Yum uses Chinese model in India

05 June 2012

NEW DELHI: Yum Brands, the fast food group, is seeking to import the model it has successfully employed in China as the firm endeavours to drive growth in India.

The US multinational, the owner of chains including KFC, Pizza Hut and Taco Bell, entered China in 1987, some 15 years before it embarked on a similar enterprise in India.

By 2015, it expects to have 550 branches of KFC up-and-running in the latter market, which would be a faster rate of new store growth than in China during the equivalent period, and to yield $1bn in sales from the country.

"What we're doing in India is we're getting flagship locations, just like we do in China and we're going into both large cities and smaller cities earlier on, because in China we learnt that," David Novak, Yum's chief executive, told the Financial Times.

As part of a broader process mirroring this idea, managers from Yum's various emerging markets divisions will be visiting China this week to gain an insight into the strategies and techniques that have been utilised locally.

“We're going to share what we have learnt in China, because we think that the model can be adapted in emerging markets,” said Novak.

Yum currently possesses over 4,000 branches in China, an increase from 612 in 2001, and is present in 800 cities. It also boasts a centrally-controlled distribution system, and has targeted many remote regions.

"We've been creating the category," Novak said. "What we're focused on in China is not staving off McDonald's … it's just doing a better job of responding to what our customers are telling us we need to do to become even more relevant."

"And now, the biggest thing that I see and the biggest difference when I go to China is that the kids are buying the food themselves," he added. "The consuming population is growing so rapidly that the business is exploding because of it."

The organisation's additional strategies in the world's most populous nation have included introducing menus tailored for the tastes of domestic shoppers, an approach it is also pursuing in India.

"We have spicier, ‘Fiery Drums', or chicken legs, that will knock your socks off in terms of the heat level," said Novak.

Another major advantage aiding Yum in India is that beef does not constitute a widely eaten meat in the country, limiting the sales of McDonald's burgers, a staple in most of its markets.

Data sourced from Financial Times; additional content by Warc staff