Yum! Brands KFC Background Yum! Brands, Inc. is the parent company of KFC, Pi a !ut and "aco Be##.

. $ith o%er &',''' restaurants across the (or#d they are ranked )'*st on the Fortune +'' #ist. ,rigina##y a part of PepsiCo, Yum! Brands separated from Pepsi in *--. and has since /ecome a #eader in internationa# retai# de%e#opment. In )'*0 Yum! Brands reported a#most .' percent of its profits came from outside the 1nited 2tates. Yum! entered four ne( emerging market countries this past year3 "an ania, 1kraine, 4rgentina, and 5ongo#ia. Yum! Brands #argest internationa# interest are current#y in China. "hey ha%e o%er 6,)'' #ocations and ha%e p#ans to open .'' more restaurants /y the end of )'*&. In *-7., KFC (as the first of Yum! Brands chain of restaurants to /reak into the Chinese market and current#y has &,6'' #ocations. Beating their competitors t(o8to8one, the amount of #ocations ha%e he#ped KFC gain more market share. Yum! Brands took the time to adapt the KFC menu to the Chinese market /y incorporating rice dishes and nood#es dishes that (ou#d appea# to the #oca# preference that (ou#d run a#ongside of the traditiona# KFC menu items #ike the ,rigina# 9ecipe chicken. 4fter ac:uiring a #arge portion of the fast food market in China, Yum! KFC mo%ed into India. By ;ecem/er )'*0 there (ere a tota# of )-- KFC #ocations, its first #ocation is #ocated on the fashiona/#e Brigade 9oad in Banga#ore /ui#t /ack in <une *--+. Yum! Brands current#y has &',''' restaurants, the most recent /ui#t in the city =oa. India>s #arge and e?panding popu#ation made it a #ogica# ne?t step for Yum! KFC.

Pro/#em 2tatement ;espite a## the success that Yum! had in China, food safety scanda#s and a%ian f#u out/reaks damaged the pu/#ic opinion of KFC and #ed to a dec#ine in sa#es. If Yum! Brands (ants to continue to operate KFC in China and /e profita/#e, ho( can (e impro%e the pu/#ic perception of Yum! KFC@

Case In the 1nited 2tates, KFC is a (e##8kno(n fast food restaurant chain, ho(e%er +'A of o%era## sa#es comes so#e#y from China B;etarC. 2ince $estern /rands are often regarded as safer and of higher :ua#ity than their Chinese e:ui%a#ents, many /usinesses are seeking out the opportunity to market to such a #arge popu#ation and consumer /ase B9eutersC. 1nfortunate#y for Yum! Brands, the KFC /ranch has recent#y seen drastic decreases in sa#es3 in )'*0, sa#es fe## *+A according to BBC De(s. In accordance (ith sa#es dropping, there ha%e /een se%era# reports of #oca# consumers %oicing their opinions on ho( KFC is causing pro/#ems and (anting the restaurant chain out of the country. 2o (hat is causing sa#es to p#ummet in China@ $hy does the pu/#ic (ant KFC out@ In recent years, the pou#try industry has /een ra%aged /y an out/reak of the !.D- strain of a%ian inf#uen a, more common#y kno(n as the /ird f#u. "his contagious respiratory infection is rapid#y spread /et(een /irds, (ith hard#y Eany e%idence of sustaina/#e human8to8human transmissionF BFe##man, KhanC. "hough this may /e the case, it is sti## (ide#y kno(n that the maGority of Epeop#e HareI infected Hthrough directI contact (ith infected pou#try or contaminated en%ironmentsF BC;CC. "his has caused peop#e to ha%e an a%ersion to chicken, (hich not on#y

threatens the supp#y of pou#try, /ut a#so the future of chicken /ased restaurants in China. 4s of <anuary this year, -6 peop#e ha%e /een infected and *- (ere reported dead, resu#ting in 2hanghai, !ong Kong, and at #east one other pro%ince to p#ace restrictions and e%en /ans on the trade of #i%e pou#try BFe##man, KhanC. "here is #itt#e dou/t that this has had an effect on KFC>s /ottom #ine and possi/#y the (ay their product is percei%ed in China B$ongC. In addition to concerns a/out a%ian inf#uen a, Chinese food safety authorities ha%e disco%ered that the Echicken supp#ied to KFC contained anti%ira# drugs and hormones used to acce#erate gro(thF BBaert#einC. "(o of these chicken supp#iers, Jiuhe Co. and Yingtai Food =roup Co., (as found to ha%e pro%ided chicken to KFC (ith unappro%ed #e%e#s of anti/iotics BBaert#einC. $ith nationa# media /roadcasters :uestioning the supp#iersK intent to outright ignore regu#ations, Yum! had recei%ed an Eons#aught of negati%e media attentionF B!uffington PostC. "his has caused a rise in pu/#ic response, inc#ining se%era# outraged #oca#s to c#aim that they (onKt eat at KFC again. ,thers suggest that KFC needs to pack up and #ea%e China. Yum! decided to do a defensi%e strategy and issued apo#ogies, stating that these supp#iers Erepresent an e?treme#y sma## percentage of product to KFCF and has stopped purchasing chicken from /oth companies BBaert#einC. L%en after Yum! stopped recei%ing chicken from Jiuhe Co. and Yingtai Food =roup Co., the KFC restaurant chain is sti## getting /ad pu/#icity from the peop#e and go%ernment of China. $ith consumers Edeserting the HKFCI restaurants in dro%es #ast year after an in%estigation /y Chinese food regu#atorsF B,>"oo#eC. 4s a resu#t, sa#es in China (ere hit harder than e?pected in the #atest :uarter according to Jisa Baert#ein of the !uffington Post. 4rtic#es associated (ith the a%ian inf#uen a in China that are not re#ated KFC /rand sti## creates a negati%e impact on sa#es B,>"oo#eC. $e can conc#ude that the Chinese>s pu/#ic perception of KFC and Yum! not

