This is the second article in a series of posts on Yum! Brands’ success in China. For part one please click on “What are China’s consumers eating? Yum! Brands – One Company, Three Pillars of Success (Part I).”
Pillar III: East Dawning & Little Sheep Hot Pot - Trusted Local Chinese Dining
In 2005 Yum! Brands launched its East Dawning (Chinese: Dong Fang Ji Bai) chain of restaurants, focusing on local Chinese fast food. The Yum! Brands executives found that despite the success of KFC, most Chinese people will only eat Western food at most two times per week. They saw a need for a Chinese fast food chain – an opportunity to leverage their robust supply chain in China, to offer quality Chinese food at convenient and affordable prices. The chain is not widespread, but there are outlets in Shanghai, Beijing, Guangzhou and Xiamen. East Dawning is an on-going project for Yum! Brands and it will be interesting to observe how it will fare against other Chinese fast food chains like the popular Zhen Gongfu.
While East Dawning is Yum! Brand’s local equivalent of KFC, Little Sheep Hot Pot could be viewed as its local equivalent to Pizza Hut. Instead of creating its own local casual dining restaurant, Yum! Brands invested in Little Sheep Hot Pot. I wrote about Little Sheep hot pot almost 2 years ago and have since observed it develop into one of the best standardized Chinese casual dining restaurants. In March 2009, Yum Brands! bought a 20% stake in the Little Sheep hot pot chain. By October 2010 Yum! had increased its stake by an additional 7.5% – and currently owns 27.5% of the Hong Kong stock-exchange listed hot pot chain.
Yum! Brands diversified approach to China’s many markets allows it to tap into the taste buds of all different types of Chinese consumers. For those seeking Western fast food KFC is the go-to choice, while it also hopes to develop East Dawning as the local equivalent. Casual dining for China’s emerging middle class centers on their Pizza Hut brand, and Little Sheep Hot Pot may become the go-to casual dining restaurant for those seeking a more local experience. I wouldn’t be surprised if Yum! partners with other local chains as it continues to develop; however, for now it is clear that the three pillars of success are working well for Yum! Brands in China.
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