#8 WHY DOES KFC DO BETTER BUSINESS THAN MCDONALD'S IN CHINA?
In 2014, KFC, the most popular chicken restaurant chain, listed 18,875 outlets in 118 different countries around the world whereas McDonald’s, the world’s largest chain of hamburger fast food restaurants, listed 34,492 restaurants in 116 countries. Then, the question at stake is why does KFC do better business than McDonald’s in China?
KFC was the first quick-service restaurant chain to enter China in 1987, and has now more than 4,800 locations here whereas McDonald’s entered China three years later and has now over 2,000 stores in China. Additionally, KFC is a part of the business of Yum!, an American brand which includes Pizza Hut too.
KFC is the most popular foreign brand in China, and it was built largely by catering to local tastes in its menu choices. In fact, KFC has more China-specific choices than McDonald’s; for example, they offer breakfast with local flavour. McDonald’s has added some menu items that address Chinese tastes, but hamburgers are an acquired taste in a country more used to pork, chicken and fish; more Chinese people like fried chicken more than hamburgers, although McDonald’s rolled out a new marketing plan aiming at young adult Chinese consumers last year.
KFC reinvented the fast food toy meal in China. Knowing that China has 557 million mobile Internet users, KFC created a mobile game and a digital campaign supported by traditional media. The app, available with a QR code given on figurines offered when you buy a KFC combo, avoids to set EXO alarm clocks and stickers to share on mobile app Wechat, which is the largest standalone messaging app by monthly active users (378 million in China). 10 EXO fan parties were organized in different KFC around China too, in order to welcome fans of the band.
KFC has better coupon deals than McDonald’s, which is very important to most Chinese consumers. About half of customers of either restaurants use coupons, but the best tasting stuff at McDonald’s, the beef, rarely has good coupon deals.
McDonald’s faces declining sales in Asia after China food scandal, while KFC marketing campaigns may have convinced people that KFC is more healthy in China than America; their message is that KFC in China is the “new fast food”, healthier than other fast food options abroad in China.
Even if China has suffered a string of product scandals over the past decade, foreign fast food brands are still seen as more reliable than Chinese competitors, though local brands have made big improvements in quality. Even if minor KFC supplier was investigated for providing expired meat, KFC is and will remind the leader in the fast-food industry for a lot of Chinese people, even if it is often the subject of negative reports.
To conclude, KFC is the biggest fast-food chain in China, with more than 4,800 outlets and plans to open 700 more this year, which is integrated into Chinese consumers’ lives and offer products that appeal to their local taste preferences. McDonald’s may have a good strategy for growing its Chinese business, but the company waited too long and let KFC build too large a lead. China remains for all of those the best opportunity of the 21st century with a consuming class that is expected to double from 300 million to more than 600 million people by 2020.
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