ase 3–6: McDonald’s and
C
KFC: Recipes for Success in China

Quick Service Restaurant Giants in the Middle Kingdom
In 2008, McDonald’s and KFC were the two largest quickservice restaurants (QSR) in the world, with 31,999 and
15,580 outlets, respectively.1 Both chains were renowned for their broad spectrum of consumers on a global basis.
McDonald’s appeared to be a clear winner in international expansion. It had over 17,500 international outlets and was the first corporation to set up a solid foundation for international franchising. It spearheaded global expansion with its first overseas outlet in Canada in 1967, and entered Japan in 1971.2 McDonald’s outlets had tremendous success in Japan—despite the difference in culture— with record-breaking daily sales and speed of expansion in the initial stage.3
KFC also started international expansion early, opening its first overseas outlet in England in 1964. However, it was given a bumpy ride when it began to penetrate the market in Asia. The Japanese outlets were far less successful than McDonald’s and only started to make a profit in 1976, six years after KFC entered Japan. KFC outlets opened in Hong Kong in 1973 but were all closed down within two years. The company would eventually win the confidence of Hong Kong customers ten years after its first entry. In Taiwan it experienced relatively smoother development, although KFC headquarters was to spend a huge amount of money and effort in order to get the ownership back from its joint venture partners at a later stage.4
This case was written by Gabriel Szulanski, Professor of Strategy at INSEAD, Weiru Chen, Assistant Professor of Strategy, and
Jennifer Lee, Research Associate. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. The