On December 15, KFC made history when it became the first western QSR restaurant brand to open 10,000 stores in China. The 10,000th store, located in Hangzhou, comes 36 years after KFC China opened its first store in Beijing. This milestone underscores KFC’s impressive growth story since entering China in 1987, as well as the adaptability and resilience it has shown in the fiercely competitive Chinese market.
Commenting on KFC’s positioning and ambitious growth plans in China following the 10,000th store milestone, Joey Wat, CEO of Yum China, stated, “KFC stands to benefit from its large and rapidly expanding store network, substantial economies of scale and access to an even broader customer base. Presently serving just one-third of China’s population, our goal is for KFC China to reach over half by 2026. By leveraging our solid foundation of success and tremendous untapped potential for future growth, we are confident that KFC China will continue to be China’s leading restaurant brand for many years to come.”
With a presence in over 1,900 cities and more than a billion annual transactions, KFC has established itself as the largest QSR brand in China in terms of system sales. Impressively, 15 of KFC China’s current menu items have annual sales exceeding $100 million each. And there is still plenty of room for further growth, with KFC’s deep understanding of Chinese consumers accumulated over many years, as well as its pioneering innovation and supply chain capabilities, positioning it to effectively capture opportunities and thrive in the Chinese market.
A key strength of KFC in China has been its ability to tailor its menu offerings for diverse local tastes, including the introduction of popular localized products alongside its more established classic menu items. For example, in 2003, the Dragon Twister – a sandwich wrap with localized features – was launched, which has been embraced by Chinese consumers. Ever since then, original new product offerings such as the Egg Tart and New Orleans-style Grilled Chicken Wings, have also became iconic products for the brand in China.
To appeal to an even broader range of consumers, KFC China has also been expending its menu with entry-level price point offerings. Speaking following the opening of KFC’s 10,000th store in China, Warton Wang, General Manager of KFC China explained, “Going forward, KFC China will continue to offer a diverse array of innovative meal choices across price ranges, ensuring that consumers can enjoy KFC anytime and anywhere.”
Digitalization is another area where KFC China has led the way. KFC China rolled out digital service offerings amid the digitalization boom in China in 2015, making digital payment available in 5,000 restaurants within weeks. Now, more than 90% of KFC’s orders in China are fulfilled via digital payment, and KFC China has over 430 million loyalty members as of Q3 2023, with member sales accounting for approximately 65% of system sales. The most loyal 1 million KFC customers in China visit KFC stores more than 100 times a year.
KFC China is also embracing AI-generated content (AIGC) to further enhance customer experiences and improve store operational efficiency, contributing to the rapid growth of the business. This includes the recent launch of Menu X, an AI food creation platform that combines technology with food innovation.
KFC China’s pioneering mentality and customer-centricity has played a crucial role in building this loyalty. For example, KFC China launched delivery services as early as 2006, well ahead of many competitors. This move capitalized on the growing demand for convenience among consumers, setting a precedent in the industry. And more recently, KFC China is redefining the meaning of convenience and making its delivery services more accessible. At the same time, KFC China has been dedicated to adhering to Yum China’s long-standing RGM (“Restaurant General Manager”) No 1. corporate culture, which emphasizes that RGMs are the most important leaders for the company and play a key role in its long-term success. For example, in 2022 Yum China upgraded medical insurance coverage for RGMs up to RMB one million. Yum China has also established a RGM Restricted Stock Units (RSUs) equity incentive scheme to ensure that RGM’s share in the growth of the business.
In the coming years, KFC China plans to accelerate its annual net new store openings in the country, with 15% to 20% expected to be franchise stores, contributing to Yum China’s overarching goal of reaching 20,000 stores by 2026. Warton Wang, General Manager of KFC China, stated at Yum China’s 2023 Investor Day, “Looking ahead, we intend to maintain our position as the number one brand in China’s restaurant industry. In order to do this, we must maintain our leading market share and continue to lead the industry’s development in all aspects including mindset, products, services and innovation.”