McDonald's VS KFC: Who is more successful in China?

It is also the world's top excellent fast food company. It is also a chain management system. McDonald's has a longer operating background, stronger corporate strength, and stronger brand equity. Why did KFC have a tendency to overtake and even form a full-scale trend in the Chinese market? What is the disparity in this disparity?

The profits of chain companies come from the number and quality of chain stores, especially the expansion speed and success rate of chain stores in a competitive environment. As for the brand strategy or product, location selection, price and promotion strategy, as well as supporting internal operation and management mechanisms, are the tools and means to achieve the basic business objectives.

It is also the world's top excellent fast food company. It is also a chain management system. McDonald's has a longer operating background, stronger corporate strength, and stronger brand equity. Why did KFC have a tendency to overtake and even form a full-scale trend in the Chinese market? What is the disparity in this disparity?

First, deciding on the gap between China and China

Since the 1990s, the process of economic globalization in China has accelerated. In the world's largest and most promising Chinese mass-market catering market, McDonald's and KFC, two global giants of “the same roots” (same sourced from the United States), have never staged “having urgency” in the Chinese market. The tragedies have all achieved remarkable performance in the game that has made the world's other markets ashamed. The Chinese market has become the “engine” that drives its global business development.

From a global perspective, McDonald's and KFC are not yet a heavyweight: McDonald's currently has more than 30,000 stores in 121 countries and regions worldwide, with a global turnover of approximately US$ 40.63 billion, and KFC has chain stores in 80 countries and regions in the world. Only 11,000. According to the US food industry research organization Technomic's statistics on the number of fast food sales and restaurants in the United States in 2003, McDonald's ranked 13609 restaurants with sales of more than 22.1 billion US dollars, and KFC had 5,724 restaurants nationwide. US$4.936 billion ranked seventh.

However, the overall status quo of the McDonald's, the absolute leader of the world’s fast food brands, in the Chinese market is unconventional and not optimistic. It lags far behind the second-largest global brands and the seventh-largest KFC in the U.S. domestic market. The performance between the two is far from one another.

Many experts of this kind of gap have done a lot of analysis, but there are few systematic understandings of high-level housing construction. Regarding the behind-the-scenes truth of its turf war, the author may wish to boldly try and inject ideas to attract more people's participation and attention.

Second, the two major differences in the chain operation

As we all know, regardless of KFC, or McDonald's, applying a fashionable term, the operating status of both are "chain management."

The so-called “chain operation format” includes three basic models: direct chain (or regular chain, abbreviated as RC), that is, the direct investment of the head office to open chain stores; voluntary chain (or free chain, referred to as VC), that is, to retain the chain of individual The combination of capital ownership; franchise chain (or franchise, contract chain, franchise chain, referred to as FC), that is, the operation of the transfer of the franchise as the core of the chain, which is the franchise.

Although the three models have their own characteristics, but in simple terms, their core characteristics are the chain of stores as a business platform, with the expansion rate and success rate of chain stores (ie, the number of chain stores and the quality of single store operations) as the core evaluation indicators of business mode. The business goal of a chain company is to pursue maximum market share while maximizing the single-store profit as much as possible. It can be said that the profits of chain companies come from the quantity and quality of chain stores, especially the expansion speed and success rate of chain stores in a competitive environment. As for the brand strategy or product, location selection, price and promotion strategy, as well as supporting internal operation and management mechanisms, are the tools and means to achieve the basic business objectives.

As the so-called “reducing the complexities and simplifying the Sanqiushu”, we may wish to start with the appearance of the two core index systems that measure the level of development of chain-operating companies and compare the McDonald’s and KFC’s performance in the Chinese market:

One of the core indicators: the speed and quantity of chain restaurant expansion

McDonald's:

McDonald's is famous for managing fast food, and Krok was founded in the United States in 1955. On October 8, 1990, China's first McDonald's restaurant opened in Shenzhen. In April 1992, Beijing's Wangfujing opened the largest McDonald's restaurant in the world.

By the first quarter of 2002, the total number of restaurants had reached more than 460. In the 14 years of entering the Chinese market, by the end of 2004, the total number of chain stores was about 600. However, the pace of its development began to increase rapidly and was slower in the latter part of the period: During the last three years from 2002 to 2004, the number of newly added shops per year was only 47.5, and the annual growth rate was only about 25%, which was lower than the initial annual growth rate of 38%. rate.

KFC:

It is the first Western-style fast food chain group to enter the mainland of China.

As of December 14, 2004, with the opening of the KFC restaurant in Sanya, Hainan, KFC has reached 1,200 in China. At this point, KFC's number of stores in China reached twice the old rival McDonald's.

From the first store in Qianmen, Beijing, to 1200 stores in Sanya, KFC spent 17 years; in the period of gold development from 1997 to 2004, KFC has rapidly increased from 216 to 1200, with an average of 140 new stores per year. Above, the average annual growth rate is as high as 70%.