engaging in socia# issue participation is part of the reason of the company>s fai#ure in the country. Profits p#ummeting and negati%e pu/#ic perception has :uestioned KFC>s sur%i%a# in China. "he a%ian inf#uen a and the /an on pou#try affect a## chicken /ased /usinesses. It is no surprise that KFC has such a /ad pu/#ic reputation and the peop#e of China (ant KFC out of /usiness. $ith a## e%idence inc#uded, the future of KFC in China might not fu##y reco%er in the near future.

9ecommendation "here is no :uestion that Yum! KFC has seen its fair share of strugg#es in China o%er the #ast fe( years. Bet(een the red dye, anti8/iotic, and a%ian f#u pro/#ems, KFC has e?perienced an enormous #oss of profits and re%enues, a#ong (ith a diminishing market share in the fast food market. $ith a## of these issues surrounding KFC, it is imperati%e for KFC to make drastic and immediate in%estments into repairing their status in China. In order for Yum! KFC to regain its market share and repair their tarnished image, it is recommended that Yum! KFC imp#ement a fe( strategies that (i## drastica##y impro%e their position in China. "his #ea%es us (ith a cha##enging di#emma. If Yum! Brands (ants to continue to operate KFC in China and /e profita/#e, ho( can (e impro%e the pu/#ic perception of Yum! KFC@ ,ur first recommendation is argua/#y the most critica#. 9epair the negati%e perception of the KFC /rand and its products and (in /ack the trust of the Chinese popu#ation. "here are a num/er of things that KFC can do to impro%e its image and regain the trust of the Chinese consumer. In%esting in a rigorous and aggressi%e marketing campaign focused on re/ui#ding the

trust of the Chinese peop#e in KFC. $e (i## focus our efforts through a%enues such as "M ad%ertising campaigns, socia# media, digita#, and on#ine ad%ertisements. Furthermore, it (ou#d /e in the /est interest of KFC to impro%e its pou#try supp#y chain in China. 4s a resu#t of #ackadaisica# regu#ations on the sma## Chinese farmer, the :ua#ity of KFC chicken can easi#y /e ca##ed into :uestion. $ith our products coming from farms that are #oose#y regu#ated, ho( can (e possi/#y assure our customers that our chicken is he#d to a higher standard@ "he so#ution is an impro%ed pou#try supp#y chain, supp#y chain management, :ua#ity contro# and :ua#ity assurance. Furthermore, (e (ou#d imp#ement an open door po#icy to any regu#atory agency and consumers a#ike, to tour our factory. 4#igning this (ith the marketing campaign (i## sure#y aid in the effort to impro%e its /rand and product perception. $e ad%ise KFC to restage the /rands identity through changes in menu and store design. 5oderni ing its current stores and remode#ing them (i## offer a fresh ne( start for the company. $ith many /ig chains and mu#tinationa# firms attempting to connect (ith Chinese consumers, many ha%e created menus that ha%e appea#ed to the #oca# Chinese pa#ate. KFC>s attempt at #oca#i ing menu items such as congee, chi#i /#ack fungus and /eef dishes, ha%e eroded KFC>s /rand identity as a chicken restaurant. "here are other #oca# firms operating in China that offer the same products as KFC at a #o(er price. "his is trou/#ing for KFC /ecause #arge chains in China such as, ;IC,2 and cn!J2, ha%e gained the trust of Chinese consumers and offer the same menu items at a #o(er price. For e?amp#e, ;IC,2, (hich is said to /e %ery simi#ar#y compared to KFC, offers fried chicken at a much #o(er price. cn!J2, another competitor of KFC, offers a %ariety of chicken products, ham/urgers, and e%en fish. 4s a resu#t of #o(er prices and the #oca#i ation of Chinese menus from a #oca# chain, KFC is #osing considera/#e market share to these t(o chains. "herefore, (e /e#ie%e KFC shou#d aim at restaging the /rand to

impro%e its /rand perception, and regain market share, re%enues, and profits. ,%era##, our goa# is to create transparency in the organi ation to gi%e the Chinese consumer an inside perspecti%e of KFC operations and (i## sho( our intentions of impro%ement for our products. By imp#ementing this po#icy, it (i## sho( the Chinese consumer that (e (i## /e accounta/#e for our actions and proGect a trust(orthy image. 9estaging the KFC /rand, impro%ing its pou#try supp#y chain, and practicing /etter management practices (i## u#timate#y #ead to an impro%ed /rand image.

