KFC in China: Intelligent Strategies with Understandings and Creations

In 2015, Kentucky Fried Chicken (also known as KFC), was the largest restaurant chain in China and successfully became the most familiar American fast food restaurant to Chinese people. Nowadays, KFC is not only a place for people to rest or have meals, but also an important restaurant chain which treats its customers equally while staying true to Chinese traditions.

KFC first expanded in Beijing, the capital city of China, in 1987. At the time, China was at the beginning of “Reform and Opening” policy which introduced western business to China. KFC was interested in this country because it had the largest population in the world. However, as a fried-chicken-food company, KFC faced the challenge of introducing an unfamiliar product to the Chinese people. Would Chinese consumers enjoy western flavors? In order to enter into the Chinese market, it was necessary to bring technical resources and managing resources. Most importantly, where should the first restaurant be located? KFC compared the potential risks and the potential gains that may be gained from investment. By balancing these potential factors, KFC con-temporarily decided to choose Beijing as the first step to open the new restaurant, exceeding than other competitors taking actions. In fact, the decision to choose Beijing as the preferred city for KFC was the right method to enter the Chinese market. Chinese people were attracted by new-style fried chicken and western flavors. By 1992, KFC had ten different located outlets around China, which has become the largest western fast food restaurant chain in China.

However, things were not going smoothly after that. With Chinese people’s eating habit and changing of tastes, the varieties were too single to unfavorable for the development prospects. At this turning point, KFC came up with a strategy which combined Chinese and Western food. KFC has hired more than 10 native Chinese experts and scholars as consultants who were responsible for improving and developing suitable fast food which matched Chinese people’s tastes.

As time went by, KFC kept launching new food with Western flavors and Chinese characteristics such as Bacon Mushroom Chicken Rice which features crispy, boneless chicken in a bacon mushroom sauce with rice and a side of pickles, Dragon Twister which is extremely close to Chinese style food with crispy chicken, Peking Duck sauce and Mexico tortilla or Egg Tart which consists of an outer pastry crust and is filled with egg custard and baked.

Products of Chinese KFC

Nowadays, KFC still holds its original concept. During 2000–2010, KFC held sports competitions such as KFC 3 ON 3 Basketball and KFC Campus Youth Aerobics Competition annually to encourage young people to go out and exercise. In 2016, KFC invited Lu Han and Chris Lee to represent products’ celebrity. Lu Han also made a catchy song for KFC. Its social influence is becoming more important than ever.

Lu Han
Chris Lee

Comparing to KFC in the US, it is a huge success. First of all, Chinese KFC outlets are playing a very important role in Yum! Brand which also operates the licensed brands Pizza Hut, Taco Bell and Wing Street. A financial highlight from Yum! 2015 represented that Chinese KFC outlets were about 33.5% of all KFC outlets worldwide. Secondly, for catering Chinese customers, KFC not only kept their own style fried chicken, but also integrated Chinese flavors to improve the quality of products and satisfy Chinese consumers.

A video made by Chinese international students represents the different products between KFC in China and in the US. In the video, the hosts provided participants with Chinese KFC products and make them guess which restaurant they were experiencing. However, no one recognized that the products were belonged to KFC. Some participants even said “KFC China is way more fire than America”.

How American University Students Think of KFC in China. Made by Douhua Zhang

From the first KFC restaurant in the US, KFC targets American people with fried chicken and mash potatoes, which are classic comfort foods in the US. However, as new fast food restaurants develop, KFC is no longer the most attractive restaurant chain — simple products without creations go from the beginning to now. Moreover, KFC catches up to contemporary trend and make progress on young people as its importance in Chinese society. The two celebrities (Lu Han & Chris Lee) are famous and have a good influence on teenagers. American KFC lacks advertising and celebrities, which makes it much more unobtrusive. Last but not least, Chinese KFC makes way more profits than American. From the following pie chart, Chinese KFC profits are trending to a half of KFC gross profits, which means the Chinese market is much more important. It is no doubt that KFC is an original and historical brand, however, it is not brilliant as before. Instead, KFC keeps making progress in China, trying to understand Chinese people’s tastes and Chinese characteristics, and holding social activities to make Chinese people more rely on this brand. Eventually, it becomes the largest restaurant chain in this country with the largest population in the world. The success of KFC in China is not an accident, but is necessary for its patience and understanding.