KFC is the world's largest chain of fried chicken fast food companies. It opened its first store in 1987 and after 6 years of exploration, it had a total of 10 restaurants nationwide in 1992. On June 25, 1996, the 100th KFC store in China opened in Anzhen Bridge, Beijing. This is a milestone and marks a new stage in the development of KFC in China. From the speed of the opening of nine chain stores in 2002 to the opening of 25 chain stores every month in 2003, the speed is getting faster and faster.

compare results:

Excluding the fact that KFC has entered the Chinese market three years earlier than McDonald's, McDonald's has been lagging behind KFC in the 14 years of common development, both in terms of the rate of restaurant expansion and the number of final developments. In 2001, the gap between the two parties was suddenly expanded to 149. In the short period of three years from 2002 to 2004, the growth rate and number of KFC restaurants were more than twice that of McDonald's.

According to media reports, McDonald's plans to open 100 restaurants in 2005, and in June 2006, it will open about 10 franchise chain stores in mainland China. By 2008, it will have to bring the number of McDonald's restaurants in the interior to 1,000, including franchises. Franchise will account for 20%. At the same time, Su Jingyi, president of China’s Yum! Brands Group, publicly stated that KFC will maintain a high-speed store opening strategy in 2005 and will extend the network to fourth-tier cities. In 2005, it will open 300 restaurants, of which less than 5% will be franchisees.

The second core index: investment income and development quality of chain restaurants

McDonald's:

According to statistics of the China Chain Store & Franchise Association in 2003, as of the end of 2002, McDonald's had 543 stores in China with a sales scale of RMB 3.2 billion. Based on this rough calculation, McDonald's average annual operating revenue for a single store in the Chinese market is approximately RMB 6 million per year.

KFC:

Also from the statistics of the China Chain Store & Franchise Association in 2003, by the end of 2002, Yum! (more than 90% of them came from KFC) had a total of 902 stores in China with a sales scale of RMB 7.3 billion. By analogy, KFC’s annual operating revenue per store in the Chinese market is about 8 million yuan/year.

compare results:

According to the business performance of the two parties in 2002, it can be said that McDonald's is significantly inferior to rival KFC in the competitiveness of single stores, the gap between the average operating income of single stores is more than 25%, and the unfavorable single-storey competitiveness makes McDonald's A considerable number of outlets are in a state of low profit or even no profit.

Third, the review of the Chinese market gap

Looking at the above two truths of the gap, we can not help but ask, is also the world's top excellent fast food companies, with the chain management system, McDonald's has a longer operating background, more solid corporate strength, stronger brand equity, why KFC in the Can the Chinese market show a trend of overtaking? Even formed such a wide gap? Which of the reasons is that the original party is merely a localized process that is not satisfied with soil and water, or is it the strategic step that comes first? In my opinion, it is not so simple.

The strategy is based on speed

As the saying goes: “How great is the heart, and how great is the heavens and the earth.” This is true for people, and for companies. A company that lacks foresight, especially a firm lack of clear goals and long-term planning, will always interfere with things on the way forward, and it is difficult to reach the other side of success. In this regard, the different results of McDonald's and KFC's contending in the Chinese market are also derived from the difference in strategic starting point and fixed position between each other.

KFC:

(1) Prophet, starting point

As early as 1985, Mayer, the then general manager of KFC, had a keen interest in the Chinese market, which had the largest population in the world and contained unlimited potential, and he initiated the idea of ​​developing China.

After fully learning the lessons learned from the failure of Hong Kong's development in 1970 and 1971, he profoundly realized that the difficulty that must be overcome in the development of this ancient new continent is to become familiar with and understand China's cultural heritage. In this regard, he wisely chose Singapore as a pilot before entering China (Singapore speaks Mandarin, living habits are the closest to the mainland, and Hong Kong speaks Cantonese and local features are more concentrated).

In April 1986, Mayer took decisive action and reorganized the KFC Southeast Asia Regional Office. At the same time, in order to ensure the autonomy of entering the Chinese market, strategic repurchasing of all franchised dealerships in Singapore (at that time KFC in Singapore was authorized to operate by others), clearing the ownership barrier in advance for independent development in the Chinese market.

In late September of the same year, he appointed Wang Dadong as the deputy general manager of KFC in Southeast Asia and assumed the responsibility of expanding the Chinese market. Wang Dadong was born in China, typical of Chinese cultural background; he studied in the United States and received rigorous professional training. The middle-level management staff who used to be KFC’s company for many years knew and understood the unique culture of the company, especially the successful experience of setting up a catering industry in China. This cross-cultural experience is very important for KFC’s expansion in China.

Wang Dadong's joining has injected localized blood into KFC's development in China. This has played a key role in the initial local rooting and development of a multinational company that is not familiar with the characteristics of Chinese culture. And through training in Singapore, KFC has accumulated sufficient experience in cross-cultural management, especially the management of the Orientals. On the other hand, it also accumulated operational talents familiar with China's characteristics and ensured rapid integration after entering mainland China. Do it with ease.

