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Tag Archives: KFC
Yum’s new leadership change marks the start of a new period of sustained same-store sales growth for KFC in China, overview by former Reuters journalist Doug Young
The following press releases and media reports about Chinese companies were carried on August 14. To view a full article or story, click on the link next to the headline.
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Lenovo (HKEx: 992) faces Motorola Hangover, Cuts 3,200 Jobs as Sales Slide (English article)
Xiaomi Announces New Products, Including MIUI 7 Operating System (Chinese article)
Amazon (Nasdaq: AMZN) China to Accelerate Local Investment – President (Chinese article)
Bottom line: Baidu’s tie-up with a major Japanese noodle chain looks like a smart move to build up its fledgling takeout dining business, though it will need to do more to win back investors concerned about its aggressive spending on O2O investments.
Baidu ties with Ajisen Ramen
A week after its stock was hammered by concerns about big spending on its online-to-offline (O2O) services, leading search engine Baidu (Nasdaq: BIDU) has found a major new ally for that part of its business in Japanese noodle chain Ajisen Ramen (HKEx: 538). This particular deal will see the Hong Kong-listed Ajisen and another investor pump $70 million into Baidu’s takeout dining service, providing a major supporter not only due to the investment but also the chain’s strong presence in major Chinese cities.
Baidu’s stock is still recovering from a hammering last week that saw the shares fall by nearly 20 percent to a year-low after it reported anemic 3.3 percent profit growth in its latest reporting quarter due to heavy spending on O2O services. (previous post) Such services include things like buying takeout restaurant food online, and purchasing items from real-world stores through group buying sites. Read Full Post…
Bottom line: Retailers like Yum and Mondelez are increasingly suffering from weak China sales due to a local slowing economy, and are unlikely to return to rapid growth of previous years over the short- to medium-term.
Mondelez in China shuffle
Two separate stories involving major western food retailers paint a gloomy picture for the China market, which is losing momentum in tandem with the country’s slowing economy. One headline has Yum Brands (NYSE: YUM), operator of the KFC fast food chain, announcing results that continued to be weak in this year’s second quarter, despite a major overhaul for its China operation and the fading impact of a major food safety scandal a year ago. The other news has Mondelez International (Nasdaq: MDLZ), maker of Oreos cookies, reportedly making major adjustments to its China operations, in a move that one insider says is the equivalent of lay-offs. Read Full Post…
Bottom line: Alibaba-affiliated Ant Financial is experiencing breakneck growth through its roll-out of a wide array of new products and services, and could be valued at up to $150 billion by the time it makes its IPO as soon as next year.
Ant Financial in Alipay offline campaign
A new report is spotlighting the rapid rise of Ant Financial, the financial services affiliate of e-commerce giant Alibaba (NYSE: BABA) that looks set to challenge not only domestic rival UnionPay but also upcoming drives into China by global giants Visa (NYSE: V) and MasterCard (NYSE: MA). Much of Ant’s incredibly rapid rise is tied to its core Alipay asset, which began life as an electronic payments service but is rapidly moving into other areas like credit card-style offline payments and savings account services.
The latest reports also contain a new figure on Ant’s valuation following its first major capital raising. That figure of $45 billion is substantially larger than an earlier figure of $30 billion that was contained in initial reports on the funding just a week ago. (previous post) But those earlier reports also pointed out the low valuation was based on shares that were probably sold at a discount to a big domestic institutional investor, perhaps for strategic reasons, and that the real value could be as high as $50 billion. Read Full Post…
Bottom line: KFC’s and McDonald’s latest moves to add high-tech elements to their China stores are a savvy way to update their images, and could help to attract a younger trendy crowd that has abandoned both chains in recent years.
KFC links up with Alipay
Leading global fast food chains McDonald’s (NYSE: MCD) and KFC (NYSE: YUM) are both in the headlines as we head into the heart of summer, each trying new high-tech approaches to reignite their faltering China stories. Announcement of these latest initiatives seems especially appropriate right now, as we’re approaching the first anniversary of a food safety scandal that dealt a major blow to both chains in China.
