door for a novelty; it’s another to turn that into something that sticks.
Big idea, uncertain payoff
For all its ambition, PepsiCo is being careful not to position this as the start of a global restaurant rollout. The company insists the Shanghai site is a test-and-learn model rather than a blueprint for a permanent restaurant chain.
Running restaurants at scale is a very different business to selling packaged snacks and right now, it’s not an easy one. Hospitality operators across multiple markets are battling rising costs, squeezed margins and increasingly cautious consumers. It’s a tough environment even for specialists, let alone a global snacking giant stepping outside its core model.
What PepsiCo is betting on, then, is what the restaurant experiment can teach it; more importantly, how to translate “Lay’s into a broader brand experience through culinary creativity, immersive design, and partnerships that fit local culture.” That doesn’t have to mean bricks-and-mortar outlets everywhere; it could just as easily surface in pop-ups, collaborations, hybrid retail spaces or formats that haven’t yet been defined.
What happens next remains open with PepsiCo acknowledging this “will depend on what it learns in Shanghai.” That’s a long way from a defined rollout plan.
And then there’s the bigger question: does any of this translate outside a market like Shanghai? What works in a trend-driven, experience-hungry city doesn’t automatically land in more traditional markets. Still, PepsiCo isn’t alone in exploring new thinking. The industry is entering a phase where incremental product innovation is no longer enough to sustain growth. As categories mature and consumer expectations shift, brand owners are being pushed to think beyond the shelf – into spaces, experiences and behaviours that were previously peripheral.
PepsiCo’s Shanghai restaurant is an early attempt to map that territory. It may not lead to a chain of Lay’s restaurants; it may not translate neatly across markets; but it does underline a more important point: understanding how consumers want to experience a brand may matter more than where they buy it.
