Marketing/ June 10, 2021/ News

KFC (Kentucky Fried Chicken) is an American chain of fast food restaurants founded in 1930. The restaurant attracts many customers in many countries around the world. How does it look in China? KFC (肯德基 – Kendeji) is the one with the most extensive reach among all the foreign brands present in China. How did the brand achieve such success?

KFC beginnings in China
The first KFC restaurant in China opened in 1987 in Beijing. The brand started operations and then worked with other companies, owing 60% of all shares. In early 1988, the Bank of China took 25% of KFC’s shares, leaving the brand with 51%.

As the first restaurant of its kind in the Chinese market, KFC had a significant advantage over the competition. Rather than bring in managers from the US, the brand decided to hire people from countries with high economic growth rates, such as Taiwan. KFC created its Chinese distribution method never before made in the country, and at the same time it was awarded 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 for burgers, which are still not very popular there.

KFC became a symbol of a rapidly 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 of branches in other countries.

When the restaurant first opened in China, it was considered quite luxurious. The brand guaranteed its customers cleanliness and freshness.

Greater progress
Since 2003, more and more fast foods, including KFC, started to open in China.

In 2008, the KFC CEO announced plans to open more than 20,000 new restaurants nationwide.

With all the success come scandals. In 2012, the chain was accused of using antiviral drugs and growth hormones on its chickens, violating food safety laws. The event led to a government investigation into the use of antibiotics in food products. Due to this scandal, sales in January 2013 fell 41% compared to the previous year. Clarifying the brand name took longer than expected, but in the first quarter of 2014, sales were up 11%.

Another scandal took place in July 2014. Chinese authorities closed restaurants in Shanghai following rumors that they used expired meat. The brand broke the contract with its current supplier and tried to fix its good reputation.

Even with all the problems, KFC is still immensely popular in China and continues to grow, striving to meet the expectations of all customers.

Not long ago, KFC opened a restaurant in China with a completely new concept. KPRO concentrates on preparing fresh and healthy food (not fried chicken). The site even allows customers to “pay with their face,” using the Smile to Pay system, which identifies the face and connects it to a bank account.

KFC reach
There were already 28 KFC restaurants in China in 1994, seven of which were in Beijing. In 1997, more than 100 were opened.

In 2002, when more and more Chinese had cars, the first KFC restaurant with car access was opened.

By 2020 there were already more than 6,700 KFC restaurants in more than 1,400 cities across China.

The largest KFC restaurant is located near Tiananmen Square in Beijing. It has three floors, more than 334 m2, and capacity for 500 people. The place was an instant hit and customers lined up to enter for many months after it first opened.

According to Euromonitor, KFC had 11.6% shares in the Chinese market in 2018, surpassing McDonald’s 5.6%. McDonald’s owns about 3,383 restaurants as of 2020.

Predictions of further development
In China, KFC is considered a place for the young and the rising middle class. Teens, families with children, and students doing their homework are often seen at restaurants. Although everyone is welcome, these are the people who visit most frequently and are therefore the most attended by management.

Many consider the Chinese KFC to be much better than the American or European KFC. Some say it is because the food tastes fresher, less greasy, and is much more thought-out.

The brand is continually developing, renovating and modernizing the restaurants to ensure that they are to the liking of its customers.

The brand plans to reach 20,000 restaurants, also opening in smaller cities. Its objective is to satisfy all the requests that the clients may have.

The challenges of the Chinese market
The key to KFC’s success in China was the way they adapted the menu to local tastes. The Chinese KFC has items that are never 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 items such as matcha ice cream, chicken with soy sauce, or sandwiches with prawns. These are not found in European KFCs, but they are immensely popular in China.

Here are three examples of foods you can find at a KFC in China:

In 2019, KFC China began selling local street food, such as chuan, boiled skewers, as well as many other snacks. The franchise even established a separate supply system specifically for street food. However, the new menu was not without controversy, as the street food sold at KFC was much more expensive than actual Chinese street food, making many customers quite reluctant to buy it. Another novelty was launched in 2020 when KFC began selling plant-based chicken in select stores.

In recent years, KFC also began working 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 Taiwanese-born, US-educated senior managers who managed KFC in its early stages of expansion. Knowing China and its culture, they worked with the local population, developing an appropriate menu and management methods.

The history of American fried chicken in China points to the key aspect of the country’s reforms and its opening up to the world in the last 40 years, which are the dramatic changes in the consumer market and the service industry.

Brand owners must ensure that their products and services are well thought out to be successful in the Chinese market.

It should also be noted that food safety is always the most important.

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