China Food

70 year old KFC, the future depends on tea?

rural foundation and Haidilao opened tea shops one after another, and Xicha and Naixue reduced their prices. When the new tea market fell into chaos, the 70 year old KFC also stepped in. Recently, the first store of KFC’s new brand “Grandpa free tea” landed in Suzhou. Will it be the new enemy of tea lovers?



A few days ago, the new tea drinking circle set off a new wave: foreign fast food giant KFC also began to make tea.
It is reported that KFC’s first tea shop, which has just landed in Suzhou Lvbao square, is called “Grandpa free tea”, and focuses on the new fashion of “innovative rice milk tea” and “fruit tea” in the south of the Yangtze River. At present, the official platform of KFC has not released relevant information.
KFC selling milk tea is not new. However, when the new tea industry has reached the extreme, KFC, which is 70 years old this year, has begun to incubate new brands and opened its first tea shop, which makes people wonder: Despite the blessing of Yum China, how far can KFC’s new brand go?
“Grandpa free tea” is online
On social media, the “Grandpa free tea” that just opened a store has attracted users’ attention. Caijing Tianxia weekly found that as of July 5, there were more than 300 notes related to “Grandpa’s free tea” in Xiaohong book.
Open the ordering applet of Grandpa free tea. On its home page, the store products are divided into four series, including innovative rice milk tea series, pop juice three lemon tea series, super meat and fruit tea series and special dessert series. The main ingredients of “rice milk tea” in the store have a strong regional style of Suzhou, such as bamboo cane horseshoe, orange red cake and chicken head rice; The ingredients of “fruit tea” have more characteristics of online popularity, such as guava and oil Mandarin, which are sometimes popular. In addition to pink peaches and super meat, which are the main popular concepts, there are also classic drinks such as Yang Zhi manna and black sugar pearl milk tea, which can be described as a large collection of “Hot Pop”.
(“Grandpa free tea” product, image / screenshot of applet)
Compared with other new tea brands, the price of “Grandpa free tea” is relatively “people-friendly”. Among the four most popular drinks, the price of mangmangmang Yangzhi manna smoothie is up to 19 yuan / cup without additional ingredients, while the price of glutinous orange red cake rice milk tea, summer black grape super meat and pink peach super meat is 16 yuan / cup.
In addition, local netizens said that on the first day of opening on June 29, the store also launched a promotional activity of 9.9 yuan / cup. The pricing of drinks is basically 13-23 yuan, and the “affordable choice” series is also listed separately. In addition, the store also sells ice cream and small fresh meat pastries, egg tart, raw coconut Swiss rolls and other snacks.
The logo of “Grandpa free tea” has also been made into the cartoon version of the original KFC colonel. The character’s iconic glasses and beard are still there, but his clothes are changed into Chinese style, holding a milk tea cup in his hand and powder Blusher on his face. In addition to the pink color of the logo, the decoration of the store has also been changed to pink and green. There is also a carved screen design at the entrance. “The decoration of the store has a sense of atmosphere, and the charm of Jiangnan is full, which is very suitable for clocking in and taking photos with sisters.” A consumer said in his notes.
KFC has been deeply involved in the Chinese market for 35 years since its landing on Qianmen Street in Beijing in 1987. During this period, KFC’s love for “localization” and “online celebrity marketing” has become a prominent feature in the Chinese market. KFC’s new “Grandpa free tea” also reflects these two characteristics. However, in recent years, the new-style tea shops with “tea + baking” products as the main products have become white hot. Now, KFC has a new brand in it. What is its purpose?
(picture / screenshot of little red book platform)
After testing water for nearly three years, why do you concentrate on drinking tea now?
In fact, KFC is not a “newcomer” in the tea circle.
As early as February 2019, when KFC opened its independent TIFFANY BLUE dessert station, it began to sell new tea products, which was once regarded as a signal that KFC was going to enter the tea market at that time. Then, KFC launched 10 new tea products in four series, namely, local oolong tea, Jiulong Jinyu dirty tea, Jiulong Jinyu milk tea and Jiulong Jinyu sour granny tea, at some dessert stations in China. Since this year, KFC has stepped up its efforts in new tea, and has launched a variety of products such as mashed taro hot milk tea and fried juice three lemon oil Citrus tea.
According to the 2020 new tea white paper, the period from 2018 to 2020 is in the period of new tea 2.0, when various tea brands focus on the integration of categories and multiple scenes. At that time, Naixue launched tavern and DreamWorks, Xicha opened a lab shop, Lele tea created a tea factory, and Credit Suisse coffee launched deer tea. At the same time, KFC tried to integrate new tea drinks.
Since 2020, the new tea has ushered in the 3.0 period, and the original top brands have ushered in digital changes in the whole system, including intensive membership system, entry into e-commerce platforms, online small program shopping and digital operation. At the same time, more and more enterprises began to cross-border new tea.
“Meal + drink” has also become the choice of many meal enterprises in recent years. Rural base opened its first specialty tea shop in Chongqing last year, selling hand-made tea; In February last year, Haidilao also opened new milk tea shops in Shanghai and Nanjing, launching four types of fruit tea and two types of milk tea to support consumers not to eat hot-pot/" 22375 rel="nofollow" target="_self">hot pot and only order milk tea. This year, the local chicken, which rushed to the market, also made its own drinks, adding three new tea drinks: chicken cage lemon tea, fresh raw coconut milk and guava green tea.
