The CEO behind KFC and Taco Bell in China says Chinese customers still want American brands

Emma HinchliffeBy Emma HinchliffeMost Powerful Women Editor
Emma HinchliffeMost Powerful Women Editor

Emma Hinchliffe is Fortune’s Most Powerful Women editor, overseeing editorial for the longstanding franchise. As a senior writer at Fortune, Emma has covered women in business and gender-lens news across business, politics, and culture. She is the lead author of the Most Powerful Women Daily newsletter (formerly the Broadsheet), Fortune’s daily missive for and about the women leading the business world.

Joey AbramsBy Joey AbramsAssociate Production Editor
Joey AbramsAssociate Production Editor

    Joey Abrams is the associate production editor at Fortune.

    Joey Wat
    Yum China CEO Joey Wat at the Fortune Global Forum in Abu Dhabi.
    Fortune

    Good morning, Broadsheet readers! The GOP presidential contest is down to two, Spelman University receives a $100 million donation, and the CEO behind KFC and Taco Bell in China says Chinese customers are still buying from American brands. Have a productive Monday!

    – Fast food politics. Joey Wat was born in China and moved to Hong Kong at age 9. For 10 years of her career, she worked in the U.K., turning around the brands Superdrug and Savers. Then she got a call inviting her to rehabilitate another brand: KFC China.

    In 2016, Yum! Brands, the company behind KFC, Taco Bell, and Pizza Hut, decided to spin off the China versions of its restaurants to form Yum China. KFC stores needed to be improved and the company had to build a digital business. The opportunity came at the perfect time for Wat; she wanted to move back to China so her U.K.-raised son could better learn the language. In 2018, Wat became CEO of the new company Yum China, now with $9.5 billion in revenue. The job landed her at No. 83 on Fortune‘s Most Powerful Women list last year.

    Yum! Brands spun off its China restaurants because they operated under an entirely different business model, Wat explained on a recent episode of the Fortune podcast Leadership Next. While Taco Bell and Pizza Hut locations are usually franchised in the U.S., Yum China operates the majority of its own locations.

    Joey Wat
    Yum China CEO Joey Wat at the Fortune Global Forum in Abu Dhabi.
    Fortune

    There are other differences too. About 60% of food sold at China’s KFCs is made in an oven, rather than fried. Outside China, not all KFCs have ovens in their kitchens, Wat says. Today, Yum China has 14,000 restaurants in 1,900 cities. About 10,000 of those restaurants are KFCs—about one-third of all KFC locations in the world.

    On the podcast, Fortune CEO Alan Murray points out that Wat is “running a bunch of very American brands” at a Chinese company. Wat says there’s no sign that Chinese customers are turning away from American brands amid U.S.-China tension.

    Many international brands have reported depressed revenue from Chinese consumers, blaming the country’s slow emergence from COVID following easing of restrictions in late 2022. Wat argues that, even in a tough consumer economy, there’s still plenty of runway ahead for a fast-food company that reaches one-third of China’s population.

    Listen to the full episode on Apple Podcasts and Spotify.

    Emma Hinchliffe
    emma.hinchliffe@fortune.com
    @_emmahinchliffe

    The Broadsheet is Fortune’s newsletter for and about the world’s most powerful women. Subscribe here.

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    PARTING WORDS

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