Joey Wat - Yum! China | KPMG | GLOBAL
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Joey Wat – Yum China

Joey Wat – Yum China

Yum China CEO Joey Wat reveals how the fast food giant keeps up with increasingly demanding consumers

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Partner, Global Chair - Consumer & Retail, Partner-in-Charge - High Growth Markets

KPMG in Canada

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Joey Wat Yum China CEO

You worked in a Chinese restaurant for three years when you were younger. What did you learn from that?

Empathy. When I took over KFC, what’s the first thing I did? Introduce very heavily subsidized staff meals. When I worked in a restaurant, I knew how important that meal was for me. In Asia, vegetables are very cheap so most families with tight budgets eat them every day. In reality, young people need meat and fried white meat is very good meat. That’s how I became strong, physically, working in restaurants. The uniform is important too. Give them a witty, nice uniform and a new T-shirt whenever there’s a promotion. From a strategic point of view this might seem unimportant, but do staff care about your strategy? They care about their schedule, uniform, pay and how you treat them. No matter who I am, today or in the future, there’s always that little girl in me, working in a restaurant.

What are the biggest challenges and opportunities for Yum China?

Digital and delivery. The entire marketing and customer landscape is changing so fast. Take marketing for example. In the past, the channel was king – so TV advertising was king – now in the digital world, content is king. The channels have become so fragmented – digital TV, websites, social media, key opinion leaders... So you won’t go very far without content. And content doesn’t mean you have to write something – it could be a product that is so quirky, people find it exciting. Delivery is becoming a lifestyle in China but the critical issue is labor cost. In China, labor costs are relatively low, so for the customer, it comes down to a trade-off between their time and the delivery cost. For many consumers, their time is expensive and delivery is comparatively cheap.

What changes do you see in the Chinese consumer’s behavior?

I see two distinct trends. The first is that the Chinese consumer is so horribly difficult to please when it comes to new products. In America, you can sell a new product for a year and the customer is happy. Here, it’s hard to keep them happy for four weeks. With so many choices in China, customers expect something new every time they visit KFC. That’s very challenging. The other trend is that customers are expecting more and to pay less, so we have to be very careful with our value proposition. We need healthy margins, but it is dangerous to be too greedy.

Is there room for Yum China to grow?

Absolutely. We have put the number out there of running 20,000 restaurants in the longer term. We have over 8,000 restaurants right now, and last year we opened 691. We have multiple flexible store and business models, KFC and Pizza Hut have big stores, smaller stores, convenience stores, so that opens up a lot of opportunities in the future.

How do traditional retailers compete with disruptive new entrants?

We need to be very savvy with digital and delivery. We launched mobile payment back in 2015 and began to build our customer relationship management. Right now, we have 140 million members through our loyalty apps. We know how to use digital channels to spread news of our products and to engage the customers. Newcomers need to learn how to do food safety, cook good food, create products that are difficult to replicate, and control labor costs to stay viable, as well as knowing how to do digital and delivery. Learning is still the most important determinant of future success. Whoever learns the best – and fastest – will survive.

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