Early days
KFC became the first Western fast food company in China after its inaugural outlet opened in Zhengyangmen, Beijing, in November 1987. It was China's introduction to franchising and grew rapidly. The operation was a joint venture, with a 60% stake held by KFC, 27% by the Beijing Municipal Bureau of Culture and 13% by Beijing Food Production.[4] In early 1988, Bank of China took a 25% stake in the venture, and KFC's original stake was diluted to 51%.[4]
Warren Liu, a former vice-president of Tricon Global Restaurants (KFC's former parent company) argued that "being the first....has continued to provide KFC with a substantial competitive advantage."[5] By 1988, the Beijing outlet had the highest volume sales of any KFC in the world.[4]
Taiwan influence
Instead of hiring managers from America, KFC hired the managers from rising Asian economies such as Taiwan.[5] Existing Chinese distribution infrastructure was poor or non-existent, so KFC created its own to ensure quality standards.[6] The founding leadership were known as "Taiwan Gang" because they were from Taiwan. The team was filled with veterans in the fast food industry with up to 10 years of experience before joining.[7] They were knowledgeable of Chinese culture and formed local partnerships to come up with localized menus and management practices despite being educated in the west.[8] The chain had an early advantage against its Western fast food rivals, as fried chicken has been a staple Chinese dish since antiquity, whereas hamburgers were foreign and relatively unknown.[9]
Taiwanese businessman Tony Wang was hired by KFC in 1975 to work as a business analyst
Rapid expansion
By 1994, there were 28 KFC outlets in China, including seven in Beijing.[11] By 1997, there were 100 outlets. In 1999, two KFC stores in Changsha were wrecked by crowds protesting the United States bombing of the Chinese embassy in Belgrade.[12] By 2007, there were 2,000 outlets in 240 cities.[13] KFC began to expand North and West into China and also in the central region. Eventually, it gained operations in all of China's provinces except for Tibet.[13] In 2008, CEO David Novak announced plans to open more than 20,000 restaurants in China, saying: "We're in the first innings of a nine-innings ball game in China."[14]
At the beginning of 2008, the chain added its first Chinese street food snack to its menu, the youtiao.[15]
2005 Sudan I incident
In 2005, Sudan I (organic compound) was found in the spice pickle powder used in some KFC menu items. Affected items included spiced drumsticks, spiced chicken wings, popcorn chicken, and the "New Orleans Roasted Chicken". The discovery was made by quality inspection authorities in Zhejiang Province.[16] Sudan I is an industrial dye used for coloring solvents, oil waxes, as well as shoes and floor polishes. It is not safe for use in foods because it increases the risk of cancer. The discovery led to the ban of all flavoring products made by Heinz-Meiweiyuan Food Co.[17][18]
2012–2014 supply issues
In December 2012, KFC faced allegations that some of its suppliers injected antiviral drugs and growth hormones into poultry in ways that violated food safety regulations.[19] After this, the chain severed its relationship with 100 suppliers and agreed to "actively co-operate" with a government investigation into its use of antibiotics.[5] KFC China sales in January 2013 were down 41% against the previous year.[20] In May 2013, Businessweek speculated that KFC may be "losing its touch" in China.[21] Sales continued to decline throughout 2013, albeit with a slower rate of decline than analysts estimated.[22] Leslie Patton of Businessweek highlighted increased competition in the fast food category from competitors.[22]
Since 2016
Following the 2016 result of the South China Sea arbitration, KFC restaurants in Chinese cities became locations for public protests.[27] Protestors denounced what they viewed as United States interference in China's sovereignty issues.[27] Viewing KFC as symbolic of American presence in China, the protestors called for a boycott of the restaurant chain.[27] These protests also became a focus for Little Pink, young online fandom nationalists.[28]
