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Wen 丨 深火 (ID: shenrancaijing), author 丨 Zou Shuai, editor 丨 Tang Yahua
Xiaosha, after 95, recalled that more than 10 years ago, his parents would say, "If you score 100 points in this exam, I will take you to eat KFC." Nowadays, every time they have a problem with what to eat, Xiaosha and his friends will say, "Or eat KFC." ”
In the eyes of a generation, eating KFC and McDonald's has changed from a big thing worth showing off to a reluctant coincidence. Now, Xiaosha still eats KFC and McDonald's regularly, "not much to talk about, just because it's fast and doesn't have to queue." ”
In the 30 years since coming to China, KFC and McDonald's have steadily become industry benchmarks, from new faces to "old brands". However, turning over the 2020 financial report, the data of both companies is not very good, under the epidemic, revenue has decreased and growth has slowed down. In fiscal 2021, the data picked up somewhat, but it will take time to recover to before the epidemic.
In order to win back consumers, KFC and Madang work continuously. Take the recent example, McDonald's front foot just launched a limited edition cat nest, the shelf was robbed madly, KFC back foot and Bubble Mart's popular IP Dimoo to engage in a joint blind box. Popularity is coming, but so is the spitting.
On January 12, the China Consumer Association named the existence of KFC blind boxes to induce consumption, some consumers spent more than 10,000 yuan at a time to buy 106 packages, as well as in order to get blind boxes, hiring people to buy and eat on behalf of the behavior, and even do not rule out the direct discarding of uneaten food. Subsequently, KFC customer service responded: it will not affect sales.
Marketing flipped and new ones were ridiculed, and KFC and McDonald's have experienced it before. Some insiders commented that racking their brains to please young people, while the performance declined while continuing to open stores, KFC and McDonald's are like two middle-aged people who can't stop, trying to keep their own acres and three points in the fiercely competitive catering industry. Or, they just don't dare to stop.
The magic weapon of the "old brand" of foreign fast food: engaging in marketing and promoting new products
In 1987, KFC entered China, and in 1990, McDonald's entered China. In the past 30 years, China's fast food market has undergone earth-shaking changes, and everyone's income level and consumption habits have been different in the past, and the roles and status of the two have also changed. In order to stabilize their position, KFC and Madan worked continuously.
The first is to engage in marketing. The McDonald's cat bed and the recent KFC blind box are similar, both are marketing strategies for young people and based on trendy culture, and the common denominator is limited and uncertain.
McDonald's Cat's Nest was launched on December 7, 2021, and according to the official story, before December 21, you can get a random color cat nest by purchasing a mcDonald's app or Hungry Mo APP. The so-called cat nest is actually an enlarged version of the hamburger box, which can accommodate the next pet cat.
McDonald's Cat's Nest Source / McDonald's official Weibo
After the sale of 10:30 on December 7, the nation's limited 100,000 cat beds quickly ran out, and the McDonald's APP collapsed. Many netizens complained that they bought it, but then they still received the message that the restaurant asked for a refund. There are also a large number of sellers of new cat beds on idle fish, the package is fifty or sixty yuan, and a single cat nest also has the same price, and even sells more than 70 yuan to hundreds of yuan. On January 13, Shen Ran searched for Idle Fish and saw that there were still a large number of sellers selling brand new or used McDonald's cat beds at the same price as the package.
Consumers have not yet recovered from the McDonald's cat nest, and KFC launched the 35th anniversary Dimo blind box co-branded with Bubble Mart on January 4. According to the official release of the event, the Dimo family bucket package worth 99 yuan includes a Dimeo blind box, which has a total of 7 models, including a hidden model.
According to the rules, in order to collect the whole set of dolls, at least 6 packages need to be purchased, and the probability of hidden funds appearing is 1:72. Some consumers posted small tickets and bought 106 packages at a time, costing 10,494 yuan; some people said that they had received a meal service and had to eat 48 packages within 5 days.
