For the world’s biggest franchise chains, expansion into the developing Asian markets of China and India is something of a race. Experts say that the franchises that adapt earliest to these markets will be the ones that enjoy the most success in the long run.
According to Bloomberg Businessweek, Yum! Brands, driven by Kentucky Fried Chicken, Pizza Hut and Taco Bell, is now the largest food chain in the world, with over 37,000 stores in 110 countries. For anyone who considers McDonald’s or Subway to be the biggest franchise in the world, this article is eye-opening stuff.
Bloomberg Businessweek attributes this rise primarily to Yum!’s “conquering” of the Chinese market. In fact, 33% of Yum!’s profits now come from the Chinese market, compared to its 38% percent US market share. One assumes that that figure will only skew more China in the coming years. It’s pretty remarkable when you consider that KFC have only been operating in China for 23 years.
How did KFC do it?
"Part of the reason is that they built up their supply chain and their distribution system quickly, and that is giving them a real competitive advantage. When you are setting up restaurants in new territories it is often difficult to procure packaging and to develop good relationships with suppliers, but Yum! now has a nice little edge," RJ Hottovy, an analyst at Morningstar, told the magazine.
The Yum! brands have also modified their menus to appeal to foreign tastes, a trend we noticed while visiting India recently.
As Franchise Direct put out the annual list of the Top 100 Global Franchises, we'll definitely be taking note of the Yum! ascendancy. Perhaps Pizza Hut or KFC cannot compete with McDonald's on an individual basis, but they're a very strong team.