At the height of its Chinese growth, KFC was opening an average of one restaurant every day, and this rapid development has made the company’s expansion one of the most renowned business success stories of this generation. Starting with one restaurant in 1987, the Yum-operated company now manages a total of 4,563 branches and controls more than 40 per cent of the Chinese market.
The success of the US company’s export strategy has become exemplary so we’re taking a closer look at just how they did it. We hope to see what lessons can be learned for export managers and international marketing professionals with their eye on China.
We’ve broken their success story down into three main components: Pioneering decisions, localisation and knowledge of the market. Each of these can be divided into a number of key strategies that were applied by KFC to make it one of the most successful exports ever to leave the shores of the US.
As a major player in the fast food industry it’s clear that KFC constantly faces tough competition; in 2015 McDonald’s, perhaps KFC’s biggest competitor, was worth an impressive $81 billion, making it the biggest fast food brand in the world. Despite this, KFC has stayed one step ahead in China by making pioneering decisions that prompted rapid expansion and phenomenal levels of growth that surpassed even the work of Ronald McDonald.
KFC opened its first Chinese branch in Tiananmen Square in 1987, but it wasn’t until foreign companies were granted greater access to Chinese markets in 1992 that the company developed its impressive and now renowned export strategy. Faced with the growing presence of McDonald’s, KFC discovered a competitive advantage in targeting smaller cities. Rather than facing the threat of the Big Mac head on, KFC embraced a ‘far and wide approach’ by choosing low cost alternatives, which soon saw it become a favourite amongst mall developers as they began working their way across the country.
Supply Chain Development
Across the US and Europe, the fast food industry relies heavily on an efficient supply chain, which was non-existent when these brands first approached a developing China. Rather than reducing its speed of expansion, KFC simply set about establishing a distribution arm of its own, which ensured the process could be carefully controlled and monitored on a daily basis.
Customer Service Training
With rapid growth comes a desperate need for staff, and KFC became one of the first companies in China to promote the need for training and customer service. As a self-proclaimed ‘learning organisation’, KFC has developed a programme to teach new employees how to interact with customers by placing them on training schemes alongside current employees. This ensures the company has a constant flow of staff trained to deliver customers the service to which they’ve become accustomed.
Focus on Ownership
Franchising is a common choice for fast food chains thanks to the reduced investment costs and lower risk associated with rapid expansion. However, this type of business growth is most successful with limited menus and easy products, which didn’t comply with the company’s goal of delivering a more complex model to the Chinese market. So, KFC adopted an ownership model which was capital-intensive. This allowed the rapid expansion to take place.
KFC’s focus on meeting the needs and desires of the Chinese market has led to the development of a distinctly localised business strategy. As an industry pioneer, the brand was tasked with introducing American food culture to an unprepared China; a task that required a careful balance of traditional KFC with the familiar taste of China.
In an industry dominated by hamburgers, the fried chicken giant was lucky enough to be entering the Chinese market with a traditional staple as its landmark dish. However, the company required more than just eleven herbs and spices to win over Chinese consumers. Desperate for an eclectic fusion menu of Chinese and American cuisine, the restaurant chain’s visitors have rapidly been won over by the brand’s localised menu, which includes rice congee with pickles, egg custard tarts and the spicy chicken Zinger Burger, which has been specifically developed to fulfil China’s desire for spice.
Employing Bi-Lingual Local Management
Many foreign countries targeting the Chinese market will recruit American-born managers to reduce confusion in the boardroom. However, KFC’s expansion plan focused on the hiring of Mandarin-speaking Chinese managers from Taiwan, who had a solid understanding of both the language and the culture of the target market. These employees proved to be key in helping KFC spread to locations that remained out of reach for many rival fast food firms.
Embracing Local Culture
A crucial part of KFC’s strategy was to appeal to the sense of tradition ingrained in Chinese culture. Unlike the simple interiors found in US branches of KFC, the brand’s Chinese counterparts are designed to resemble traditional Beijing neighbourhoods. On a more controversial note, in Xinjiang, KFC has begun advertising parties for the families of boys who have undergone the ritual of circumcision, which demonstrates the brand’s commitment to fully embracing the country’s culture.
Knowledge of the Market
Having placed such a significant emphasis on adopting Chinese culture from the outset of its arrival, KFC has managed to develop the reputation of being a ‘part Chinese’ company. This acceptance is due in part to the fact that the organisation’s growth has overlapped with that of China. However, it is also a product of KFC’s dedication to understanding the market into which it was so keen to expand and a testament to the thought and effort put into creating products and branding to suit.
Abandoning Brand and Original Principles
Many players in the US fast food market focus on delivering low prices, a limited but reliable menu and an easy takeaway system to win over consumers. However, this dominant approach to growth was abandoned by KFC as it set its sights on China. Unlike the US, China views food as being at the heart of society and culture, both national and regional, and only an extensive selection of home-grown flavours would tempt consumers to explore the concept of Western-style fast food.
This emphasis on delivering an abundance of exciting products helped KFC to build up a level of trust with consumers. Setting it apart from traditional fast food counterparts, the fried chicken firm began offering up itself as the provider of balanced and healthy cuisine. From vegetable dishes to an emphasis on adhering to Chinese food safety standards, KFC created a culture of trust that has transformed it into one of the most powerful brands in the country, and the world.
There are many lessons to be learned from KFC’s accomplishments in China, but the overriding message is that translating and localising your entire brand with respect for the culture of your target market is key to a successful export.
Here at Bubbles, we help businesses to go beyond translation, exploring the meaning behind a country’s culture and traditions in every aspect of your marketing and business material. Get in touch today to find out more about how we can help streamline and support your expansion into your target market.