The McDonald’s Corporation is the largest “single brand” fast food chain on the planet with over 31,000 restaurants in 119 countries and territories. McDonald’s serves more than 47,000,000 customers daily and brings in annual revenues exceeding $22 billion. With multiple brands, and more than 37,000 restaurants in 110 countries and territories, Yum! Brands is the largest restaurant company in the world. Their brands include KFC, Taco Bell, Pizza Hut, and Long John Silvers. Both Yum! Brands and McDonald’s Corporation have systematically injected themselves into the cultures of countries ranging from Algeria to New Zealand. Why are these companies so successful at expanding internationally?
The most obvious reason is that these companies quickly and efficiently produce mass quantities of food at relatively inexpensive prices. Is it the novelty of Western food and culture combined with low price and convenience that entice foreign consumers? These are significant reasons for the success of McDonald’s and Yum! Brands, but a closer look at these companies operations globally, but specifically in China, add to the recipe. In 2009, Yum! Brands opened four new restaurants outside of the United States everyday. With close to 3,000 KFC restaurants already in mainland China, Yum! Brands continues to open a new restaurant at a rate close to one a day. McDonald’s isn’t expanding nearly as quickly, and operates about 800 restaurants in China. No one can scoff at a $22 billion a year company, but it’s clear that McDonald’s could pick up their game in China. Come on Ronald, step up. Yum! Brands is rapidly stealing more of the Chinese market share than the Hamburglar.
Perhaps, the sleeping dragon has woken up with an intense hunger for the Colonel’s secret recipe. More likely though, it isn’t the Colonel’s original recipe Chinese consumers are after. In fact, the significant growth of Yum! Brands and McDonald’s around the world is a result of the localization of their business models. In India, instead of the Big Mac, McDonald’s sells the Maharaja Mac made with lamb or chicken since Hindus don’t eat beef. Then there’s beer for the Germans, McLobster rolls for Canadians, rice and beans for the Costa Ricans, and shrimp nuggets for those seafood lovers in Japan. Yum! Brands has modified the KFC menu in China as well. Besides buckets of fried chicken, customers can order vegetables, bamboo shoots and rice porridge. French fries and coleslaw just don’t cut it for the Chinese.
These corporations understand building an empire. While countries invade other countries resulting in high deficits and turmoil, corporations seek profits. Private entities, fast food companies specifically, accept the locals and adapt to meet the tastes of their market. Yum! Brands and the McDonald’s Corporation don’t push their American menus in foreign markets. Is it out of respect for cultures rooted in hundreds and thousands of years of history? No. Clearly, localized menus increase the viability and profits of their restaurants. American executives of both chains likely prefer French fries to bamboo shoots, but building an empire requires substitutions where necessary. When in Rome do as the Romans do. When in China, sell rice burgers and soup.
