China is very competitive, Every food and beverage segment in China that can attract the youth target will benefit from huge consumption. Particularly in the drink market, there are currently many fusion drink concepts and youth-focused beverages.”

KFC still holds its original concept

With over 5,000 branches, KFC is American fast food’s biggest success story in China, beating out other competitors like Burger King and McDonald’s for the biggest share of the Chinese market. They’ve also been incredibly adept at using celebrity endorsements and brand collaborations in order to attract customers in China.

Over the years, KFC has managed to make a seamless brand transition into a go-to establishment for traditional Chinese breakfast food. The franchise began offering localized morning options in China during the early 2000s, when they picked up on customers’ desire for street-food style breakfasts, eaten on the commute to work. 

They started off simple with soy milk, congee and fried sticks of dough, called youtiao (油条), but due to consumer demand, have since expanded to offer a full Chinese menu, including everything from egg tarts to veggie soup.

The Key to KFC’s success in the country has been its aggressive catering to Chinese tastes, with menu items that will never make their way to US restaurants. While KFCs in China serve fried chicken, they also serve a variety of local dishes like egg tarts, congee (rice porridge), and the “Dragon Twister.”

We are all impressed by the KFC China’s transformation of the business model that had made Kentucky Fried Chicken a global brand. KFC China offers important lessons for global executives who seek to determine how much of an existing business model is worth keeping in emerging markets and how much should be thrown away.

Gradually KFC began to seed its menu with increasingly Chinese-styled options. Now, the chain boasts a full Chinese breakfast menu alongside fish and shrimp burgers, vegetable soups and full-plate meals with vegetable sides. Given KFC’s shift to a dine-in experience, this menu variety caters to local tastes while offering enough variety to encourage repeat visits. Still, despite all the Chinese options on the menu, the trusty Zinger chicken burger remains the country’s favorite.

Digital Driving Growth in KFC China

Global companies face a critical question when they enter emerging markets: How far should they go to localize their offerings? Should they adapt existing products just enough to appeal to consumers in those markets? Or should they rethink the business model from the ground up?

Promotion/Advertising

KFC in China usually adapts its advertising campaigns to match the Chinese customers’ tastes. There is a Cantonese version of “We Do Chicken Right” advertisement in China. In order to increase brand awareness and motivate sales volume, there are periodical meal sets and promotional prices for some special foods or meal sets constantly. There are also children meals specially designed for children.

It’s part of a strategy to reinvent the brand as “younger and buzz-worthy” in China, in a bid to stand out in the crowded market. Millennials in China are no different from the rest of the world, except trends come and go even faster thanks in particular to the nation’s advanced social networks.”

Loyalty App for Loyalty Consumers

As well as online orders and payments, KFC China uses the app to send exclusive offers and coupons to its loyalty base. These are focused on driving business on off-peak days. The app also offers rewards when you first download it with a rich cash value of 88 yuan (approx $13) and packages such as five breakfasts for 39 yuan (approx $6).

Gamification

China is identified as a gamer’ country with more than 564 million gamers as a great market to target, leveraging its youth, scale, and passion as a way to completely re-position their brand. Rather than developing games of their own, they instead chose to partner with the country’s award-winning gaming giant Onmyoji to create an exclusive KFC China game. This game uses location-based services and augmented reality to encourage players to meet in-store to play together.

eGifts

In order to maximize their digital distribution channels, KFC China has opened a digital store on TMall, the most Chinese consumer eCommerce marketplace operated by Alibaba, which is the world’s ninth most visited website. The brand is tapping into the traffic to firstly register members to its loyalty app, and also to sell gift cards and coupons described as their way to “build a new O2O [online-to-offline] model” using digital techniques to drive store visits.

Dramatic transformation was driven by the needs of China’s youth population

Digital content is a perfect fit for millennials and KFC China has built an innovative platform where customers can choose and play their chosen tunes in-store. Watch the video below to experience the concept of a digital jukebox. It also showcases their partnership with smartphone manufacturer Huawei, with whom they launched a limited edition smartphone in 2017 to celebrate the brands thirty-year anniversary in the country.

If you want to become the next KFC in China, you should contact us for more details. Our experts will be happy to help you.