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Five Secret Ingredients of KFC China’s Franchising Success

Five Secret Ingredients of KFC China’s Franchising Success

Colonel Sander’s bucket of delicious fried chicken probably tops the list of China’s favourite western fast food. From 20 outlets in the year 2000 to 3200 outlets today, Kentucky Fried Chicken, better known as KFC has spread its wings to cover over 650 cities in China; and counting. Hands down, KFC has proved to be a franchising inspiration with its finger-lickin’ success story. But what did actually lead to its triumph? Is it the popularity of chicken as food or the secret ingredients of the famous deep fried chicken? Well, it is that and a lot more. Let us look at some important factors that have contributed to KFCs franchising success in China.


BackgroundKFC opened its first outlet in Beijing, way back in 1973. Soon after, they opened 11 outlets in the next year. Unfortunately, they misjudged their market, expanded too fast and by 1975, all the 12 KFC outlets had to display the closed sign. With a second attempt, ten years later, KFC re-entered China. This time, it followed a new strategy and began a joint venture with a Japanese company. This outlet too had to get its shutters down sooner than KFC would have liked. Despite the negatives and losses at that time, these failures were stepping stones to success roviding KFC with priceless lessons to their final entry in China in 1987.

1. Joint Venture KFC started joint ventures with state owned companies like Beijing Corp. of Animal Protection, Processing, Industry & Commerce and Beijing Travel and Tourism. By doing so, the restaurant‘s leaders gained access to invaluable connections that incentivized KFC’s growth. When the need for partners was abolished and enough knowledge was gained, KFC decided to go solo and expand further in the potential Chinese markets. But till date, KFC has maintained its close ties with government officials.


2. Early Bird KFC re-entered China in 1987, a time when the word “franchise” wasn’t even directly translatable into Chinese. They were always the first among western brands to both venture in and expand in the potential market of the most populous country. In fact, KFC was the early-bird to start franchising in second-tier cities since as early as 1992.


3. Demographic Changes Another factor that contributed to KFCs success is the Chinese demography. The booming middle class and the accompanying desire to climb up the social ladder among the population was key to the perception of KFC by the Chinese. KFC was regarded as a western brand and positioned highly in the eyes of the consumer. Additionally, more and more people had a greater disposable income for both, consumption at KFC and also to invest in a KFC franchise.


4. Taiwan Gang Despite taking a global approach to the brand, the leaders at KFC decided not to hail people from its birth country, the USA for managing the outlets. Instead, KFC opted for Taiwan-born, US-educated, Mandarin-speaking executives who had some experience in F&B. This set of culturally aware managers came to be known as the “Taiwan-gang” and was undoubtedly an asset to the brand. Moreover, KFC cut costs by sourcing their food from within the country, unlike before when some ingredients were sourced from outside the country. To add to it, they have adopted a massive logistics and supply chain organisation which effectively adds to KFC’s product quality.


5. Think Global, Act Local Most importantly, KFC has taken the ultimate leap towards success by adopting a re-vamped menu. The KFC menu in China does not only contain the America-inspired Zinger burger but also congee - a rice porridge that can feature pork, pickles, mushrooms and preserved egg. KFC China serves you soup with every meal and even steamed rice or noodles with vegetables on the side.
They have effectively developed a menu that demonstrates a melting pot of cultures to suit the Asian palette. Their adaptation of the oriental culinary tastes have made them very popular among the adults and the ‘little emperors’, too. To add to this, KFC boasts a d�・cor with a traditional Beijing-style ambience in some stores. As more Chinese feast on their KFC bucket, KFC will be dependent on China for more than half of its global revenues very soon. These lessons from KFC’s past mistakes, the importance of franchising at the right place, right time, with the right people and adapting the brand to the local market rather than the other way round are very valuable. Such lessons in franchising can be learned from KFC and undoubtedly applied in the Asian market.

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