Originally created 01/16/04

American fast food chains announce expansion in China



BEIJING -- Colonel Sanders, whose bearded, down-home visage adorns chicken restaurants from Kentucky to Karachi, is headed for a new frontier - the mountains of Tibet.

There's more: Taco Bell will expand across China in the near future. Pizza Hut will step up its home deliveries. And McDonald's is adding 100 more restaurants to the 560 it already has in the country.

As China increasingly embraces the outside world and its snack food, U.S. fast-food chains are kicking off a high-speed expansion in the world's biggest market.

On Thursday, executives from Louisville, Ky.-based Yum! Restaurants offered an optimistic blueprint for their company's KFC, Taco Bell and Pizza Hut restaurants ahead of a meeting of regional managers marking the opening of KFC's 1,000th outlet in China.

And the state-controlled newspaper China Daily said Thursday that McDonald's planned to open nearly 100 more restaurants this year. It quoted Tim Lai, north China managing director of McDonald's China Development Company,

Plans are also under way for more sites of the Chinese version of Taco Bell, which currently has one location - in Shanghai.

Gearing fast food toward local stomachs while retaining its prestige as a foreign brand is a delicate balance. KFC has adapted with fare like the "Old Beijing Twister" - a wrap modeled after the way Peking duck is served, but with fried chicken inside.

"In our business, it's very simple. You have to respond to consumers' demands. As they become more sophisticated, we need to become more sophisticated," said J. Samuel Su, greater China president for Yum!.

KFC opened its first China restaurant in Beijing in 1987, and the capital city now has more than 100 sites. Nationwide, Yum! opened 230 new KFC outlets last year.

In Urumqi, capital of China's heavily Muslim Xinjiang region, the Colonel smiles next to lettering in English, Chinese and Arabic. In Guiyang, in southwestern China, managers removed old-fashioned glasses from his plastic statue out front and replaced them with the kind worn by retired President Jiang Zemin.

Currently, KFC operates in every Chinese province and region except Tibet. That won't last long, company officials say, though the difficulty in guaranteeing supplies to any proposed outlet due to limited road, rail and air links remains an obstacle.

"We do have plans to enter Tibet. I can't tell you when," said Su, who added that he believes the proper permission has been secured from the Chinese government.

Yum!, which also owns Long John Silver's seafood restaurants and the root beer-and-burgers chain A & W, has targeted a 15 percent growth rate for the company's international operation, and executives say China regularly surpasses that.

KFC also plans to increase the number of drive-through outlets, currently limited to one in Beijing - a move that reflects the sharp growth in private car ownership among urban Chinese.

Yum! is also planning a slower expansion for Pizza Hut, said Peter A. Bassi, chairman of Yum! Restaurants International. He said he expects the pizza market to grow with the affluence of the Chinese people.

"They all have their DVDs, air conditioning in every room. They want to stay at home," Bassi said. "They want a pizza delivered."

On the Net:

http://www.yum.com