KFC’s Strategy In China

Five Competetive Advantages Of KFC In China

Infusing KFC into a brand that would be perceived as a part of china.

Expanding into small and mid-sized cities.

Developing fast logistics and supply chain organizations.

Training employees in customer service.

Owning rather than franchising the restaurant.

Infusing a western brand with chinese characteristics

Twice as large in size as that in US.

Floor area was increased so that people could dine in easily and extended family of customers could be welcomed easily.

Its menu had 50 items as compared to that of US which had 29 items

in its menu.

Changed the recipes of their dishes according to the prefrences of the people of different regions.

Number of workers employed are twice as that in the US.

Expanding Rapidly

Decided to embrace the smaller cities and expand their business at national level with outlets all over the country.

Lower cost of operations.

Advantage of being the early movers.

Rapid expansion has helped KFC move ahead of the competetion.

KFC has 40% market share as compared to that of McDonalds which stands at 16% market share only.

Developing Logistics Network

In 1997, KFC china created its own warehouse and ran its own fleet of trucks.

Supplier Rating System helped the managers to buy the products from the managers who perform the best.

Relied on renting temporary warehouses and reserving space on cargo airlines during the time of traffic jams in winters.

Training Employees In Consumer Service

Teams of new employees work side by side with the experienced once.

New recruits at KFC often have to learn basic people skills and team work.

Many competetiors have tried to copy it but didn’t match the level.

Train the employees in personsal hygiene, from what to wear at workplace to how often wash hands.

Ownership rather than franchising

More than 90% of Yum’s outlets in china are owned by the company itself as compared to 12% in US.

KFC china model is complex and owning it helps the company to close control every aspect of the company.

Permits centralized purchase which reduces costs and increases the profits of the company.

The Risk Of Backlash

In 2002, 23% of chinese adults were overweight, in 1982, 6% adults were overweight.

Overweight and obese children aged between 7-17 yrs have tripled to 8.1% in the past 10 yrs.

In 2005, a new concept “new fast food” was introduced and promoted healthy living.

More fruits and vegetables are included in the dishes.

KFC’s children meals are served with vegetables and juice.

Nutritional information is printed on every package and the hostess teach on nutrition to the kids.