Yum Brands were once the fast food kings of China. However, time and the company’s inability to change their image in China led to their decline. Imagine when KFC and Pizza Hut were new to the market. They were considered the go to place for many Chinese consumers. So far in that KFC was actually making fashion trends for kids who were in school, as they offered a school bag with a kids meal from KFC.
Consumers loved the taste of the chicken, as it was something new. They also loved the convenience of being able to go into a restaurant, order their food, and sit down within minutes of deciding to go to the restaurant. Fast forward to 2010, Yum Brands can thank China for their success, as China is considered their largest market in terms of making project. They operate over 6,000 restaurants within China, a remarkable feat for a US company. So what happened?
Yum Brands Decline
It was late 2012, when Yum Brands started to feel their momentum shifting in China. It was reported that Yum was utilizing chicken that were being fed antibiotics in order to shorten the growth cycle to just 45 days. It was then reported that the supplier for KFC was utilizing low quality materials in producing food. These news stories alone were enough to damage the reputation of the company. However, add in social media and it became a frenzy. On WeChat there were rumors flying that KFC was utilizing chickens that were genetically-modified, having six arms, two heads and the like. To add insult to injury these WeChat accounts altered digital photos to make it look as if this was true.
The co-author of China’s Super Consumers, along with being Vice President of Tompkins International, Michael Zakkour stated:
“Most of [these scandals]are not the company’s fault, but you know how these things work: they print it on the whole front page and make the correction a week later on the [bottom]of the last page.”
Despite most of these scandals not being the fault of the Yum Brand, their image started to suffer, which lead to their businesses suffering. Along with this brand image issue, Yum Brands was seeing more and more competition on the market since they arrived in China in 1987. Their competition is coming from brands like McDonald’s, along with local eateries.
How Yum Brands Plan to Comeback into the Heart of China
CEO Greg Creed stated:
“We’ll always believe in China and we are always going to participate in its growth.”
So how does the huge brand plan on doing this? First off Yum China is going to become a franchisee of Yum Brands in China. In addition, Yum Brands are looking at their menu and making changes where they see fit. They are even starting to offer cappuccinos and macchiato via KFC to directly compete with Starbucks and other coffee restaurants. Already, the company is seeing some increase in their sales from coffee, as can be seen below.Chart Courtesy of http://knowledge.ckgsb.edu.cn/2015/10/26/branding/yum-china-can-it-become-finger-lickin-good-again/
One of the others methods for making the Yum Brands a staple brand for Chinese consumes is through their new concepts. One of these concepts is offering a better dine in option that has cozier arrangements. The idea is that through offering a cozier dining room, people will change their opinions about KFC, plus they are working with the same concept as Pizza Hut does.
So are these strategies going to be what turns around the image that Yum Brands has in China? The company seems to believe it will help. As they already have plans for expanding to over 20,000 restaurants in China in the future.