KFC in China
KFC in China
KFC in China
Homogenization has made it easy for fast-food joints to circle the globe, spitting out carbon copies of themselves, their burgers, and their fries along the way. But in the most populous country in the world, a fast-food giant stepped off the conveyor belt and found unprecedented success by being different, not by being the same. In the Harvard Business School case Yum! China, professor David E. Bell and Agribusiness Program director and senior researcher Mary Shelman examine how Yum! Brands, the parent company of KFC and Pizza Hut, outperformed McDonald's and became the largest restaurant company in mainland China. The case describes how Yum! China succeeded and expanded by staying local on many levels. It keeps close ties to the Chinese government, hires local management, sources food from within the country, and changes the menu to suit Chinese tastes and style of eating.
A matter of scale
One key issue the case examines is "how to implement the rollout of a fast-food chain involving so many stores across such a
into the world, provides crucial social skills for young adults who grew up in single-child households, creates lifelong Yum! Brands customers, and develops a culture of customer service in a country where there was none. The restaurant management program is similarly focused. "You're a college graduate," says Shelman. "You're recruited for that position. You're very carefully developed to be able to do all these different jobs in the restaurant. And it's perceived as something that you would do your entire life." Along with training and retaining quality employees, another key factor in KFC's success was Su's early decision to downsize his own career. Originally hired to cover the northern Asia-Pacific region, he departed from the usual managerial growth path of taking on larger geographic assignments and instead argued that he should focus exclusively on China. Early on, he decided that Yum! should develop a national footprintsupported by a company-owned distribution system since third-party suppliers didn't existinstead of growing in geographic chunks through franchising. Su sourced products from within China whenever possible. This was no easy feat early on as the supply chain for chicken, for example, included multiple vendors providing a handful of birds each. Food safety is a big concern for Chinese consumers, and it was Su's decision to build the supply chain from the ground to help ensure quality. "We work with our suppliers to build their capabilities. We stress the
importance of knowledge transfer, and even arrange for them to go overseas to learn," Su said in the case.
The KFCs in China have also limited the amount of money saved on combo meals, and have completely eliminated supersized items. Exercise is actively promoted inside the chain; as of 2010 the youth programs and competition it sponsored had over 260,000 participants in 438 cities. KFC succeeded in China both because it was not McDonald's and because in many ways it decided it wouldn't be KFC eitherwhich brings up another key question. "With the benefit of 20/20 hindsighthow do you avoid the mistakes of the American fast-food model?" asks Bell. "Put another way, if McDonald's and KFC were to start over in the United States knowing what they know now, how would their model differ?"