Global business strategy of KFC in China

Yum! Brands is the largest restaurant group in the world. Kentucky Fried Chicken, or KFC, is the dominant subsidiary of Yum! Brands and what KFC’s product focus in the fast food industry is fried chicken. KFC is very successful in the fast food industry internationally. According to KFC official website description, “There are more than 18875 KFC outlets in 118 countries and territories around the world”. In 2013, KFC’s sale revenue is around 13,084 million (Yum! Brands Annual Report). In my personal opinion, the key to KFC’s global success is accredited towards their global strategies.      

KFC’s global market penetration strategy was easy: Expand by staying local!  Understanding the local cultural, economic and regulatory differences becomes a key element in any global business strategy. Let’s take a look at KFC’s market penetration success story in China, for example.  

  

With its “Go Global, Act Local” market penetration strategy, KFC adapted their fast-food model to fit the Chinese market by positioning itself as a native company, not a foreign. Specifically, KFC’s success in China was accomplished by taking the following strategic steps: 

 

  

First, KFC identified customers’ likes and dislikes at the local and cultural level. Besides chicken, it serves food that appeals to Chinese tastes, items you’d never find on an American KFC menu: chicken with Sichuan spicy sauce, rice, egg tarts, and soybean milk. It is also part of the Chinese culture to eat in groups, so KFC offers larger dishes 

for sharing.

  

Second, KFC hired managers who read and speak the local language, who understand the Chinese consumer, the restaurant trade, as wells as the Western way of doing business.

  

Third, “Good restaurant brands know that the way to customers’ hearts is through their stomachs, but delicious food alone is not enough. We also need to deliver a comfortable store environment, excellent service, and a distinctive culture for our customers,” said Su, Chairman and CEO, Yum! Restaurants China and Vice Chairman, Yum! Brands. “Therefore, KFC’s Re stage also includes redesigned product packaging, an enhanced service model, contemporary staff uniforms, gradual roll-out of a new store design, and a number of digital initiatives including a new mobile app, E-menu and prepay take-out option,” Su added. The Company will provide additional details about these initiatives in the coming weeks.  

  

And finally fourth, KFC carefully followed Chinese strict foreign investment laws and entered into Joint Ventures with local producers – a departure from its traditional US based franchise approach.  

financial highlight 

Year-end	2013	2012	2011	2010 (a)	2009 (a)	5-year growth
CHINA
KFC	4,563	4,260	3,701	3,244	2,872	13%

Although Chinese market often represents a huge risk for many foreign companies, KFC’s “Go Global, Act Local” market penetration strategy created and filled an untapped marketplace by identifying and prioritizing cultural, business and regulatory sensitivity. Since opening its first store in Beijing in 1987, the KFC has grown to over 3,800 locations in 800 cities with finger lickin’ performance.