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Colonel Sanders more profitable in China than the U.S.

A KFC delivery scooter in downtown Shanghai. The city has 350 KFCs. Yum! Brands' 3,700 restaurants in China out-perform its more than 20,000 restaurants in the U.S.

TEXT OF STORY

Tess Vigeland: If he were alive today, Harland Sanders -- otherwise known as Colonel Sanders -- might be surprised to learn that his fried chicken is now making more money in China than it is back home. KFC's parent company Yum! Brands joins General Motors as the latest American company whose profits in China have eclipsed those in the U.S.

Marketplace China correspondent Rob Schmitz reports on what has arguably become the most successful foreign company in the Middle Kingdom.


Rob Schmitz: In the 1980s, if you wanted to eat out in China, there weren't many options. The few places where you could have a sit-down meal were run by the government. This was China when Kentucky Fried Chicken arrived in 1987.

James McGregor: They came at a time when there were no restaurants.

James McGregor is author of "One Billion Customers: Lessons From the Front Lines of Doing Business in China."

McGregor: I remember going to duck restaurants here in the early '90s when you'd walk on the floor and the bones crackled under your feet. So they came in, they had a clean restaurant, they had fast service, they adapted their menu, and they invested in the country, and they just spread across the country very fast, so they're everywhere.

KFC's parent company Yum! Brands now opens one restaurant every 18 hours in China. The country's 4,000 KFCs and Pizza Huts make more money for Yum! than its 20,000 restaurants in the U.S. It's left its biggest competitor in China, McDonald's, in the dust. McGregor says that's because KFC has been more aggressive in localizing its product.

At one of Shanghai's 350 KFCs, you can order rice porridge, bamboo shoots, and spicy tofu chicken rice as side dishes. A life-size statue of Colonel Sanders stands at the entrance, his face altered to seem more Asian -- he looks like Confucius dressed in a white suit and a string tie. Seventy-five-year-old Ying Ruquan has just finished his meal.

Ying remembers lining up outside KFC's first store in Shanghai when it opened. That was 22 years ago. He's come back religiously, twice a month.

Ying Renquan: Their service is so quick. Other restaurants in Shanghai are so dirty, but KFC is very clean.

For two decades, Ying says he's never veered off-course in what he orders: Fried chicken legs. Is he tempted by the soybean milk or the Chinese wolfberry pumpkin congee? Nope, he says. I go to Chinese restaurants for that.

In Shanghai, I'm Rob Schmitz for Marketplace.

About the author

Rob Schmitz is Marketplace’s China correspondent in Shanghai.
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Over my last week and a half in Beijing, I have actually enjoyed going to American chain restaurants and comparing and contrasting the offerings. I vowed to myself that I wouldn't eat at McDonald's or any restaurant I could go to at home, but it turns out is speaks volumes about the differences in cultural values to experience these chains. In his book 'Chinese Lessons', John Pomfret writes how he interviewed young Chinese students about where they like to take their dates and they usually said a Western chain restaurant. Here, it is special to take your date to Haagen-Dasz or Pizza Hut where in the States, she may not go out with you again if you pull up to a chain restaurant on the first date. Is KFC this popular in other countries, or is it unique to China?

Hearing about the Chinese developing a taste for KFC reminded me of the time in 1975 when I interviewed 4 young Japanese exchange students on their very first day in America. I asked them if they had seen anything yet that they recognized, thinking they'd say something like the Golden Gate Bridge. "The Colonel," they replied. I guess the Chinese have caught up on the American fast food power curve.

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