KFC-owner Yum! is now eyeing up India

The owner of KFC, Pizza Hut and Taco Bell now has more outlets than McDonald's. But has it had its chips in China?

by Andrew Saunders
Last Updated: 28 Oct 2014

Formative years

Famous (dyed) greybeard 'Colonel' Harland Sanders started frying chicken to his 'secret recipe' in Kentucky in 1930, but Yum! Brands itself was served up more recently, spun out of soft drinks giant PepsiCo in 1997. Known initially as Tricon Restaurants, the venture could easily have been a case of out of the frying pan and into the fire. Compared with its golden-arched rival, McDonald's, Yum!'s three brands - it owns Pizza Hut and Taco Bell too - then looked about as appetising as a week-old KFC family bucket.

But novelty and low prices made Yum! a big hit with the last nation on earth that anyone expected to go a bundle on stuffed crusts, hot wings or bacon waffle tacos: the People's Republic of China. Thanks to a policy of hiring savvy local management rather than parachuting in US bosses, Yum!'s growth there became the stuff of biz-school legend. It now has more than 14,000 outlets in China (most of them KFC) and around 35% of its $13bn annual revenue is generated in the country.

Recent history

The Chinese don't just like to eat KFC - they like to work there too. In sharp contrast with the west, where kids get an education in order to avoid fast-food 'McJobs', Yum! reckons almost 80% of its restaurant managers in China are college graduates.

The group is also targeting India, where it has opened 150 new outlets this year. Next year, KFC is poised to set up shop in Burma.

But Yum!'s Chinese adventure is being undermined by food-safety crises, from excessive levels of antibiotics to suppliers accused of selling rotting meat. It's full-year growth outlook has been halved. That's a big problem in a country where consumers have placed greater trust in the safety of foreign brands than in local alternatives.

Who's the boss?

Former Pepsi COO and committed Christian David C Novak has been at the helm ever since the spin-off. He it was who spotted the chance to blindside McDonald's in China, and appointed country manager Sam Su - an ex-P&G exec born in Taiwan - to execute the plan.

The secret formula

Health food it is not. To its detractors, Yum! is proof that no one ever went bankrupt by underestimating the public taste. But its food is quick, easy to consume and cheap, as the firm's profit margin of only a little over 8% attests.

Don't mention

Obesity. In much of the west, fast food has become a dirty word, blamed for exploding rates of obesity, diabetes and heart disease. And with over 700 calories in a KFC Zinger Tower Burger, it's hardly surprising.

VITAL STATISTICS

Sales $13.1bn
Countries 128
Outlets 40,000
Employees 1.5 million

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