KFC China: Building Competitive Advantages through Digitalization

Since entering China in 1987 with its first restaurant in Beijing, KFC has been a great success and become the largest QSR in the country. In 2015, Joey Wat was named chief executive officer of KFC China. In the following year, Yum China (NYSE: YUMC) spun off from Yum! Brands and became an independent, publicly traded company. To expand KFC China's business one step further, Joey Wat had to navigate through a rapidly changing and increasingly competitive landscape. With rising economy and personal income, many more fast-food chains and snack choices entered the market and intensified the competition. Moreover, consumers were increasingly attracted to not only healthy diets, but also enjoyable consumption experience. As Gen-Z customers becoming the largest consumer base, they have shifted their focus more on value, personalized experience and sense of engagement, beyond just affordable and fast food. For KFC, other issues were added to the challenge too: a high employee turnover rate, rising rent and labor costs. With highly standardized products and a stable ticket average, how should KFC move forward amid the new and challenging dynamics to achieve a breakthrough? KFC China had started its digital ecosystem early and built up powerful digital capabilities. Under Joey Wat's leadership, KFC China made various attempts to drive productivity, reduce costs and constantly improve consumer experience. How did digitalization help with these accomplishments? How did KFC China carry out the digitalization? Would digitalization continue to benefit future business?