One of China’s earliest consumer hits from the United States is going a bit more local. The company behind KFC and Pizza Hut has spun off its China operations. It’s a strategic bet that has some risks. HPR’s Bill Dorman has more in today’s Asia Minute.
More than twenty years ago, one of the few familiar food options for a wandering American in Shanghai would be the Colonel’s Kentucky Fried Chicken.
KFC was the first western fast food chain allowed in China—starting in 1987.
That’s fifteen years after Nixon, and two years before the student protests, and crackdown at Tiananmen Square.
The KFC brand is still powerful in China.
It’s the largest restaurant chain in the country, with more than 7,000 outlets.
But several years ago, KFC had a number of safety issues with its suppliers—including allegations that its chickens had been injected with growth hormones.
Later some franchises were found to have received expired meat from local suppliers….leading to an overhaul of operations by its American parent company, YUM Brands, which also runs Pizza Hut and Taco Bell.
YUM decided to spin off the China business, which this week started trading as a separate company on the New York Stock Exchange.
Shares rose on the first day, before stumbling along with the rest of the market later in the week.
YUM China plans to add more localized fare to the KFC menus….which already include congee and mooncakes.
The new company’s strategy also includes plans for continued growth of Taco Bells across China.