When compared to other brands from Yum!, for example, Chinese KFC is still the top fast food brand. In China, Yum! is operates four different brands which are KFC, Pizza Hut, Little Sheep and East Dawning. Also from Yum! 2015 Financial Highlight, there were totally 7176 outlets among all these four brands in China. However, KFC was approximately 70% of all outlets. In 2016 fall, KFC accounted for 80% profits of Yum! China’s total gross profits. As a matter of fact, the other three brands are changed a lot, too. For example, Pizza Hut is not only a pizza place, but changed to a fancy restaurant with wine and champagne. The environment is very nice and people always go to Pizza Hut for formal meetings and dinners. Therefore, the price is much more expensive than KFC. Moreover, Pizza Hut is not defined as “fast food” any more. Salary men prefer to go to KFC rather than Pizza Hut. That might be the reason why KFC is dominating in the Chinese market.

Every coin has two sides. Because of the large number of customers, the services of KFC China are not as good as American. People are always on the long line and received an inpatient service from waiters. Therefore, arguments between customers and waiters are happened all the time. The more arguments happened, the worse situation would become. If people who enjoy combined KFC food but not the services, KFC China is a good place to go.

Although some reports predict that KFC would be becoming worse in the Chinese market because of food safety and more native restaurant chains taking place. However, the concept of KFC and unified standard are always the reason why Chinese people don’t give it up. KFC met some negative events in 2015, but it still gave people a positive attitude. So what makes KFC a top restaurant chain in China? The answer is obvious. Therefore, I recommend that foreign travelers could try KFC in China. Although the restaurants look very similar from their appearances, their products are way different from what they are in the US. It will be an excellent experience to all of the foreigners.

Yum! 2015 Financial Highlight

Works cited:

Lutz, Ashley. “KFC is counting on these new menu items to save business in China.” Business Insider. http://www.businessinsider.com/kfcs-new-menu-items-in-china-2014-10. 8 Oct. 2014

An analysis of KFC’ s successful strategy in China. Phoenix Finance. http://finance.ifeng.com/news/corporate/20090906/1200051.shtml. 6 Sept. 2009

Zhang, Douhua. “How American University Students Think of KFC in China.” YouTube. https://www.youtube.com/watch?v=uMnEwoMZUt8. 14 Jan. 2016

Building Three Global, Iconic Brands People Trust and Champion. Yun! Brand Company. http://www.yum.com/company/

Yum! 2015 Financial Highlight. Yum! Brand Company. http://www.yum.com/annualreport/

Reflection

My audiences are foreign travelers, and my second audience might be some entrepreneurs who are interested in operating a food company internationally. I first show an overall view of Chinese KFC of its history, products and managing. Then I compared the differences of KFC Chinese version and American version. In order to make my audiences clearly know the products differences (main difference), I put pictures of new products.

For design principle, I didn’t add too many things. I use Italicize for some parts that I think they are supposed to. Over-viewing my paper, there is a lot about the good things KFC China has because that is very obvious to see. The only shortcoming I wrote was the services. Basically, KFC China is successful, but the services are talked more by customer. Therefore, I don’t agree that everything of KFC China is perfect. My first audience is foreign travelers; I give them different opinions so they can balance whether it is good or not.

My experience in China and America might indicate the differences since I have been to KFC in both of these two countries. Also, I do want to encourage other brands(this might be my secondary audience) to learn from KFC China and make a good decision of operating a store chain in China. What KFC did is understanding and supporting. Of course, every store longs to make money, however, a lot of restaurants are not as successful as KFC, for example McDonald’s. Without understanding and catering, the brand will not be good.

In conclusion part, I add a pondering question “what makes KFC a top restaurant chain in China”. The question can be mainly thought by two different audiences — travelers and entrepreneurs. By experiencing KFC and different restaurants in China, travelers can find the answer. And entrepreneurs(operating food restaurant) can compare the marketing strategies, product quality and service so that they can find the answer.

For taking a risk, I think the risk might be the video? Because video is not required to be included. Adding this video can make people more familiar with the products of KFC and see people’s exact expression when they are trying the products. (I am not sure about this part.)

Medium looks great to be honest, and it might help my paper looks more professional (I said might be). Hopefully it will help people come up with more ideas about operating restaurants internationally.

If I have more time, I might look for more resources about the shortcomings of KFC. And I will add “how KFC China compares to McDonald’s China”. Because I still think the evaluation part is short and not very convincing.

Anyways, I am good with this project.

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