Stat of the day: Yum! success in China

Yum! is the parent company of several large fast-food chains including KFC and Pizza Hut — both of which are very popular in China.  In terms of profit and revenue, consider the following:

Global Yum! (source: annual report)

  • 2010 – $1.769 billion operating profit from $11.343 billion revenue
  • 2011 – $1.815 operating profit from $12.626 billion revenue
  • 2012 – $2.294 billion operating profit from $13.633 billion in revenue

As I mention in Chapter 16, since their first store opened in 1987, KFC now operates approximately 5,000 restaurant outlets in 700 Chinese cities and is on pace to open one new store everyday of the year – with a goal of opening 15,000 across China including 700 more in 2013.1 And despite a food scare regarding antibiotics in chicken suppliers mentioned in Chapter 3, they plan to continue this expansion.2 A large reason why they have been successful is as noted above in the HBR study: adapting to local tastes with foods such as fried dough, sweet potato buns and fishball soup.  Furthermore, its parent company, Yum Brands, now operates 5,400 stores on the mainland (including Pizza Hut restaurants); more than double what it had five years ago.3 As a consequence, China now represents for over half of Yum’s operating profit and sales globally.4 In fact, in 2010, KFC China for the first time had surpassed the US market in revenue.  In contrast, McDonald’s has a mere 1,464 outlets and 16% of the fast-food restaurant market share.5

  1. Yum Brands Says The Chinese Still Love KFC from The Wall Street Journal []
  2. See Yum Brands Rebounds From Chicken Antibiotic China Scare from Bloomberg, Yum stumbles badly in China, warns on profit from Reuters and ‘Kentucky Fried China’ no more? from Reuters []
  3. Yum’s Yuck Factor in China from The Wall Street Journal []
  4. ‘Kentucky Fried China’ no more? from Reuters []
  5. KFC’s Big Game of Chicken from BusinessWeek []
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