KFC and Bubble Mart's co-branded blind box source / KFC official Weibo
To sum up, McDonald's and KFC are accustomed to using packages + peripheral forms to engage in marketing, and encounter joint models, especially with Bubble Mart, a popular fashion brand for young people, which can indeed achieve the desired effect for a period of time. However, just like this blind box incident, once the marketing scale is not properly grasped, it will lead to word-of-mouth "overturning".
The second is to push new products. If there are no special circumstances, McDonald's and KFC can have new products every month. According to the incomplete statistics of deep combustion, in 2021, KFC and McDonald's have launched dozens of new products, KFC averages 3 models a month, and McDonald's averages 2 models a month.
Some user reviews have said that KFC's new product idea is a consistent chaotic fist style. From the old burger fried chicken, to the drink dessert, to the rice bowl, there are four flavors of peach, brown sugar bobo, poplar manna, and cherry seed. McDonald's is relatively conservative, but the basic categories are also involved. In addition, compared with KFC, which also has a coffee business, McCaffe (McDonald's coffee business) has put more effort into new products.
To say that the characteristics of the two new products, one is seasonal, peach, strawberry and cherry blossom flavors in the spring, coconut flavor in the summer, hot milk tea and hot chocolate in the winter. The second is to love to play limited, including limited time periods and limited regional supply.
The third is localization. Turning over the KFC menu, it is difficult to imagine that more than 30 years ago, the menu of the first KFC in Beijing had only two pieces of sucking finger original chicken, chicken juice mashed potatoes, vegetable salad, small meal package set, and a jar of Beijing five-star beer that followed the local customs.
Today, KFC has made it clear that it is a set of local customs. Needless to say, there are also old Beijing chicken rolls, soy milk fritters, skinny egg lean porridge, fried sauce noodles, hot dry noodles, snail powder and other Chinese foods. McDonald's is not to be outdone, out of the meat sandwich steamed buns and oil spicy seeds new land, bacon vegetable burger also has plum button meat.
All indications are that KFC and McDonald's have made many attempts to cater to local audiences, integrate into the Chinese market and stimulate consumption. But some marketing events and new products have only become a temporary gimmick. In the end, the only products that are praised and asked to return by consumers are those products that really have excellent tastes, such as KFC's tender beef wufang and McDonald's green peppercorn half chicken. Gimmicks are hard to bring word of mouth, especially in the catering industry.
Competition was fierce and performance was down, with KFC and McDonald's slowing down
It is still unknown how much marketing and frequent new products can alleviate anxiety. Under the epidemic, the entire catering industry has been impacted, and the results are also reflected in the financial reports of KFC and McDonald's.
In 2020, KFC parent company Yum China's net profit performance was stable at $784 million, an increase of 9.96% year-on-year, but revenue fell for the first time in three years, with total revenue of $8.26 billion, down 6% year-on-year, and KFC's system sales also fell by 5%.
McDonald's net profit attributable to common shareholders for fiscal 2020 was $4.730 billion, down 21.49% year-over-year, and operating income was $19.208 billion, down 8.87% year-over-year. McDonald's independent data for the Chinese market was not disclosed, but in October 2020, McDonald's China CEO Zhang Jiayin told the media that McDonald's business in China was in a recovery period. It can be seen that the epidemic has also brought fluctuations to the Chinese market of McDonald's.
In 2021, the financial data of the two picked up slightly. However, as Yum China CFO Yang Jiawei said, it is still time before same-store sales return to 2019 levels. Yum China's total revenue for the first three quarters was US$2.56 billion, US$2.45 billion and US$2.55 billion, respectively, and McDonald's's total revenue in the first three quarters was US$5.12 billion, US$5.888 billion and US$6.2 billion, respectively, and both of them increased year-on-year.
It's not just the pandemic that's affecting the performance of the data. Li Yingtao, a senior analyst in the new consumer industry at Analysys, analyzed that both were originally positioned in the United States as the cheapest fast food, with low gross profit and relatively low profit margins. When KFC and McDonald's first entered China in the last century, the pricing was still based on American standards, and the American "fast food" instantly became China's "luxury goods", with extremely high gross profit margins. However, in recent years, relative to China's consumption level, the price of the two has not risen much, and "luxury goods" have gradually become "ordinary fast food", and gross profit margins will naturally decline.
