Organization: Central Michigan University
Newsgroups: bit.listserv.seasia-l
Date:         Wed, 27 Jan 1993 09:30:43 EST
From:         Elliott Parker <3ZLUFUR@CMUVM.CSV.CMICH.EDU>
Subject:      ID: Hot wings take off

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                         Copyright 1993 Forbes, Inc.
                                     Forbes

                                January  18, 1993


HEADLINE: Hot Wings take off

BYLINE: By Andrew Tanzer; EDITED BY JOSHUA LEVINE

In the U.S., fried chicken outlets are struggling, but Asians can't seem to get
enough of the bird

   ASK JOHN CRANOR, the president of PepsiCo, Inc.'s KFC Corp. division, about
his domestic business and he gets a bit touchy.  Kentucky Fried Chicken's
same-store sales were up only 1% in 1992; they fell 5% in 1991.  The U.S.
fast-food market is clotted, some of KFC's franchisees are mutinous and the

word "fried," with all its artery-clogging connotations, continues to dog the
company.

   But mention the Asia/Pacific region and Cranor's mood brightens immediately.
"We're looking at almost unlimited opportunity for growth in Asia," he gushes.

   KFC is already the Western fast-food leader in South Korea, China, Thailand,
Malaysia and Indonesia, and runs second to McDonald's in most other Asian
markets, such as Japan and Singapore.  Sales and profits in Asia (excluding
Japan) are growing at over 30% a year.  By 1997 KFC expects Asia to account for
33% of projected system retail revenues of $ 9 billion, up from 22% of its $ 6.4
billion revenues.

   Average sales per store in Asia are $ 1.2 million, compared with $ 750,000 in
the U.S. -- and remember this: Per capita incomes in most of KFC's Asian markets
are much lower than in the U.S.  They key is volume.  The world's busiest KFC
outlet is Beijing's cavernous 701-seat Tiananmen Square restaurant which serves
2 million to 3 million customers a year.

   KFC's first ten outlets in China -- in Beijing and Shanghai -- serve an
average of 1 million customers a year each -- four times the average traffic in
the U.S.  The Louisville-based fast-food operator plans to open outlets in
nine more Chinese cities this year.

   Timothy Lane, president of KFC Asia/Pacific, says profits margins in Asia
(outside of Japan) are double those here.  In the next five years KFC will add
1,000 restaurants to the region's 1,470 -- more than one outlet every two days.
Says Lane: "The opportunity is exponentially greater than in the U.S., and more
important, it's eminently achievable."

   KFC isn't alone in Asia.  McDonald's, Pizza Hut and many other American
fast-food outlets are also sprouting from Tokyo and Seoul to  Jakarta  and
Singapore, to serve growing concentrations of young middle-class urban workers
with rapidly rising disposable incomes.  Women are entering the work force at a
brisk pace, leaving them with less time to cook but more money to eat out.  In
Bangkok, market research commissioned by KFC in 1990 showed that 22% of the
population had eaten at a fast-food outlet in the preceding three months; when
the survey was redone in 1992, the number had jumped to 42% (in the U.S., it's
90%).

   In the U.S., health fears and a rather shabby image have driven many
fast-food junkies into the closet: Everybody eats fast food, but nobody likes to
admit it.  In Asia, it's just the reverse.  Western-style quick-service eateries
are trendy, branded, air-conditioned -- and very hygienic -- alternatives to

local food-hawkers' stalls.  "The image of fast food is very positive in Asia,"
says Karel Hofland, a partner at Hong Kong-based Technomic Consultants
International, a food consulting firm.  "It's not perceived to be junk food."

   but KFC also has one big advantage over its U.S. fast-food rivals in Asia --
to wit, its chicken menu.  Chicken is much cheaper and more widely available
than beef in Asia's developing countries.  It's a lot more familiar to Asian
palates than the cheese topping on pizza.  And it doesn't face any religious
strictures, the way pork does in Muslim countries like Indonesia and Malaysia
and beef does in India.  Says KFC President Cranor: "We have yet to find a place
in the world where chicken is not a staple in the diet."

   So KFC's Asian menus are almost identical to the U.S. menus: fried chicken,
mashed potatoes and coleslaw.  There is some tinkering around the edges.  In
Thailand, for instance, Hot Wings, a spicy chicken dish, is considerably more
spicy; the coleslaw is sweeter.  In the highly competitive Japanese market, KFC
has branched out into dishes like chicken curry.

   Prices at Asian KFCs are considerably higher than for local fare, such as
hawkers' stalls, but that, too, is part of the image.  The quality, consistency,
comfort and status of eating at an American-style restaurant with a contemporary
decor justify the premium.  "We're selling a lifestyle and concept, not just a

product," says Hester Chew, KFC's country manager in Thailand.  Adds his boss,
Timothy Lane: "KFC is one of a person's first stops on his or her way up Asia's
socioeconomic ladder."
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