KFC (Kentucky Fried Chicken) is an American chain of fast-food restaurants founded in 1930. The restaurant attracts plenty of customers in many countries worldwide. How does it look like in China? In one of our previous articles, we mentioned that it is KFC (肯德基 – Kendeji) that has the most extensive reach among all foreign brands present in China. How did the brand manage to achieve such success?
Beginnings of KFC in China
The first-ever KFC restaurant in China was opened in 1987 in Beijing. The brand started operation and later worked with other companies, owing 60% of all shares. At the beginning of 1988, the Bank of China took over 25% of KFC’s shares, leaving the brand with 51%.
Being the first restaurant of that type on the Chinese market, KFC had a significant advantage over the competition. Instead of bringing in managers from the US, the brand decided to hire people from countries with high economic growth rates, such as Taiwan. KFC created their Chinese distribution method never done in the country before, at the same time giving themselves a high-quality standard. Another advantage KFC had was their menu. A fried chicken was present in Chinese cuisine for decades. The same cannot be said about hamburgers, which still are not very popular there.
KFC became a symbol of a quickly reforming economy, as well as China’s new access to the rest of the world.
KFC China is currently owned by Yum China and operates independently from branches in other countries.
When the restaurant was first opened in China, it was considered quite deluxe. The brand guaranteed its customers cleanliness and freshness.
Since 2003, more and more fast foods, including KFC, started opening in China.
In 2008, KFC’s CEO announced plans of opening over 20 000 new restaurants all over the country.
With all the success come scandals. In 2012 the chain was accused of using antiviral drugs and growth hormones on their chickens, breaking food safety laws. The occurrence led to a government investigation of the usage of antibiotics in food products. Because of this scandal, sales in January of 2013 fell 41% compared to the previous year. Clearing up the brand’s name took longer than expected, but in the first quarter of 2014, the sales went up 11%.
Another scandal took place in July 2014. The Chinese authorities closed down restaurants in Shanghai following rumors of using expired meat. The brand broke the contract with their current supplier and tried to fix their good reputation.
Even with all the problems, KFC is still immensely popular in China and continues to grow, striving to meet all customers’ expectations.
Not long ago, KFC opened a restaurant in China with a completely new concept. KPRO concentrates on making fresh and healthy food (no fried chicken). The place even enables patrons to “pay with face,” using the Smile to Pay system, which identifies the face and connects it to a bank account.
There were already 28 KFC restaurants in China in 1994, seven of which were in Beijing. In 1997, over 100 were opened.
In 2002, when more and more Chinese people had cars, the first drive-through KFC restaurant was opened.
In 2020 there were already over 6700 KFC restaurants in over 1400 cities all over China.
The largest KFC restaurant is located not far from Tiananmen Square in Beijing. It has three floors, over 334 m2, and seats for 500 people. The place was an instant success and had customers stand in queues to enter for many months after it was first opened.
According to Euromonitor, KFC had 11,6% shares on the Chinese market in 2018, exceeding McDonald’s 5,6%. McDonald’s owns about 3,383 restaurants as of 2020.
KFC is a global brand with the most extensive reach in China, which you can see on an infographic in the article Global Brands in China.
Predictions of further development
In China, KFC is seen as a place for young people and the rising middle class. Teenagers, families with children, and students doing their homework are often seen in restaurants. Although everyone is welcome, these are the people who visit most often and therefore are the most catered to by the management.
Many consider Chinese KFC to be much better than American or European. Some say it is because the food tastes fresher, less greasy, and is much more thought through.
The brand continually develops, renovating and modernizing the restaurants to make sure they are to their customers’ liking.
The brand plans to reach 20 000 restaurants, also opening in smaller cities. Their goal is to accommodate all requests the customers might have.
Chinese market’s challenges
The key to KFC’s success in China was the way they tailored the menu to local tastes. Chinese KFC has items never to be found in American restaurants. The chain serves not only fried chicken but also many local dishes such as rice porridge or egg tarts. The menu also has foods like matcha ice cream, soy sauce chicken, or sandwiches with prawns. These will not be found in European KFC’s but are immensely popular in China.
Here are three examples of foods you can find in a KFC in China:
In 2019, KFC China started selling local street food, such as chuan, boiled skewers, as well as many other snack foods. The franchise even established an independent supply system specifically for street food. The new menu was not without controversy, though, as the street food sold in KFC was much more expensive than actual Chinese street food, making many customers rather reluctant to buy it. Another novelty was launched in 2020 when KFC started selling plant-based chicken in selected stores.
In the last couple of years, KFC also started to work with celebrities to promote their brand. This practice resulted in increases in sales.
KFC in China: a good model for exporters
KFC’s success in China can be attributed to a business strategy developed and implemented by the so-called “Taiwan gang.” They were a group of high-rank managers born in Taiwan and educated in the US who managed KFC in its early expansion stages. As they knew China and its culture, they worked with local people, developing a fitting menu and management methods.
The history of the American fried chicken in China points to the key aspect of the country’s reforms and opening to the world in the last 40 years, which is the dramatic changes in the consumer market and service industry.
Brand owners need to make sure their products and services are well thought through to be successful in the Chinese market.
It should also be noted that food safety is always the most important.
Find out how Lego became successful in China.