With Trouble In China, KFC Sets Sights On India
Nov 14, 2013
As it expanded internationally over the last two decades, Yum! Brands has been hyper-focused on China. The fast-food company now has more than 6,000 locations in a country of 1.35 billion people. India and its 1.24 billion consumers, meanwhile, have just 613 stores.
Yum is apparently ready to shift its focus a bit, announcing on Tuesday the goal of bringing India’s total number of KFCs, Pizza Huts, and Taco Bells to 1,000 by 2015.
With localized variations such as rice bowlz and paneer pizza, it expects sales in India to reach $1 billion within two years—10 times the $100 million Yum made there in 2012.
Expansion in India is part of a $10 billion investment the company and its franchise partners plan to make in emerging markets by 2020.
Yum has been struggling with declining sales in China this year due to concerns about bird flu and KFC’s poultry supply, although its India ambitions predate these problems.
Yum Chief Executive Officer David Novak said last year that the company was “laying the foundation for [India] business to have a significant impact on Yum’s profit growth in the future.”
The company started breaking out India as a separate division only in 2012, and executives have made it clear that Yum is adapting lessons from China, which represents half the company’s revenues.
“I think that traditionally, when we opened up countries, we concentrated a lot on the capital cities and the bigger cities,” Chief Financial Officer Richard Carucci said at the time.
“And what we learned in China is that there’s opportunities – when you have a billion people in a country, there’s opportunities in a lot of cities. So in India, we’re going to cities outside the major cities quite quickly.”
India poses challenges of its own. Carucci has pointed to distribution difficulties caused by poor infrastructure, saying India is “not as developed as China was at this same stage of development.”
KFC unquestionably got off to a rough start: When Colonel Sanders first came to the subcontinent in 1995, local authorities tried to close the outlets on health grounds, while locals protested against the company’s multinational nature.
KFC “has been a target of campaigners claiming to defend Indian culture against Western encroachment,” as the Chicago Tribune noted back then.
After a few years, the chain quit India until 2004, when it relaunched with a localized menu.
As of last month, India counted 296 KFC restaurants, 313 Pizza Huts, and 4 Taco Bells.
Credit: Business Week