Bloomberg Business Week featured KFC, a Yum brand restaurant, in two recent articles focusing on the brands Chinese storefronts. KFC, a household name in US fast food chains, has been suffering in several different aspects. Originally tied with the name “Kentucky Fried Chicken”, KFC has evoked feelings of unhealthiness with US consumers for years, and has suffered sluggish sales. However, the chains crowning glory has been KFC China which has been a start for Yum brands and been increasingly profitable.
Recently, however, KFC China has suffered from image issues and quality problems, and therefore there sales in China have been dipping. For KFC in the past, unhealthiness was not as much of an issue for its Chinese counterpart, because it brought a unique competitive advantage: its traditional American menu. KFC China took a different approach that may have ruined that competitive advantage, by trying to adapt the menu to the Chinese audience and adding traditional Chinese fare. So far it appears that this was not a wise choice, and consumers are left wondering what happened to their beloved American food. KFC needs to reassess their product design to match the wants of the Chinese customer base.
On top of this reconstructed image issue for KFC China, what may have been even more damaging was quality control issues. A history of poor quality issues can be severely damaging to a brand, especially one associated with the food industry. Consumers take extra precautions with what they are putting into their bodies, so when news of KFC chicken containing “unacceptably high levels of antibiotics” the chain suffered. This on top of already high concerns dealing with avian flu, made Chinese consumers even more skeptical about consuming this product. This illustrates, how damaging a quality issue can be for a brand, as discussed in Chapter six.
KFC China had been so successful in the past, that Yum has considered completely selling the United States stores in order to focus on those abroad that were growing at a much faster rate. However, if they continue to have these image and quality issues in China, getting rid of US stores may be a poor choice. If KFC abandons its US stores, does that destroy its image of being a classic American restaurant even further? Only time will tell what happens to this brand, but it is crucial that Yum and KFC managers assess this project.
What are your thoughts on KFC and KFC China?
Questions for discussion:
1. Should KFC focus on one brand or the other? Or continue with both?
2. How should a major fast food brand adapt to international markets? Maintain their original image, or add traditional food, specific to the location?
3. Where to you see Yum and KFC moving in the future?
6 thoughts on “KFC China: Straying too Far from Kentucky?”
Perhaps, the reason that KFC was doing so well in China and not the U.S. is that there is less fast food chicken competition in China. For example, in Chicago KFC competes with Harold’s, Churches, and Popeye’s. Popeye’s has some Chinese locations, but Harold’s and Churches does not. Another issue with KFC might be it’s relationship with Pepsi. Pepsi actually used to own KFC so because of that KFC and all Yums brand restaurants have a lifetime agreement with Pepsi. Subsequently, according to the WSJ, Coke still have a dominant market share compared with Pepsi in China. Finally, I do not expect KFCs to disappear in the U.S. as they can be easily combined with other Yums restaurants such as Taco Bell and Pizza Hut.
KFC should focus on their brand and the other brands that they have, so pretty much continue with both. KFC can adopt to international markets by catering their food to the specific culture where they plan on selling food or opening a specific franchise. So they maintain their traditional image, while adding some cultural/traditional food to the mix specific to the location. If there is a certain type of chicken that is native to that land, they can maybe offer that type of chicken KFC style. I can see KFC’s moving to different markets in the future, many of them will be international, however I don’t think they should lose that american home-base of franchises.
Sometimes I have to use China-based websites when watching occasional pirated material, and KFC ads are almost guarenteed to be there. They are definitely pushing China hard and it’s surprising the types of cultural things that they sell at their chains in China. Maybe they need to reassess their menu in China. Perhaps they should also adapt the tactic they used for Japan. In Christmas in Japan it’s tradition to eat KFC. Perhaps they used a strategy in Japan that could be reconfigured for China.
I can see why they would have so much success in China, but once the flu is connected to your food, that’s like a dagger to the heart. I don’t think there is anyone that would comprimise their life for some chicken. They are going to have to come up with some sort of great PR to get their good name back. Until they can correct that, I don’t think they will be selling any US establishments. Also like the first comment stated, Coke is a very dominant soda brand in China, so maybe it’s time to try and strike a deal. Good post. To your question though, they should continue to focus on both because almost half of their profits came from China based stores.
I agree with the comment stated above about keeping focus on both because if they sell the U.S. stores then lots of revenue will be lost. Therefore, selling any establishments is out of the question. However, I do believe that YUM and KFC should start putting more attention to China’s market because they need to work on fixing the issues with image and quality to help keep this franchise alive. Because times are changing rapidly, it is harder to keep up with the demands of the consumers. That is why I think KFC should be more active in figuring out what their consumers really want on their KFC menu’s.
I think KFC China put some traditional Chinese fare into menu, also it is still have KFC traditional fried chicken. This act is necessary, because not every countries have their own food style, and it is hard to keep traditional fast-food chain when you want to open your country restaurant to other countries. You want to get into other countries and you have to change and make an additional. Like other fast-food restaurants, they have different menus in all country locations, and companies still go well.
Yum and KFC still can go further in the future. China is a big and good place to develop KFC this kind of fast-food restaurant. It had mention that they open up a new KFC in China everyday, I believe that there are more people adapt KFC and there are more stores opening in China.