KFC China: Building Competitive Advantages through Digitization

Case Solution

Chen Lin, Chi Zhang
China Europe International Business School ()

Since entering China in 1987 with its first restaurant in Beijing, KFC has been a great success and has become the largest Quick Service Restaurant (QSR) in the country. In 2015, Joey Wat was appointed CEO of KFC China. The following year, Yum China (NYSE: YUMC) parted ways with Yum! Brands and became an independent publicly traded company. To take the KFC China business one step further, Joey Wat had to navigate an increasingly competitive and rapidly changing landscape. With China’s growing economy and rising income levels, many more fast food and snack chains entered the market and competition intensified. Furthermore, over the years, consumers have been increasingly attracted to a healthy diet, but also to a pleasant drinking experience. As Gen Z customers become the largest consumer base, they have shifted their focus to value, personalized experience, and a sense of engagement in their grocery purchases that go beyond affordability and speed. . For KFC, there were other problems as well: high employee turnover and rising rental and salary costs. With highly standardized products and a stable ticket average, how should KFC move through the challenging new dynamic to make a breakthrough? KFC China had launched its digital ecosystem early and developed powerful digital capabilities. Under Joey Wat’s leadership, KFC China made several attempts to increase productivity, reduce costs, and constantly improve the customer experience. How has digitization contributed to these achievements? How did KFC China implement digitization? Will digitization also benefit businesses in the future?

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