I read an article today in the China Daily that described KFC’s latest attempt to stay relevant in Beijing by adding Wifi and creating a more comfortable atmosphere where guests can hang out. New store designs will include off-white and grey walls with paintings as well as wooden booths separated by plants and glass – all to create a better social experience. The Starbucks effect continues as Chinese guests demand more and more comfort.

KFC says they must make these changes as a result of declining preference for foreign brands and more demands for convenience by mobile users. It is certainly true that KFC and McDonald’s face more competition from local restaurant chains. The Taiwan owned chicken chain, DICOS, recently surpassed McDonald’s to claim second place in terms of number of stores. Brands like Zheng Kung Fu, Da Niang Dumplings and Yonghe Da Wang, are all growing rapidly in the market.

In most Asian countries, QSR chains try to process you out the door as quickly as possible given the high rental cost factor. In Hong Kong, McDonald’s keeps their restaurants ice cold so nobody will linger. You eat quickly and go outside to warm up. In Thailand, McDonald’s now have clocks on each table to monitor how long a guest is staying. After one hour the clock rings and the diners are asked to move on.

Can KFC really make money if guests linger? It all depends on the rent and this strategy can certainly work in Tier2-4 cities where the economics are better. A sign of the times I guess that Chinese consumers are more and more demanding while still very price sensitive and value conscious.

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