Question

KFC China's menu has evolved and become highly localized. It eliminated "super-size" items altogether, and added oven-roasted chicken, sandwiches, wraps, and different proteins such as fish, shrimp, and beef. since \(2002,\) KFC China has been opening for breakfast. They introduced Chinese favorite breakfast congee, which is now the number one seller at breakfast. KFC China is also positioned to appeal to Chinese families. Many restaurants have a play area, and hostesses organize activities. a. Explain how KFC has differentiated its fast food to compete with other restaurants in terms of quality, variety and marketing. b. Predict whether KFC produces at, above, or below the efficient scale in the short run.

Short answer

a. KFC differentiated by improving quality, offering variety, adapting to local tastes, and attracting families. b. KFC likely produces below the efficient scale in the short run.

Step-by-step solution

Identifying Differentiation in Quality

KFC China has improved the quality of its menu by eliminating 'super-size' items and introducing oven-roasted chicken, which is perceived as a healthier option.

Examining Variety in the Menu

The introduction of a wide variety of items such as sandwiches, wraps, and different proteins like fish, shrimp, and beef provides customers with more choices.

Understanding Adaptation to Local Preferences

KFC has introduced local favorites, such as breakfast congee, which has become a best-seller, showing their adaptation to local tastes.

Marketing Strategies for Families

The presence of play areas and activities organized by hostesses are designed to attract families, creating a family-friendly environment.

Predicting Production Scale

In the short run, it is likely that KFC produces below the efficient scale due to the costs of adapting and diversifying the menu, opening for breakfast, and creating a family-friendly atmosphere.

Key concepts

Localization Strategy

KFC China's localization strategy is a critical factor in its success. The company has adapted its menu to include items that resonate with the local palate. For example, it introduced congee, a traditional Chinese breakfast dish, which has become their top seller in the morning. This adaptation shows KFC's commitment to catering to local tastes.
Additionally, KFC eliminated 'super-size' items, often seen as Western indulgence, replacing them with healthier options like oven-roasted chicken. These moves help KFC stand out among competitors who may offer a more generic, Western-centric menu.
The overall goal of localization is to make the brand feel more like a part of the local culture rather than an external entity. This strategy not only attracts customers but also builds loyalty as they perceive the brand to be more relevant and personal.

Menu Diversification

Another essential element of KFC China's market differentiation is menu diversification. The menu includes a mix of traditional KFC items and locally favored foods. In addition to chicken dishes, KFC China offers sandwiches, wraps, and proteins like fish, shrimp, and beef.
By broadening their offerings, KFC caters to a wider audience, ensuring there's something for everyone. This strategy helps attract not just fast food lovers but also those looking for healthier, varied options. Moreover, it aids in customer retention as individuals can experience different menu items during each visit, reducing the likelihood of menu fatigue.
Menu diversification also demonstrates KFC's flexibility and willingness to innovate, which can be a significant competitive advantage in the dynamic fast-food market.

Family-Friendly Marketing

KFC China's marketing strategy heavily focuses on being family-friendly. Restaurants are often equipped with play areas to keep children entertained. Hostesses facilitate activities, making the dining experience enjoyable for all family members.
This focus on family creates a welcoming environment and encourages repeat visits from families looking for a pleasant dining outing. By positioning itself as a family-centric restaurant, KFC can differentiate from other fast-food chains that may not offer these additional features.
Family-friendly amenities also help in creating positive, memorable experiences. Such experiences not only invite more visits but also generate word-of-mouth referrals, which are invaluable for brand growth.

Short-Run Production Efficiency

In the short run, KFC China might produce below the efficient scale. This is due to several factors, including adaptation costs from diversifying the menu and creating a family-friendly atmosphere. Such endeavors can initially lead to higher operational costs.
Efficiency scale refers to the level at which the average costs of production are minimized. In the context of KFC China, the investments in new menu items and family-oriented facilities can increase costs in the short term. However, these strategic moves are not merely expenses but investments that are likely to pay off as they attract a broader customer base and encourage repeat business.
As these changes become integrated and the customer base grows, KFC China can aim to move toward or even exceed the efficient scale in the long run.