On December 15, 2023, a sunny winter day, the 10,000th Kentucky Fried Chicken (KFC) restaurant in China officially opened on the banks of the Beijing-Hangzhou Grand Canal in Hangzhou, East China’s Zhejiang Province.
KFC's 10,000th store in China opens in Hangzhou. (Photo from Internet)
“I didn’t expect that KFC, which I grew up eating, would make for a good photo,” said customer Zhao Ning as she held a classic family bucket and took snapshots in front of the floor-to-ceiling window.
On November 12, 1987, KFC became the first Western fast-food company in China, opening its inaugural outlet at No. 1 Zhengyang Market on Beijing’s Qianmen West Street.
"At that time, it was the largest KFC restaurant in the world,” said Yu Dongxing, who was among the outlet’s first batch of employees. “It was three floors and a capacity of more than 500 people. It was snowing on opening day, but there was still a long line of customers at the door.”
Over the next 36 years, the US fast-food company opened 10,000 stores in 1,900 cities across China, serving more than one billion consumers annually. So, what has KFC done right in the Chinese market?
According to Joey Wat, CEO of Yum China, KFC’s China operators, bullish investment and market confidence has been key to their success.
“We have always been confident in the Chinese market,” Wat said. “China is one of the world’s fastest growing economies. The size of its population and economy is of prime importance in the catering industry. Investing in China is our firm choice no matter in the past, present or future,” he added.
KFC has achieved a significant milestone by surpassing the 10,000-restaurant mark, marking a new beginning for the company. “We are poised to enter a stage of rapid growth, aiming to expand our food and services to reach more than 700 million Chinese consumers and achieve a 50 percent growth in our consumer base in 2026,” Wat said, adding “We will make KFC a daily dining option.”
Conducting in-depth market analysis and embracing consumer upgrading
Markets are a rare global resource. Over 36 years, KFC has adhered to consumers’ taste preferences, maintained product innovation, research and development, customized menu items such as the Old Beijing chicken roll, Sichuan-flavored spicy beef wrap and century egg and pork congee. And KFC has rolled out services including home delivery, quick pick-up for takeout meals, and 24-hour restaurants to meet the demands of young consumers’ fast-paced lives.
This undated photo shows a customer waiting to get his order at a KFC restaurant in Beijing, capital of China. (Photo: Xinhua)
Mass catering is a significant area of interest in the realm of service consumption. Those who win over the hearts of consumers gain a competitive advantage in the market. Wang Tao, general manager of KFC China, said that from the iconic finger-lickin' chicken to innovative offerings like secret sauced whole chicken tailored specifically for the Chinese market, from its first restaurant in China to outlets in county towns and food trucks in parks, KFC has stuck to its brand principle of “always delicious, always company, always good” and wholeheartedly embraced the continuously evolving catering demands of Chinese consumers.
Integrating into China: digitalization drives innovation
During the inauguration of its 10,000th location, KFC unveiled its AI-driven food creation platform "MENU X." This platform represents a profound integration of digitalization and product development, positioning KFC at the forefront of industry innovation.
KFC's “Crazy Thursday” special offer menu is displayed on a smartphone. (Photo: CFP)
In present-day China, digital consumption has become an integral part of people's daily routines. Recognizing this trend, KFC has prioritized its digital empowerment initiatives to cater to evolving customer needs. The early introduction of mobile self-service ordering, adoption of mobile payment, and the seamless integration of various “super app” initiatives have collectively allowed KFC to streamline its cost structure and expedite product development.
As KFC expanded from 1 to 10,000 stores, its rapid growth paralleled the ongoing optimization of China's business environment.
“In 2015, regulatory bodies streamlined the licensing and supervision processes, allowing catering enterprises to apply solely for food service licenses and eliminating the requirement to apply for public health permits. This change resulted in significant savings in both labor and overheads for enterprises,” a KFC spokesperson said. “In 2022, the authorities further expanded support by incorporating the catering industry into the scope of full VAT tax credit rebates. This move facilitated the revitalization of accumulated VAT tax credit assets for many enterprises over the years.”
Behind the thriving business environment lies a foundation of precise and impactful policies. At the start of this year, China's State Council issued a guideline on further boosting the quality and efficiency of government services in more sectors and on a larger scale. It explicitly introduced the concept of “opening a restaurant in one step.” By the end of 2020, the time required to start a business had been drastically reduced from an average of 22.9 days to less than four working days. In the World Bank’s Doing Business 2012 report, China ranked 91st globally. By 2020, it ranked 31st.
People enjoy food in a restaurant in Huzhou, Zhejiang province on Nov 25, 2023. (Photo: Xinhua)
The total revenue of China's catering industry surpassed 5.2 trillion yuan, setting a new record, according to Chen Xinhua, president of the China Hotel Association. “This achievement underscores the renewed confidence in the catering market and reflects the upward trajectory of China's economy. With the world's most promising mega-market and as a series of policy measures come into effect, the attraction of the Chinese market for foreign investment is poised to strengthen even further," Chen said.
The KFC story is an epitome for foreign-investment success. In 2023, China witnessed the establishment of 53,766 new foreign-invested enterprises, marking a remarkable 39.7 percent increase compared to the previous year.
The compelling data serves as strong evidence that China has become a synonym of the best investment destination, and that the “next China” is still China.
(Compiled by Zhan Huilan, He Jieqiong, Qiao Wai and Chen Keyu; Edited by Yang Yang)