KFC looks at China as US faces recession

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Monday , May 05, 2008 at 1004 hrs Lucy Wu, deputy head of China's Chan Store and Franchise Association. "Su is Chinese and knows the Chinese market much better than foreigners. His localisation strategy is the secret of success."

Instead of copying the KFC model in the United States, Su, 55, spent the past two decades re-defining fast-food, which is often associated with unhealthy, junk food in the west.

"Yum has localised its menu a lot in China, much more than McDonald's did," said Rein of China Market Research Group.

Yum's China business is so successful that Chief Executive Novak is now copying the China model to the United States by introducing healthier products in its US outlets, increasing emphasis on breakfast and evening sales and broader menus that include more desserts and beverages.

"Let's learn from our most successful business. Let's learn from our China Business," Novak told investors at Yum's annual shareholder conference in New York in December.

Su's next goal is to push ahead with a traditional Chinese fast-food chain called East Dawning to head off competition from local players such as Kungfu Catering Management Co and "hotpot" chain Inner Mongolia Little Sheep.

Yum has operated 10 East Dawning branches in Shanghai since 2005, and it plans to test Beijing's market in time for the Olympics. East Dawning, named after a phrase in a Song dynasty poem, serves traditional Chinese dishes such as tomato beef noodles, beef rice and bean curd.