Chapter 29 Marketing case How does KFC "stake the horse" in China?

Everyone knows that the world's number one fast food brand is McDonald's.McDonald's has 28,000 chain stores in 120 countries around the world, far exceeding KFC's 11,000.But in China, the situation is reversed.By the end of 2001, KFC's chain restaurants in China had reached 515, while McDonald's had less than 400.At the same time, the results of a survey of 16,667 questionnaires conducted by the famous AC Nielsen in 30 cities in China also showed that among the international brands "most frequently patronized by customers", KFC ranked first in the fast food category, leaving behind the big McDonald's.

The reason why KFC "wins" in China is not only because it landed in the Chinese market several years earlier than McDonald's and seized the opportunity, but also because of its own steady and scientific investment layout strategy.This is included in the Harvard Business School textbook case. Site selection is the primary factor in catering operations.KFC attaches great importance to this and is prudent. The site selection decision is generally a two-level approval system, one is the local management company, and the other is the KFC China headquarters.The success rate of its site selection is almost 100%, making it one of KFC's core competitiveness.

If KFC plans to enter a certain city, it first collects information about the city through relevant departments or professional investigation companies.Some materials are free, while others require money to be purchased.Once the information is collected, we start to plan the business district. Business district planning adopts the method of scoring.For example, if there is a large shopping mall in this area, the turnover of the mall is 10 million yuan, 1 point, and 50 million yuan, 5 points; there are specific regulations on how many points are added if there is a bus line, and how many points are added if there is a subway line.These scoring standards are a relatively accurate empirical value averaged over many years.By scoring, the business district is divided into several categories, including city-level commercial type, district-level commercial type, fixed-point (target) consumption type, community type, community business dual-use type, tourism type, etc.

After delineating the business district, the key is to find out where the most important customer-gathering points are.As the saying goes, "one step is three cities away", one step away from the location of the store may be 30% less in sales.This is related to the flow line of people (the line of flow of people). Some people come here but turn a corner. This place is a place that customers cannot reach.Across the alley, the business may be very different. How about the flow of people, which direction will people go after getting out of the bus or subway?These have to send employees to pinch the watch to record and measure.For example, to measure the flow of people in front of the store, it is necessary to record the flow of people passing by at the location where the store is planned to open, and measure how many people pass by the location per unit time.In addition to the flow of people on the sidewalk where the location is located, measure the flow of people in the middle of the road and on the opposite side of the road.Those in the middle of the road are only counted as cyclists, not drivers.

Whether the flow of people on the opposite side of the road is counted depends on the width of the road. Even if the road is narrow, if the width of the road exceeds a certain standard, it is impossible for customers to come and spend again, then it is not counted as the flow of people on the opposite side. KFC site selection personnel input the collected crowd flow data into special computer software, and then they can calculate how much the investment in this location should not exceed, otherwise the store cannot be opened. In order to plan a good business district, the KFC development department has made great efforts.In the case of Beijing KFC, its developers have traveled all year round in every corner of the city, and they are well aware of this city where buildings and roads change greatly every year, and locals tend to get lost.It often happens that Beijing KFC received a call from a customer, suggesting that KFC set up a restaurant in his place.As soon as the developer hears the address, he can casually tell the characteristics of the local business environment and whether it is suitable for opening a store.

Although the number of KFC chain stores in China is still ahead of McDonald's, the gap is only 100.To speed up the pace of development and widen the distance from competitors, franchising is definitely a shortcut.In fact, this method is also an effective means for KFC to expand its business in many parts of the world.However, since China is an emerging market, it will take time to explore and become familiar with business rules, so KFC is cautious in franchising.Su Jingshi, president of Yum Global Catering Group China, to which KFC belongs, said that in any case, profit should not be sacrificed as the price to seize market share.

So far, KFC has only more than 20 franchise stores in China, which is only a fraction of its total number of stores in China. Different from common franchising operations that can be listed after paying the franchise fee, KFC’s current franchising method in China is called “not starting from scratch” franchising, which means that KFC transforms a mature and profitable restaurant into a Selling to franchisees avoids a lot of complicated and risky work such as site selection, recruitment and training, and employee management by franchisees. In August 2000, the first "not starting from scratch" KFC franchise store in China was officially authorized and handed over in Liyang City, Jiangsu Province.KFC believes that although the transfer of mature restaurants will slow down the promotion of franchising, it can be smoothly integrated into KFC's operating system and guarantee the success of franchisees.

KFC is extremely strict in the selection of franchisees.Franchisees must be real operators of the food service industry. They are required to have a working background, be able to quickly master the basic knowledge of the industry, and prove that they have the potential to expand and develop in a certain area.The franchisee must also be an owner responsible for a substantial portion of the required equity or capital. Because of this, KFC will only start working together when it is completely satisfied with the franchisee's organizational structure, financial situation and project plan.

The new franchisee will be authorized to operate a KFC restaurant in operation, and the franchise fee for each restaurant is more than 8 million RMB (excluding the purchase of real estate).The initial term of the franchise agreement is at least 10 years. Future franchisees must also voluntarily engage in KFC franchise operations for more than 10 years.Successful candidates will be required to attend an extensive 20-week training program including Restaurant Manager, Assistant Restaurant Manager, How to Manage a Franchise Restaurant, Special Introduction to Headquarters, Small Business Management Courses, etc.

It can be seen that behind the strict regulations of franchising, there is the common profit appeal of KFC headquarters and franchise stores.The success of KFC depends on the success of each franchisee. Only when each franchisee makes a profit can the entire KFC empire become stronger.