KFC’s Explosive Growth in China Andrew Kranda Mike Boring

The Beginning Part of Yum! Brand w/ Pizza Hut First opened in Beijing in 1987 Now over 3,000 in 650 cities Was owned by PepsiCo at the time China division chairman and CEO Sam Su Su's strategy was that KFC "would not be seen as a foreign presence but as part of the local community… Our opportunity was to take the best ideas from the US fast-food model and adapt them to serve the needs of the Chinese consumer.”

Keys to Success Homogenize or not? Close ties with government Hires local management Sources food from within country Changes menu to suit Chinese tastes and style of eating

Business Culture Many of 250,000 employees are college studentscollege students Employees have leeway in showing up to work Company provided video games for breaks “provides crucial social skills for young adults.” Creates lifelong Yum! Brand customers Train and retain quality employees Source products from within China whenever possible

“The Chinese Way” Appeal to Chinese style of eating - Group sized dishes Small # of items familiar to Western visitors The Chinese KFC menu may include fried dough sticks, egg tarts, shrimp burgers, and soymilk drinks, as well as foods tailored to the tastes of specific regions within ChinaChinese KFC Helping customers make healthier choices

Questions “KFC succeeded in China both because it was not McDonald's and because in many ways it decided it wouldn't be KFC either.” Would this business model be successful for other American companies? Should McDonalds follow this idea or keep their locations primarily homogenous?