Brands in China

Presented By: Charisse S. Bruin

The Issue

• To establish a nationwide

chain seamlessly in

Chinese culture.

The Issues

• Localization

• Creating a workforce

• Cuisine

Localization

• Important to begin in

mainland China

• Chinese curiosity

• KFC interiors modernized

• Upscale atmosphere

• Native entrees

Establishing a Workforce

• Requirements:

▫ Speak and understand

Chinese

▫ Teachable

▫ Innovative

▫ Fast Food background

• Chinese employees

• Younger workforce

• Training programs

• Competent managers

• Cohesive mindset

What’s for Lunch?

• Generalized menu would

not suffice

• Offered variety

• More localized foods

• Health conscientious

Yum! History

• Started with three of five company from

PepsiCo. (Taco Bell, Kentucky Fried

Chicken and Pizza Hut)

• Based in Louisville, Kentucky

• The Yum! system includes three operating

segments: U.S., International (Yum!

Restaurants International) and China

Division.

Four key business strategies: • Build leading brands across China in every

significant category

• Drive aggressive international expansion

and build strong brands everywhere

• Dramatically improve U.S. brand positions,

consistency and returns

• Drive industry-leading, long-term

shareholder and franchisee value

• Sam Su- chairman of Yum! Brands China

• Based in Shanghai

• Mainland China : Yum! Brands' leading market for new

company restaurant development worldwide

• In 2010, the Company opened more than 500 new

restaurants in mainland China.

• KFC was the first quick service restaurant chain to

enter China in 1987

Yum in China

YUM!

Yum! China Makes the News

The Facts: Perspectives

• Experts: See Yum Brands China accounting for 50% of profits by 2015

• Chairman & CEO Yum! China, Sam Su: Aiming for 500+ store opening per year (already succeeded), 20,000 restaurants ultimately

• Consumers: Adapted to Yum primarily because of menu differentiation devoted to Chinese consumers; view restaurants as “restaurants”

Personal Source:

• “Very popular… localized taste for

menus…I know it has more than 500 stores

in China and it grows very fast…Chinese

people will feel

very disappointed if it withdraw from

China.”

Ansoff Model

Present

New

Present Market Penetration: HEAVY, 3,600 restaurants;

Goal 20,000 restaurants

Product Development: Adapt to local taste;

East Dawning

New Market Development: 1 new restaurant opening

EVERYDAY throughout

China;

East Dawning

Diversification: Menus very different than

America Yum menus

Market

Product

Marketing Mix

Product:

KFC, Pizza Hut, East Dawning

Place:

China (all provinces/territories

minus Tibet

Price:

KFC- $3-$5 US

Pizza Hut- $4.25- $7

Promotion:

Ad’s, commercials, LOCATION

SWOT Analysis

Strengths

• Strong reputation

• Diverse

• Has largest chicken

restaurant

Weaknesses

•Overexposure

•Weak R&D

Opportunities

• Expansion

• Innovation

Threats

•Changes in food prices

•Competition

•Changing consumer tastes

Actions

• Buy out competition

• Create new recipes

• Create plan to attract new staff members

• Continue to expand

• More focus on R&D

Consequences

• Oversaturated market

• Unhealthy lifestyle

• Too much preparation

• Can be costly

2011 Update

• Yum's biggest profit driver and accounts for just over 40 percent of overall profits.

• Yum's second-quarter net income rose to $316 million, or 65 cents per share, from $286 million, or 59 cents per share, a year earlier.

• Revenue rose to $2.8 billion from $2.6 billion a year earlier

• Yum overseas strength offset a 4 percent decline in U.S. same-store sales.

Future Growth

• Profit will continue to

increase in China

• Continue to expand

• And more variety on

menus

Take-Away’s A Successful China-fied Operation

Adaption

Taste

Price point

Vast Distribution Network (heavy early investments– location to other cities competition isn’t located

Long- Term Commitment

Right ambience and experience

Operating growth more than 30% each year in the past decade