Dining at KFC will cost more
By Jin Jing |
November 1, 2011, Tuesday
|
Print Edition
Print Edition
A new pricing strategy of differentiation and higher raw material costs have forced fast food chain KFC to raise prices of several products in China for the second time this year.
The United States company, which owns more than 3,200 restaurants in China, said the latest price hike on mainly chicken-oriented side dishes and beverages was imposed from last Saturday. The price increase on each item is about 0.50 yuan to 1 yuan (16 US cents) on average.
It was also the second time KFC, owned by Yum! Brands Inc, have raised prices on certain products within a month after an earlier price hike on hamburgers at the end of September.
But the pricing differentiation strategy adopted by KFC has led to different product prices in one city. For example, in certain commercial hubs within a city, products are sold at higher prices while stores in community areas would sell them cheaper.
The strategy takes into account different product prices depending on store locations, restaurant rentals and business performance.
The new strategy, introduced early this year, caters to KFC's rapid growth and changing market environment.
"In some cities or particular business areas, surging store rentals have caused enormous cost pressure and consumers in different areas also have different purchasing power," KFC said.
Some analysts said the pricing differentiation would generate extra revenue as consumers would not be sensitive to minor price increase.
The United States company, which owns more than 3,200 restaurants in China, said the latest price hike on mainly chicken-oriented side dishes and beverages was imposed from last Saturday. The price increase on each item is about 0.50 yuan to 1 yuan (16 US cents) on average.
It was also the second time KFC, owned by Yum! Brands Inc, have raised prices on certain products within a month after an earlier price hike on hamburgers at the end of September.
But the pricing differentiation strategy adopted by KFC has led to different product prices in one city. For example, in certain commercial hubs within a city, products are sold at higher prices while stores in community areas would sell them cheaper.
The strategy takes into account different product prices depending on store locations, restaurant rentals and business performance.
The new strategy, introduced early this year, caters to KFC's rapid growth and changing market environment.
"In some cities or particular business areas, surging store rentals have caused enormous cost pressure and consumers in different areas also have different purchasing power," KFC said.
Some analysts said the pricing differentiation would generate extra revenue as consumers would not be sensitive to minor price increase.
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