Competition from the outside has also had to be taken seriously. As the leader of American fast food, when the two entered the Chinese market, the domestic catering industry had no concept of standardized store opening mode, operation mode, product research and development model, and distribution mode, and naturally there was no brand that could compete with it in the field of fast food.
In recent years, the rise of the Chinese fast food industry, many industry insiders said that in the same category, there is still no role that can compete with KFC McDonald's, but Chinese fast food will form a certain impact on the two.
According to the "Analysis of the Operation Status and Future Development Trend of China's Fast Food Industry in 2021" released by Zhiyan Consulting, there were 1.103 million fast food stores in China in the first quarter of 2021, of which the number of Chinese fast food stores was 951,000 and the number of Western fast food stores was 152,000. The number of Chinese fast food stores accounts for 86% of the total number of stores in the fast food industry, and the number of Western fast food stores accounts for 14% of the total number of stores in the fast food industry.
The report explains that the concept of fast food was introduced into China by Western-style fast food represented by KFC and McDonald's, but the up-and-coming Chinese fast food developed rapidly, and the number of stores soon surpassed That-style fast food.
For example, Li Yingtao gave examples of noodles, noodles, dumplings, fast food, and chain brands in the northwest, southwest, and central China, and the rice categories include southwest fast food village base, Anhui laoxiang chicken, noodle categories such as Maran ramen in the northwest, Hefu noodles in Jiangsu, and so on.
Compared with fries burgers, Chinese fast food has a consumer base, it is easier to standardize, and there are many subdivided categories, and in the same fast food mode, Chinese can be more balanced by quantity.
"Tangled." Summarizing the biggest problems of KFC and McDonald's in the Chinese market at present, Li Yingtao said. "On the one hand, the two want to maintain the same brand positioning as the US headquarters, but this means that the two will become more and more low-end in the Chinese market, and the gross profit margin will become lower and lower." On the other hand, the two want to do brand upgrades, stabilize their brand image and position in the Past in the Chinese market, implement localization, so they constantly upgrade stores, increase product prices, and continue to launch localized products, but this is contrary to the original positioning and disconnected from other markets around the world. Therefore, in an increasingly competitive market like China, entanglement and inability to issue full operations are bound to fluctuate or even decline in performance. ”
The role of KFC and McDonald's in the minds of consumers has also changed. On the one hand, the concept of a healthy diet with low sugar and low fat is becoming mainstream, and 30 years ago, fried can also be used as an advantage of KFC McDonald's, bringing a hint of spice to the Chinese catering market, but now it is a representative of "junk food".
On the other hand, consumers have more choices, and there is no longer a sense of ceremony in KFC and McDonald's. Frequent new products, consumer aesthetic fatigue at the same time, there is no less complaint. The most controversial new product of McDonald's in 2021 is the meat sandwich steamed bun launched in January, and some netizens said that the advertising picture is full of meat, but the meat in the physical object is "thin like a layer of sauce".
Source of comments on McDonald's meat sandwich steamed buns / McDonald's official Weibo
The reason for Xiaosha's diminishing loyalty to KFC and McDonald's is simple: it's not so tasty anymore. "Some classics can be eaten occasionally, and many of the new products are dark dishes, and do you dare to eat spicy spicy new places?" There are not a few people who have the same feelings as Xiaosha, in the official Weibo comment area, it is common for a group of consumers to bitterly advise KFC and McDonald's to make chicken well and not to engage in "crooked doors".
Declining product attractiveness, the rise of external fast food brands, and the impact of the epidemic have made KFC and McDonald's more and more distant from their heyday.
A momentary anxiety, or a prolonged crisis?
Industry insiders believe that the periodic anxiety of KFC and McDonald's, or the decline in data is normal, in fact, from the overall point of view, as a company with a long brand history, a large volume and strong brand recognition, they are still relatively stable. Launching new products and opening stores will not cost them as much as start-ups.