KFC’s deal will see it pair up with Alibaba (NYSE: BABA) to offer its affiliated Alipay electronic payments service at hundreds of its China stores. The McDonald’s news is similarly high-tech, and will see the chain extend its new state-of-the-art hamburger customization program to the China market. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 1. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Eyes $600 Mln Investment in India Online Payment Firm Paytm (Chinese article)
Baidu (Nasdaq: BIDU0 to Invest 20 Bln Yuan in Nuomi.com Over Next 3 Years (English article)
KFC (NYSE: YUM) Forms Alliance With Alipay (Chinese article)
Yingli (NYSE: YGE) Seeks Public Solar Investment With Internet Financing Platform (PRNewswire)
Amazon (Nasdaq: AMZN) to Offer Loans to Sellers in China, 7 Other Countries (English article)
Bottom line: Caffebene could become the first big victim of an unsustainable Chinese coffee explosion, while KFC’s new lawsuit against rumor mongers reflects one of the many challenges it will face as it tries to rebuild its China image.
Caffebene China chief quits
A couple of new China fast-food headlines reflect the rapidly changing environment, as traditional players like KFC (NSYE: YUM) try to move upscale to attract consumers who now have many more choices than they did a decade ago. The upscale move has seen a massive explosion in premium coffee shops, which is behind one headline that has South Korean giant Caffebene showing signs of distress following its recent aggressive China expansion.
Meantime, the other more humorous headline has KFC suing 3 companies for spreading false rumors about its products on social media, including one saying it uses chickens that have 8 legs. On a more serious note, this story comes as KFC struggles to regain its skidding China momentum, and shows that Beijing isn’t the only one frustrated over the kind of rumor-mongering that regularly happens on popular services like Weibo (Nasdaq: WB) and Tencent’s (HKEx: 700) WeChat. Read Full Post…
Bottom line: A potential future spin-off of Yum’s China operations looks like a good move that would give the new company more focus, while McDonald’s China franchising drive also looks good if it can find the right partners.
Investors eye spin-off for Yum’s China unit
China was once the hot story for fast food companies like KFC and McDonald’s (NYSE: MCD), as Chinese consumers flocked to the concept of reasonably priced food that was served quickly in attractive restaurants with friendly workers. But that story has become quite stale in recent years, leading this pair of global heavyweights to look for new China stories to pump up their local business and excite investors.
KFC has been trying to achieve that goal through a major overhaul of its China restaurants over the past year, and now is back in the headlines as some investors call for its parent, Yum Brands (NYSE: YUM), to split off its China operations into a separate company. Meantime, McDonald’s is trying to bring some excitement back to its China story by rapidly accelerating the expansion of its traditional franchised store model in the market. Read Full Post…
Bottom line: Yum’s new upscale Italian restaurant looks like a smart concept for the China market, but a broader campaign to move its Chinese KFC stores upmarket looks like too little too late.
A year after announcing plans for a major overhaul of its aging Chinese KFC stores, Yum Brands (NYSE: YUM) is adding another prong to its China reboot with the launch of an upscale Italian eatery as it tries to to regain relevance in its most profitable market. Yum’s newest China restaurant brand, Atto Primo, is situated in the heart of the Shanghai Bund, home to some of the city’s oldest and most famous buildings and most expensive restaurants. Yum is calling the restaurant a “lab” for now, but I suspect it could quickly expand the concept with new outlets if it proves popular. Read Full Post…
A few food-related items, 2 in the news and one in my personal life, made me realize once more just how far China’s eating scene has advanced in the last 2 decades, especially in an increasingly international city like Shanghai. The 2 news items both involved coffee, which I wrote about a few weeks ago as I noted the recent explosion in new chains and coffee houses.
The latest twist has fast-food giant KFC joining the trend, with word that it’s rolling out a premium coffee product in a bid to boost its downscale image. If that wasn’t enough, Gubuli, a well-known local chain whose name is synonymous with baozi, or meat-filled steamed buns, is also entering the upscale coffee business through a new joint venture with Australian chain Gloria Jean’s. Read Full Post…
Bottom line: KFC’s plan to roll-out a low-cost premium coffee product looks like part of its broader plan to move its restaurants upscale, and could help it regain some momentum it has lost in China over the last 3 years.
KFC eyes low-cost premium coffee
It’s been nearly a year since struggling fast food giant KFC (NYSE: YUM) announced a much-needed overhaul for its China restaurants, and now we’re finally getting some details of changes to come with word of an interesting new plan to go upscale that takes aim at McDonald’s (NYSE: MCD). The new plan centers on coffee, with KFC aiming to find a new place at the low end of the premium market.
The move looks smart, since coffee has emerged as a hot and trendy product over the last couple of years in China. It also spotlights the fact that the fast-food market may be close to saturation in China’s largest cities. That means that KFC, McDonald’s and other large operators may be entering a new phase of their development where China looks more like the mature western markets where they are based, and they need to be more innovative to keep growing. Read Full Post…
