KFC China operated by Yum China opened its 10,000th restaurant in Hangzhou. The brand has continued to grow at a rapid pace, including during pandemics. KFC’s aggressive expansion strategy is supported by successful product introductions and a focus on everyday affordability and accessibility.
Growth potential
KFC arrived in China for the first time in 1987, and it has grown with China since then. KFC has a presence in more than 1,900 Chinese cities and still has significant growth potential. Joey Wat CEO of Yum China highlighted this potential after the opening of KFC China’s 10,000th shop.
He said, “As a Western QSR brand that has been in China for 36 years, KFC China’s 10,000th opening is a proud and memorable moment for us all.” KFC China is strategically positioned to sustain growth. Its large and rapidly growing store network, significant economies of scale, and access to a wider customer base will all benefit the company.
KFC has a multi-faceted expansion strategy. It already boasts the largest China store network of any restaurant brand in China. The expansion strategy is multi-faceted and does not just involve increasing the number of restaurants. It also includes expanding into new cities, as well as improving store density within existing markets. KFC has enjoyed a lot of success in China thanks to its constant innovation. A variety of store modules and models have also helped the brand expand quickly in recent years.
There are four types of stores, including standard stores and future concept stores. Mini-stores and strategically placed stores in lower-tiered cities round out the list. KFC China is also exploring innovative and new locations for its stores, such as highway service centers, hospitals, and college campuses. This makes the brand more accessible to consumers of all types. KFC continues to maximize its investment in new stores. The payback period for new store openings is consistent at about 2 years.
Introducing New Menu
KFC China is constantly introducing new menu items that reflect the varied tastes and needs of Chinese consumers. KFC has introduced new menu items, including whole chicken burgers and beef burgers. Both now generate sales of over $100 million annually. KFCOFFEE, KFC’s coffee brand, is one of China’s largest coffee brands and is on track to sell more than 180 million cups in 2023. This represents an increase of over 30% annually. KFC also has a goal to reach more than 300 standalone KCOFFEE shops in China by 2024.
KFC China is expanding its reach by developing cost-effective products and increasing the price ranges of select products. KFC China, recognizing the importance of affordability, availability, and value, has increased its price range. It also introduced entry-level products alongside its core product range. KFC, for example, has added new products to the RMB 19,9 (USD 2,79) value offer and its Crazy Thursdays campaign has encouraged more price-conscious consumers.
KFC designed these initiatives, along with others, to offer customers excellent value while upholding the quality they expect
KFC China
Which combines convenience with affordability, has been able to improve its digital ordering systems, membership programs, and delivery services.
KFC China has been able to build strong relationships with its customers over the years. Beyond KFC China’s massive loyalty membership base are collaborations with pop-culture icons that resonate with younger generations. They create social buzz and attract new patrons. More than 90% of KFC China orders are now processed digitally, and over 430,000,000 people have joined the KFC loyalty program.
KFC China identified Resilience Growth and Moat strategies as effective ways to rapidly expand its business. The brand’s growth momentum will continue in China through a blend of strategic store expansion, innovative products, everyday affordability, and meaningful engagement with customers. KFC’s success will continue to grow as it continues to innovate and adapt its products to meet the changing market needs in China.
KFC has every right to be optimistic about the next chapter in its growth story in China. Warton W. Wang, KFC China General Manager, expressed this optimism during Yum China 2023 Investors Day. He said, “We’re confident about KFC China’s potential growth” and added, “Considering China’s population size, the number of cities in China, we see enormous growth potential.”
