KFC, Pizza Hut push deeper into China
CAROLYNNE WHEELER BEIJING— From Wednesday's Globe and Mail Published Tuesday, May. 10, 2011 7:10PM EDT Last updated Wednesday, May. 11, 2011 5:20AM EDT
Yum Brands adds to fast-food restaurant stable with popular hot-pot chain, Little Sheep The Colonel's secret recipe in China has more to do with egg tarts and breakfast fritters than how he spices his chicken.
The KFC menu in China is heavily adapted to local tastes - think rice dishes and hot soy milk alongside the classic fried chicken and hot wings. The variety of offerings - along with a ubiquitous market presence - has helped the chain take off in China.
Now Yum Brands Inc., YUM-N KFC's parent company, is trying to fend off competition from domestic rivals and foreign competitors like McDonald's Corp. MCD-N by buying up a popular hot-pot chain, Little Sheep. Their preliminary offer for the Inner Mongolia-headquartered chain is still subject to regulatory approval, but if successful would add nearly 500 more restaurants to their China fold, which now includes more than 3,800 KFC and Pizza Hut locations.
The move shows the importance of the Chinese market for fast-food chains that are struggling at home. Yum Brands is the largest fast-food operator in China and its business here played a crucial role in its first-quarter earnings this year. Worldwide operating profit was up 5 per cent, thanks largely to 18-per-cent growth in China, even as profit dropped 13 per cent in the United States.
For the rest of the story in Canada's Globe and Mail click here.