#149 KFC loves China loves KFC

Fast food is tricky business in China. China loves to eat, but there already is an abundance of excellent affordable street food, and competition between foreign fast food brands is intense. Yum Brands-owned Kentucky Fried Chicken (KFC) stands out among many others in that it has been immensely successful in the Chinese market. With more than 5,000 restaurants in more than 1,000 cities in China, KFC has twice as many restaurants as McDonald’s. KFC’s success is without doubt the result of an interesting blend of boldness and sensitivity. Back in 1987, KFC was the first American fast food chain to launch in China. And it didn’t launch just anywhere, but within walking distance of Beijing’s central Tiananmen Square. The choice of the stately capital as KFC’s point of entry was interesting as many other foreign entrants might have chosen one of the more open coastal cities in the South instead. When the Beijing branch first opened, the restaurant was an instant success, with customers lining up outside the restaurant for several months after its opening. By 1988, the branch had already become KFC’s top-selling location among all the chain’s outlets, and it even weathered the 1989 Tiananmen incident as it was serving both protesting students and soldiers of the People’s Liberation Army. China’s economy was only at the beginning of its rapid expansion, and KFC quickly became a symbol for the country’s newly found openness and its emerging economic prowess. After its early success in Beijing, KFC moved rapidly into other cities, including second and third-tier ones. But KFC was not only a first-mover, it was also a smart first-mover that adapted both its practices and its menu to match the Chinese environment.

From the outset, it was important to KFC to be perceived as being part of the local community. This started with hiring the right people – Chinese managers who understood the local market, the restaurant industry, and the Western way of doing business. KFC also focused strongly on building unity and camaraderie among their employees in China, including management, and the executive level. KFC’s commitment to adapt to the local environment, also extended to the customer. Today’s diners at KFC don’t just find the usual staples of fried chicken, but they also can choose from items such as the “Sushirito” (a burrito-like sushi roll), the “Chizza” (a pizza-style dish that replaced dough with chicken), shrimp sandwiches, rice congee, or “Nine-Lives” juice drink, and the breakfast staples
“Youtiao” (fried bread sticks) and soy milk, all of which cater to Chinese tastes. More recently, KFC also has made a strong commitment to capture the market of China’s millennial consumers by using celebrity endorsements from popular entertainers and social media stars.

Another element in KFC’s success in China: Being a good citizen. In the second half of 2018, KFC introduced an advertising campaign celebrating 40 years of “reform and opening up”. Clearly intended as a salute to the Chinese government, a TV spot showed Chinese celebrities traveling back in time on an old train, seeing streets filled with bicycles and bamboo scaffolding. They are then transported back into the present on a modern high-speed train where they see young people using smartphones, cheering at pop concerts, and clinking chicken nuggets like champagne glasses. Make no mistake, KFC also celebrates national day pride in other countries, including Fourth of July in the United States or Bastille Day in France. But only few foreign companies have aligned themselves with overtly political events in China to the extent that KFC has done over the years. After all, in countries like China, it is not only important to keep employees happy and customers satisfied, but one also needs the support of a friendly government.

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