KFC's Explosive Growth in China

Adam Burlison & David Meigs

Yum! Brands

• 40% market share of fast-food chains, McDonalds‘ 16%• 2011 in China– 500 Pizza Huts in 120 cities– 3,000 KFC in 650 cities

• 2012 in China– 630 Pizza Huts in 120– 3,700 KFC in 700 cities– Leading retail developer in China with nearly 4,500

restaurants in more than 700 cities.

KFC

• KFC first opened in Beijing, China in 1987 • KFC was owned by PepsiCo while entering

China– PepsiCo allowed China KFC Division Chairman and

CEO Sam Su managerial freedom

KFC

• CEO Sam Su’s success:– Understood they were an American

business model operating in China– Cultures are different than one another

• Chinese are far less individualistic

– Intended KFC to be part of the local community• KFC China procures most its products from

within China• Altered menu selection in various regions

due to specific tastes

KFC

• CEO Sam Su’s success: (cont.)– Value trained labor and loyalty • Friendly employer/employee relationship• Encourage college educations for employees

– Handling health concerns• Created healthier menu• Support exercise and youth events

Questions?

• Why do you think KFC is out-competing McDonalds in China?

• If you were attempting to enter the Chinese market, what lessons from Sam Su would you adopt or do differently?

Sources

• http://hbswk.hbs.edu/item/6704.html• http://www.bloomberg.com/news/2011-01-2

6/mcdonald-s-no-match-for-kfc-in-china-where-colonel-sanders-rules-fast-food.htm

• http://www.yum.com/brands/china.asp