Recent news out of China has not been kind to KFC or YUM. Same store sales declined by 16% in the Fourth Quarter and the entire company suffered an operating loss. Is this really all due to the recent spate of food scandal news or is there a more fundamental problem unfolding. I believe a strong case can be made that the KFC brand has lost focus in China and is slowly losing appeal with its Chinese customers. Here are some reasons why.
KFC looks more and more like a Chinese QSR. – All the localization of the menu from bean curd soup in the morning to egg tarts have blurred the image of the brand. Where is the focus on the menu items that made KFC famous – original recipe chicken?
KFC is using Korean celebrities to market the brand. – The celebrities market so many brands in China the only image people get is the image of the celebrity itself. What do Korean talents have to do with a brand with an American heritage. Chasing every new trend will dilute what the brands stands for and is very risky.
Operations are uneven. – All the new menu items have complicated operations and slowed down service times. If anything, KFC should be taking items off the menu to simplify operations and increase service levels. Most successful QSR brands with sustained operating excellence have simple menus and execute flawlessly.
We will see what happens for the rest of 2015 but I for one am not very confident that the KFC brand will turnaround anytime soon.