Core Viewpoint - The pricing discrepancy between iced and hot soy milk at KFC has sparked widespread consumer confusion and criticism, with many questioning the rationale behind the higher price for iced soy milk, leading to increased customer complaints and even the removal of the iced product from some locations [2][4][6]. Pricing Discrepancy - KFC has maintained a pricing policy where iced soy milk is priced one yuan higher than hot soy milk, which has been a longstanding practice [2][7]. - Some KFC staff indicated that the difference in cup size and capacity accounts for the price variation, although specific measurements were not provided [2][7]. Customer Complaints - KFC has faced a significant number of customer complaints, with over 20,000 reported issues related to food quality, service, and order errors, indicating a gap between service quality and consumer expectations [8][9]. - Complaints include the presence of foreign objects in food, unresponsive customer service, and complicated refund processes, which have contributed to negative consumer experiences [9]. Sales Performance - Despite quality control issues, KFC continues to expand aggressively, with a reported 3% increase in sales and a 2% increase in total revenue to $5.8 billion in the first half of 2025 [11]. - The growth in sales is primarily attributed to store expansion rather than organic growth, with KFC's store count reaching 12,238 and a net addition of 295 stores in the second quarter [12]. New Market Strategies - KFC is diversifying its offerings by entering the fried chicken market with new stores branded as "Fried Chicken Brothers," indicating a strategic shift to adapt to market changes [14]. - The company is also increasing its focus on franchise operations, with a goal of having 40-50% of new stores as franchises in the coming years [12].

Group 1 - KFC has launched a new sub-brand called "KFC Fried Chicken Brothers" in Shanghai, featuring two small takeaway stores with an area of approximately 20 square meters each, focusing on delivery and self-pickup services [1][2] - The new stores offer both Chinese and Korean-style fried chicken, with an average customer spending of around 30 yuan, and operate from 11 AM to 2 AM, targeting the late-night snack market [1][2] - The trademark for "KFC Fried Chicken Brothers" is registered under KFC International Holdings LLC, with the application date set for July 2, 2025, and is currently awaiting substantive examination [2] Group 2 - The fried chicken market in China has seen significant growth, with the market size increasing from 300.066 billion yuan in 2019 to 479.6 billion yuan in 2024, reflecting a compound annual growth rate of 8.13% [2] - It is projected that the market size will further expand to 921.663 billion yuan between 2025 and 2028, indicating strong future growth potential in the sector [2] - KFC has previously diversified its brand portfolio with other sub-brands like KCOFFEE and KPRO, each targeting different market segments, which has contributed positively to customer traffic and profitability [3]

Core Viewpoint - KFC has launched a new sub-brand called "KFC Fried Chicken Brothers" in Shanghai, targeting the fried chicken segment with both Chinese and Korean styles [1][3][4] Sub-brand Details - The new brand includes two stores: one focusing on Chinese fried chicken and the other on Korean fried chicken, both operating from 11:00 AM to 2:00 AM, catering to late-night dining [4][6] - The Chinese fried chicken menu features items like fried chicken legs and various skewers, with an average spending of approximately 27 yuan per person [4] - The Korean fried chicken menu emphasizes sauces, offering eight different sauce options, with an average spending of around 30 yuan per person [6] Market Context - The fried chicken market in China is projected to grow from 300 billion yuan in 2019 to 479.6 billion yuan by 2024, with a compound annual growth rate of 8.13% [8] - KFC aims to capture the potential opportunities in the fried chicken segment by leveraging its brand recognition and existing supply chain [10][16] Competitive Landscape - KFC Fried Chicken Brothers faces competition from established local brands in the Chinese fried chicken market, which have seen significant growth [13][14] - The brand's competitive advantage lies in its association with KFC, which can help it gain consumer trust quickly [16] Brand Strategy - KFC has been diversifying its brand portfolio with various sub-brands, including KCOFFEE and KPRO, to explore different market opportunities [17][19] - The company is expanding its sub-brands after testing viable business models, indicating confidence in their growth potential [19][22]