Yum! Brands' charge into China pays off
April 24, 2014
by Erica Shaffer
LOUISVILLE, Ky. – Yum! Brands, Inc.’s troubles in China appear to be a thing of the past as the restaurant company’s KFC brand regained its footing in a market that was challenged with adversity in 2013. Yum! reported same-store sales in China grew 9 percent, including growth of 11 percent at KFC.
Speaking at an earnings conference call, David Novak, president and CEO, attributed KFC’s successful turnaround to aggressive efforts to restage the KFC brand and regain consumer confidence.
“According to our research, we have regained consumer trust and are now beginning our journey to re-stage KFC as an even more youthful, contemporary, and energetic brand that is innovating for a changing China,” Novak said. “This is built on three pillars – taste, customer experience and digital. We are investing behind each of these fronts so the consumer wins.”
In March, KFC China debuted a new menu and marketing strategy in more than 4,600 restaurants in more than 950 cities across China. Novak said this ambitious initiative was unprecedented in KFC's 27 year history in China and in the entire quick-service industry. KFC launched 15 products simultaneously – 10 of the 15 products were new while five were re-launched versions of customer favorites. KFC will launch similar menu updates at least once a year, leveraging a strategy that has worked for Pizza Hut which revamps 20 percent of the pizza chain’s menu twice a year.
“The breadth and variety of these products are expected to further strengthen KFC's leadership in four signature product platforms – sandwiches, rice dishes and snacks as well as drinks and desserts,” Novak said.
In an effort to reach connect with consumers, KFC China enlisted two Chinese celebrities as part of a national campaign to promote Original Recipe and Extra Crispy chicken. Another four celebrities will represent the new sandwich, rice, snack, drink and dessert product lines. The campaign is in its early stages, but there are signs the celebrity-driven initiative is gaining traction with diners. Novak said KFC advertising has received more than 7 million Facebook “likes” in the past three weeks.
It seems no aspect of KFC China’s business was left untouched. The chain is launching redesigned packaging, contemporary staff uniforms, new menu boards and branded service.
On the technology front KFC China began rolling out Wi-Fi in stores and a number of other new digital initiatives are in the works. More than 2,000 KFC restaurants will offer customers free Wi-Fi by year’s end.
“We also have a new mobile app coming which will provide consumers the convenience of pre-ordering with electronic payment,” Novak said. “The goal is to consistently bring exciting and dramatic news to the KFC brand across the year and keep it going.”