Yum tests upscale restaurant in Shanghai - Ben Cavender

Ben Cavender

You might know Yum mostly from KFC and Pizzahut, but in China it has started to test the upscale market. Retail analyst Ben Cavender looks at a test-kitchen at Shanghai´s Bund. From Reuters.

Reuters:

Overlooking Shanghai's iconic riverside Bund and rubbing shoulders with the city's most expensive venues, the restaurant is what Yum calls a "lab" where it studies Chinese diners as it looks to bounce back from a lengthy slump in its top market. 

"A high-end test kitchen will let Yum test the waters with new menus and concepts and get feedback from more sophisticated diners - helpful if you want to go a bit upmarket," said Ben Cavender, principal at China Market Research Group. 

Yum's same-store sales at its nearly 7,000 restaurants in China, the firm's biggest market for revenue and profit, fell 16 percent in the last quarter of 2014, dragged down by back-to-back food scares, rising local competition and a sense its main KFC brand may have fallen out of touch with China's consumers.

More at Reuters.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

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Fast food chains struggle for the Chinese customer - Ben Cavender

Ben Cavender

When US fast food chains entered the China market, they mostly kept rigorously to their American diet. But now they are struggling to gain share of the US$100 billion market by experimenting frantically with tastes and flavors, tells retail analyst Ben Cavender in CNNMoney.

CNN Money:

There's just one problem: double cheeseburgers and pepperoni pizzas aren't exactly typical Chinese cuisine. As a result, the chains are constantly looking for ways to appeal to the local population, while keeping signature items on the menu.

"The trick is, they want to keep as much of their DNA as possible in terms of having core menu items that are recognizable in any market, but also figuring out what the hero products for the specific market are going to be," said Ben Cavender of China Market Research.

McDonald's in Hong Kong, for example, serves noodles, fresh corn and lychee punch. KFC offers rice with its fried chicken meals....

 

Pizza Hut offers lobster bisque and mussels stewed in white wine. The restaurant is a popular spot for teenagers to spend a romantic evening.

 

These are "nicely-decorated sit down restaurants," Cavender said. "In most cases, people going tend to be white collar -- comparatively speaking, these restaurants are still quite expensive compared to a street corner noodle shop."

More in CNN Money.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

Are you interested in more stories by Ben Cavender? Do check out this regularly updated list.

Trust crisis hits KFC's sales - Shaun Rein

Shaun Rein

Chinese consumers expect foreign brands to be safer and better than domestic ones. But when that confidence is hurt, like happened after a government investigating into the poultry supply of KFC, damage can be huge, explains business analyst Shaun Rein in Bloomberg. 

Bloomberg:

The Shanghai Food and Drug Administration on Dec. 20 said tests conducted by a third-party agency from 2010 to 2011 found found eight batches of chicken supplied to Yum by Liuhe Group Co. had levels of antibiotics that didn’t meet prescribed standards. Yum, which operates KFC and Pizza Hut chains in China, got 44 percent of its revenue from the Asian nation in 2011. The company said that it stopped all supplies from Liuhe in August. 

“The trust in KFC was so high that now the anger is high,” said Shaun Rein, managing director of China Market Research in Shanghai. “People tend to trust western brands, they think these brands have better quality control over the supply chain and they are not going to cut corners.” 

Food safety is a big worry for many Chinese consumers and it may take at least three to six months for them to start returning to KFC stores, Rein said.

More in Bloomberg.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Not all foreign companies get it right, when they have to adopt their offers to Chinese tastes. Ben Cavender recalls how four companies, B&Q, IKEA, GAP and Dunkin Donuts got it wrong when they tried to localize.

 

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