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REALISING the huge market potential in China, Kentucky Fried Chicken (KFC) will be pumping more than US$200 million into 200 new outlets throughout the mainland in the next five years.

  While the existing outlets would contribute only a fraction to the company's regional forecast of $1 billion in sales this year, it was still the fastest growing market in the world, said KFC Asia-Pacific president Tim Lane.

  ''Both the number of stores and sales have doubled every year for the past three years,'' he said. Sales for each store were increasing 30 per cent a year.

  KFC opened its first fast food store in Beijing in 1987. It now operates 28 stores in nine cities.

  By the end of this year, $50 million will go towards another 20 outlets. Locations include Tianjin, Shenzhen, Shenyang and Zhuhai.

  Mr Lane said KFC's success was partly a result of attaining reliable Chinese partners for joint ventures.

  Of the nine cities in which the firm operates, seven involve joint ventures with state-owned entities.

  China's appetite for Western fast food generates $200 million a year, with KFC accounting for a third of the figure.

  The company serves an average of 100,000 people a day, with 60 per cent of the week's business generated during the weekends.

  Mr Lane said competition had heightened and that this was a plus factor.

   ''Our business improves when Western competitors are clustered together. The concentration of trade zones creates [customer] traffic.''   He said rising property prices, especially rents, were a major concern.

   Rental costs for KFC in Shanghai have more than doubled in the past three years. Furthermore, development projects in the Bund might force the relocation of its Shanghai store.

  Mr Lane said labour also accounted for a large portion of expenses. Training of service staff took about a month, while it took two to three years to train a manager.

  KFC employs 3,000 in China and that figure is expected to rise to 5,000 with outlet expansion.

  ''The cost pressure on our business has been great, because inflation has gone into double digit figures during the past couple of years,'' he said.

  KFC's prices in Shanghai were raised 15 per cent this year, about the same as the city's 15 per cent inflation rate.

  But Mr Lane maintained that KFC was affordable for most, with a meal typically costing 13 yuan (about HK$11.60).

  Company service staff are paid about 300 yuan to 500 yuan a month.

  ''I won't talk profit, but let's say we are not a money-losing proposition in China,'' Mr Lane said.



KFC takes big bite out of fast food market