The New Fast Food Nation: KFC Is Making More Money in China Than the U.S.
It's a fast food milestone: KFC parent Yum Brands (YUM) says it will get more of its corporate profits from China than it does from U.S. stores. And this is just the beginning -- KFC's 3,700 Chinese locations are expected to balloon to 20,000. Others are right behind or gaining: McDonald's (MCD) new Hamburger University has full enrollment.
Colonel Sanders and friends have found the new fast food nation.
When Yum first introduced the Chinese to fast food in 1987, skeptics warned that Chinese eaters would not easily abandon their traditional, home-cooked vegetable and noodle-oriented cuisine. They were dead wrong. Apparently, few cultures can resist the appeal of quick, cheap fried food.
And while Americans are eating just about all the fried chicken they can stuff down, the Chinese are just getting started. Mark Chu, the company's China president, says another 475 KFCs are planned for next year. Yum execs can barely contain their glee. "China, we believe, is still on the ground floor of growth," CEO David Novak told investors this week. Yum's Pizza Hut is a minor player with 560 restaurants and its Taco Bell unit has yet to figure out how to sell its burritos and nachos to the Chinese.
Other fast food companies are eying China with equal amounts of hunger. Earlier this year, McDonald's launched its China branch of Hamburger University and the company has plans to nearly double its Chinese presence from 1,100 restaurants to 2,000 in the next few years. Many of them will be drive-thrus, still a novel concept among the Chinese. Burger King, a distant third in the Chinese fast food wars, is also trying to ramp up growth.
Yum remains the leader because it got to China first and is doing a better job of catering to Chinese tastes than McDonlad's, offering Peking chicken rolls, preserved Sichuan pickle, shredded pork soup and a Chinese-style breakfast porridge called congee.
This is all grim news for nutrition advocates, who are not excited about the prospect of a billion Chinese adopting Western diets. Currently China rates low on the global obesity scale with just 2% of its population obese. But, perhaps tellingly, 29% are overweight. With more than two new fast food restaurants opening every day in China, those stats are likely to get a lot worse.
Image by Flckr user gray_eminence
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