"Smart grandstanding" as KFC announces first Tibet branch

Parent company Yum Brands announces moves as part of a wider strategy to expand in China following several scandals that have stalled KFC's progress

(Terence Ong/Wikimedia Commons)
(Terence Ong/Wikimedia Commons)

US fast-food chain KFC is poised to open its first branch in Tibet, in a rare move allowing a foreign business access to the region closely controlled by China.

The restaurant will be based in the Tibetan capital, Lhasa, and will be operated by a franchisee, Yum Brands said in a statement.

The move comes as Yum looks to triple its restaurant numbers in China by spinning off its brands – KFC, Pizza Hut and Taco Bell – and bringing in more franchisers.

KFC has had a difficult time in China since being embroiled in a huge scandal in July 2014 over allegedly using rotten meat in its products.

Its shares dropped significantly in the wake of the crisis, as it came quickly on the heels of a previous scandal 18 months earlier regarding the excessive use of antibiotics in KFC food.

Food safety is one of the most critical issues for consumers in China, and KFC’s problems caused a massive dip in brand trust.

Moreover, the company has been facing an uphill battle in recent years due to the slowing of China’s economy and the fact that Chinese millennials are increasingly switching to healthier food and local options.  

Charles Lankester, senior vice president at Ruder Finn Asia, told PRWeek Asia that from a timing point of view, the announcement is "smart grandstanding and headline bait" given the current focus on divesting KFC in China.

"It’s also good business. For Yum/KFC to be able to ‘talk Tibet’ with confidence means the PRC government will have been carefully consulted and approved the expansion."

Lankester added that the Tibet announcement will accelerate the Yum China business spin-off news story.

"It will build interest within China and no doubt generate terabytes of online coverage," he said. "I am personally now looking forward to news of Taco Bell in Pyongyang. North Korea must surely be Yum’s next frontier market?"

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