$orks Cited EYum! ;efining =#o/a# Company that Feeds the $or#dF httpNOO(((.yum.comO P4%ian F#u B!.D-C in China.P C;C. ). Fe/. )'*&. )6 5ar. )'*&. QhttpNOO(((nc.cdc.go%Otra%e#OnoticesO(atchOa%ian8f#u8h.n-8chinaR. Baert#ein, Jisa. PKFC China "ries "o 9egain 9eputation 4fter Food 2afety 2cares.P!uffington Post. 7 <an. )'*0. *7 5ar. )'*&. QhttpNOO(((.huffingtonpost.comO)'*0O'*O'-Okfc8china8food8safetySnS)&060.'.htm#@ %ie(TprintUcommSrefTfa#seR. ;etar, <ames. PYum Brands 2tock !it 4s Bird F#u 9esurfaces In China.P In%estors.com. )- <an. )'*&. *7 5ar. )'*&. QhttpNOOne(s.in%estors.comOprintO/usinessO'*)-*&8677'.)8yum8 /rands8fa##s8on8china8/ird8f#u8fears.asp?R. Fe##man, <oshua, and Khan, Datasha . P!ong Kong to Cu## )',''' Chickens 4fter Bird F#u ;etected.P B#oom/erg. )7 <an. )'*&. )6 5ar. )'*&. QhttpNOO(((./#oom/erg.comOne(sO)'*&8'*8).Ohong8kong8to8cu##8)'8'''8chickens8after8/ird8 f#u8detected.htm#R. ,K"oo#e, <ames. PYum Brands sti## strugg#ing in China amid /ird f#u fears.P CDD 5oney. *' 4pr. )'*0. *7 5ar. )'*&. QhttpNOOmoney.cnn.comO)'*0O'&O*'Oin%estingOyum8/rands8chinaOR.

$ong, Menessa. PBird F#u "hreatens KFCKs De( Year 9eco%ery.P B#oom/erg Business(eek.)7 <an. )'*&. *7 5ar. )'*&. QhttpNOO(((./usiness(eek.comOprinterOartic#esO*7'0..8/ird8f#u8threatens8kfcs8ne(8year8 reco%eryR. PYum Brands China 4po#ogi es "o Customers ,%er !and#ing ,f Food 2care.P !uffington Post. *' <an. )'*0. *7 5ar. )'*&. QhttpNOO(((.huffingtonpost.comO)'*0O'*O*'Oyum8 /rands8apo#ogi es8chinaSnS)&&+**-.htm#@%ie(TprintUcommSrefTfa#seR. PYum Brands L?pects Profits "o Fa## ;ue "o Chicken 2care In China.P !uffington Post. & Fe/. )'*0. *7 5ar. )'*&. QhttpNOO(((.huffingtonpost.comO)'*0O')O'&Oyum8/rands8kfc8 chickenSnS)6*76...htm#@%ie(TprintUcommSrefTfa#seR. PYum Brands p#ays do(n China /ird f#u fears.P BBC De(s. 0 Fe/. )'*&. *7 5ar. )'*&. QhttpNOO(((.//c.comOne(sO/usiness8)6'*)66)@printTtrueR. Friend, L#i a/eth. P"rou/#e in ChinaN $ho is Josing, $ho is $inning, and $hy "hereKs Do Lasy Fi?.P B)'*&CN *. Luromonitor Internationa#. ;ata/ase. - 4pr )'*&.QhttpNOO(((.porta#.euromonitor.com.#i/pro?y.utda##as.eduOPorta#OPagesO2earchO2earch 9esu#tsJist.aspU?gt3 Fast food chicken chains in China ruff#e feathers at KFCN "ue, Fe/ ., )'*) ByN 4FP 9e#a? De(s. Yahoo.httpsNOOmy.ne(s.yahoo.comOfast8food8chicken8chains8china8ruff#e8 feathers8kfc8**0.0'.06.htm# <argon, <. B)'*&, <an *)C. KFCKs crisis in china tests ingenuity of man (ho /ui#t /rand3 sam su, %ice chairman of yum /rands, (orking to (in /ack confidence in asia. $a## 2treet <ourna# B,n#ineC. 9etrie%ed from httpNOOsearch.pro:uest.comOdoc%ie(O*&.6606+-)@accountidT.*)'

<argon, <. B)'*0, ;ec '+C. Corporate ne(sN KFC to re/oot in china. $a## 2treet <ourna#. 9etrie%ed from httpNOOsearch.pro:uest.comOdoc%ie(O*&6&7.0--+@accountidT.*)'.ProVuest Burkitt, J. B)'*), ;ec '0C. Corporate ne(sN China #oses its taste for yum 888 company finds that KFCKs chicken has /ecome KGust another food optionK. $a## 2treet <ourna#. 9etrie%ed from httpNOOsearch.pro:uest.comOdoc%ie(O*))**''76&@accountidT.*)'