KFC’s growth crisis in China: Rapid expansion brings worries

In 1987 KFC opened its first restaurant in Beijing, China. After over 20 years, Kentucky first experienced the “crisis” taste.

KFC China’s official website information indicated that, as of the end of December 2012, KFC had more than 4,200 restaurants in 800 cities and towns in China. It is China’s largest and fastest-growing fast-food chain. But behind the growing scale, KFC in China’s recent performance is as good as expected.

KFC’s parent company Yum Group recently released a report, saying that affected by avian influenza, in April the Group’s sales in China was expected to suffer a decline of 29%. Among them, the KFC store sales would fall by 36%.

Although Yum Group stressed that the fourth quarter sales in mainland China is expected to resume growth, a senior financial commentator Yang Song said Yum’s expansion in China is likely touch the ceiling. The number of KFC stores will remain at 4500 or below at least at for the next three to four years.

Rapid expansion brings worries

On March 16, 2005, Yum Group issued a public statement and announced that New Orleans roast wings and New Orleans roast chicken burger sold at its subsidiary KFC restaurants contained “Sudan I”, all domestic KFC restaurants stopped selling these two products which caused at least 26 million yuan loss at its 1,200 national outlets.

In July 2011, Kentucky fell into “Soya milk” incident. Kentucky admitted that the cost of its “Soya milk” was only 0.7 yuan per cup, but sold at 5.5 yuan-6.5 yuan.

In August 2011, it was exposed that the oil used in KFC would be completely replaced only after four days’ use. And at peak time, the chicken wing will be finished within less than 4 minutes (in accordance with the provisions, the wings should be fried for at least seven minutes).

In October 2012, Excessive bacteria were found in burgers sold in KFC.

Source: NBD.com.cn

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