Li Yingtao also said that at present, the crisis of KFC and McDonald's is a situation that will appear after the brand has developed to a certain extent and touched the ceiling, which is a unique performance of the maturity period.
For future development, Yang Jiawei also mentioned that in the short term, the top priority of the business is to redirect consumers back to the store, and also plans to invest more in marketing, value positioning, digital interaction and customer service.
Indeed, Yum China's first quarter 2021 earnings report said it expects to open 1,000 stores in 2021. From this point of view, even in the face of the pressure of the Chinese market and the uncertainty of the epidemic, KFC still has the ability to open physical stores, and it is necessary to continue to open physical stores.
Zhuang Shuai, founder of Bailian Consulting, said that physical stores are still the core competitiveness of the catering industry and are difficult to be replaced by online. "This is the basis of trust in food safety, and it will not be subverted for a long time." Plus KFC and McDonald's are in-store ready-made foods that are more suitable for dine-in, so continuing to open stores is the right thing for them.
"Affordable" and "fast food" are also advantages in the catering industry. Li Yingtao stressed that for enterprises, affordable fast food or high-end catering is not good or bad, affordable fast food wins in the number of stores, the market sinking is thorough enough, the scale of revenue is large, although the gross profit margin is low, but in the total profit is still outperforming most catering brands, therefore, with the scale advantage, the world's largest catering group is almost all "affordable fast food" positioning.
Source / unsplash
What is the most effective way to push new products?
One thing is certain, KFC and McDonald's have strong capabilities in new product research and development, and in the face of four-way attacks, presumably the new product strategy is also a part that they dare not relax. Zhuang Shuai believes that the ability to scale, standardize and develop new products are the advantages accumulated by KFC and McDonald's over the years. "But sometimes it can be counterproductive, because I don't understand the consumer, or I misjudge the stage of competition, blindly innovate and market, and the response will certainly not be too good."
Judging from consumer feedback, most of the "ineffective new" caused by lack of understanding is related to localized products, McDonald's meat sandwich bun is a typical, and KFC has been criticized as "less and less like American fast food restaurants, but Chinese restaurants.".
Li Yingtao pointed out that excessive localization is risky, and localized products should still conform to its basic positioning, and it should be consistent with the supply chain and operation mode, "blurring the positioning, may become different, and the gain is not worth the loss." ”
Positioning is especially important for "old brands". New brands can still fly themselves in research and development and try more, but for brands with industry status such as KFC and McDonald's, insisting on innovation based on core categories is far more important and more effective than innovation from scratch.
"One of the core magic weapons for chain catering brands to win is the product portfolio, that is, the classic and stable core category + strategic innovative products + product innovation that chases hot spots, of which the principle is to develop more core categories through product innovation and cultivation." Li Yingtao explained. "At present, both have several strong core categories, but in recent years, there have been very few products that can grow into new core categories. Coupled with the continuous external hot spots, the two are too much in the pursuit of hot product innovation, and slightly insufficient in the trend and strategic product innovation in line with their positioning. ”
Therefore, the new return to the new, the landing point should still be in the development of the core category, and whether the new product can develop into the core category. To put it simply: how to play the sucking finger original chicken out of the flower, and whether the new product can become the next sucking finger original chicken.
However, some industry insiders are optimistic about the future of KFC and McDonald's. The "Analysis of the Operation Status and Future Development Trend of China's Fast Food Industry in 2021" also mentions that most Western-style fast food companies have a stronger ability to overcome crises because of their perfect operating models. So, judging by the current situation and actions of KFC and McDonald's, they seem to have the ability to handle the current fluctuations.
Back in 1987, KFC opened its first store in Beijing, and people's daily set aside a section for it. "The gongs and drums are noisy, the firecrackers are firing in unison, the red flags are displayed, and there are many people." This sentence in Song Dandan's sketch is not exaggerated at all to describe the scene at that time.
More than 30 years later, "middle-aged anxiety" has arrived, and for KFC and McDonald's, solving the current problems can not turn anxiety into crisis.
Note: At the request of the interviewee, Xiaosha is a pseudonym.