Wu Daiqi, CEO of Shenzhen siqisheng company, told Caijing Tianxia weekly, “KFC began to become an independent tea brand with the purpose of coping with competition. The rapid development of new tea and coffee chain formats has affected the consumption of KFC afternoon tea and business exchanges to a certain extent. Moreover, compared with other catering chains, the gross profit of tea chain is still relatively high, and the operation difficulty is relatively low.”
Catering enterprises take the category of “drinks” alone and operate as an independent brand, which is also to tap more potential revenue markets in the current era of new tea popularity. After all, the main consumption force of new tea is the young people with the most consumption potential. Building new tea brands and independent stores can also bring new growth points to catering giants, enhance market vitality and expand more consumption scenarios. However, the new tea drinking track itself has been quite crowded, and their attempts, whether Haidilao or rural base, have not yet caused much splash.
In this regard, wenzhihong, a chain industry expert and general manager of Hehong consulting, believes that in the previous “meal + drink” model, “drink” is more a part of brand expansion and extension, and will also be limited by offline restaurant stores.
Now, KFC, itself a fast-food chain giant, will open tea shops next, which may bring more exploration significance. “Now KFC’s tea has an independent brand store. Even if the store is small, you can go to the small store Dalian lock, which has more market space. In the future, you can achieve rapid expansion through joining the brand.” Wen Zhihong said.
Zhang Dexin, editor in chief of the China culture and tourism innovation and entrepreneurship think tank series, pointed out that KFC has rich experience and resources, so it also has more room for trial and error. If it succeeds, it will have new growth points, and if it fails, it will be “harmless”. “KFC pays more attention to young people, and follows the footsteps of young people to expand its brand image to young people, making the original KFC grandfather younger.”
Yum depends on KFC in the future,
KFC’s future depends on tea?
According to the latest financial report, in the first quarter of 2022, KFC parent company Yum China delivered a poor performance. At the same time, the company also expected to record an operating loss in the second quarter.
Data show that in the first quarter of this year, yum China’s revenue was $2.67 billion, an increase of 4% year-on-year; The adjusted operating profit was 193 million US dollars, a year-on-year decrease of 44%; The adjusted net profit was US $102 million, a year-on-year decrease of 56%.
According to public information, yum China was originally the Chinese business department of Yum global catering group, and has the exclusive right to operate KFC, Pizza Hut and Taco Bell in China. It entered China in 1987, was officially split in November 2016, and was listed on the New York Stock Exchange. In 2020, the company was listed on the Hong Kong stock exchange again.
It has to be said that the success and performance pillar of Yum China are inseparable from KFC. In 2021, KFC and pizza hut, the two flagship brands of Yum China, contributed about US $7billion and US $2.109 billion of operating revenue respectively, accounting for 92% of its total revenue, and brought us $827 million and US $111 million of operating profits respectively. KFC alone accounted for 71% of the revenue.
In fact, since 2018, yum China’s operating profit has mainly come from KFC. As of July 2020, before its listing in Hong Kong stocks, yum China had tens of thousands of stores, of which more than six were KFC.
There are many catering formats that Yum China has been involved in. According to the official website, yum China currently operates several catering brands at the same time, including KFC, pizza hut, Taco Bell, little sheep, Huang Jihuang, coffii & joy, Lavazza, and Shaofan who recently joined the “Yum family”. Among these brands, coffii & joy is a coffee brand incubated by yum China itself, and Lavazza is a coffee brand introduced from Italy. Yum China is still missing in the tea track.
It is worth mentioning that Yum China has always wanted to develop domestic localized brands, but it has not been very successful. Before “shaofaner”, yum China had just completely shut down its 17 year old “Oriental White” Chinese fast food brand. Perhaps, after the failure of Yum China in Dongfang Baibai, this time it is preparing to test the water in the huge domestic tea market through the new tea brand.
“The reason why we want to use the name of KFC to enter the new tea industry, rather than the parent company Yum China behind it, is that KFC is much stronger in both brand awareness and market conditions, and can play a good endorsement effect. In addition, KFC’s store influence, supply chain support, operation management and digital system can give great advantages to the new brand. If we do well, it means that Yum China’s brand family will Add another member. ” Wen Zhihong said.
However, this time, compared with the high-profile launch of Dongfang Jibai, yum China is more cautious in its action. It just incubates a brand from KFC’s original tea product system and operates its stores independently.
“Many enterprises’ investment or cross-border behavior is’ follow the trend ‘, lacking in-depth understanding of the industry and judgment of their own core competitiveness. A hot industry may be a red sea, and only by being’ specialized and innovative ‘in this field can it win. However, KFC still has advantages in making tea this time, whether it is the ability of chain operation, supply chain, the drive of big brands, and scale advantages, are more prominent.” Wu Daiqi believes.
“You don’t have to make money to make tea, as long as you don’t lose. The key is that it is a tool for the whole customer stickiness, a channel for upgrading the service system, and a very important means to form differentiated advantages.” Chinese food industry analyst Zhu danpeng told Caijing Tianxia weekly.
Original title: KFC, 70, is involved in the chaos of new tea drinking
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