After more than a year of investigation and verification, Wang Dadong expressed his understanding of the Chinese market in a letter to the headquarters: "I am fully convinced that KFC has an absolute competitive advantage over any other US fast food chain, even though McDonald's is trying to cooperate with China. Establishing relationships, but the road ahead before beef supply becomes possible. Poultry farming is a priority area for development in China's agricultural modernization. Thanks to the government's strong support and encouragement, we have the advantage to open the door to China." It soon became a reality. On November 12, 1987, the first KFC restaurant in China was established in the bustling area of ​​Qianmen, Beijing, and the pace of China's strategy was officially launched.

(2) Pursuing excellence and winning speed

At the beginning of KFC's entry into the Chinese market, Mr. Su Jingyi, then the vice president of Asia for PepsiCo Foods Group and current President of Greater China of Yum! Brands, set up a long-term vision for KFC in China: to make Chinese KFC brand Chinese food and beverage The industry's first brand, even the world's most popular restaurant brands.

In the process of entering and expanding the Chinese market, KFC has always upheld the principle of “the first brand of Chinese catering”. “We want Chinese consumers to really feel that maybe McDonald’s is the first in other countries, but The first in China is KFC, which everyone likes,” said Su Jingyan at the opening ceremony of KFC’s 400th restaurant in China. KFC finally achieved positive results in China and truly realized the vision of the first brand in China's fast food industry.

After six years of exploration, KFC had begun to exert its efforts in China after successfully opening 10 Chinese restaurants and grasping a wealth of local operating experience. Since 1996, KFC has established a rapid-response decision-making organizational mechanism (first to relocate China's regional headquarters to Hong Kong and then to Shanghai) with its first-mover advantage, to concentrate its resources, integrate resources, and start a steady "accelerated expansion." strategy:

——In the chain business model, the implementation of the “straight-chain” and “chartered-chain” speed-raising strategies that go hand-in-hand with both legs (as early as 1999, the franchise of “zero-point starting” was implemented, and since the end of 2004, 1,200 There are 5% or more franchise stores in the restaurant.

——Strategic introduction of a number of catering brands in the group such as Pizza Hut and Taco Bell to enter the Chinese market, and implement strategic synergies on the elements of supply, marketing, finance, and talent, and further enhance KFC’s competitive advantage through multi-brand synergies.

- Supply chain integration. Make full use of China's convenience as a big agricultural country. Supply localization ensures maximum profits.

McDonald's:

"McDonald's is more than just a restaurant." This sentence accurately summarizes its business philosophy. In the global McDonald's system, the operation of McDonald's restaurant is an important part.

In 1990, McDonald's opened China's first McDonald's restaurant in Shenzhen. Then, in April 1992, it opened the largest McDonald's restaurant in the world in Wangfujing in Beijing. The number of people consumed was more than 10,000 on that day. Since then, McDonald's has grown rapidly in China, and has opened more than 460 restaurants in 74 large and medium-sized cities in 17 provinces across the country, which occupies an important position in China's catering industry market.

McDonald's currently has about 600 restaurants in China, with 50% joint ventures, contractual joint ventures and wholly foreign-owned operations. McDonald's plans to open 100 restaurants in 2005, and in June 2006, it will open about 10 franchised chain stores in mainland China.

(1) Afterwards, there is insufficient stamina

In 1990, three years after KFC entered China, McDonald's began its journey to China and wanted to implement a catch-up strategy. During the 10 years from 1992 to 2002, the average number of opened stores was 38.3, and they came from behind the Beijing market. The number of stores opened ahead of KFC. However, in the key three years from 2002 to 2004, the drag on the operating performance of the world (especially the United States), compared with KFC's strides, the growth rate of McDonald's has slowed down obviously, and the average annual increase of shops in three years is only 60-70. Home, while KFC's new stores in the same period over 400.

(2) Behemoths, Slow Decision-making

Chen Bingfa, general manager of the McDonald's Greater China Region in 2004 stated: "McDonald's places great importance on the mainland market, but Hong Kong is still one of the most important McDonald's markets in Asia. The headquarters has not considered moving its headquarters in China's market from Hong Kong to Hong Kong. To the mainland.” This shows that McDonald’s headquarters is more inclined to internationalize its rights control, and lacks preparations for the complex environment in China. Similarly, after 12 years of cruel market competition, McDonald's began the two-way development of “direct chain” and “franchise chain”, and it was not until late 2005 that it considered moving its headquarters from Hong Kong to Shanghai. The slow pace of decision-making reaction has also restricted the speed of its expansion, and has affected the speed of decision-making in the Chinese market in terms of site selection, public relations, and other aspects, affecting the decision-making process of selecting the same target store site.