KFC And McDonald’s O2O Facelift In China

After sagging profits and damaging food safety scandals, KFC and McDonald’s in China are trying to attract China’s younger generation by introducing tech savvy features into their restaurants, Forbes reports.

This week (July 1), Alibaba and KFC China came together to enable KFC customers to pay by scanning barcodes using Alipay’s smartphone app. KFC follows in the steps of Walmart and Carrefour,which each began accepting Alipay in 2015.

With 5,000 restaurants across 900 cities, KFC is the largest food delivery business in China. KFC says that 2,200 of its stores already have Wi-Fi, while 500 stores now have an online menu app.

The partnership ignites with 700 KFC stores in Shanghai and nearby Zhejiang province now accepting Alipay and will extend to the rest of its chain food restaurants nationwide. Both partners aim to build up their O2O business strategy, the newest big thing in China right now. According to a Barclays report, the O2O market is forecasted to grow 32 percent in 2015 to 309 billion yuan ($49.8 billion).

In April, Forbes reported that McDonald’s closed 350 poorly performing stores in Japan, the United States and China in the first three months of 2015 following disappointing profits. A shrink in the number of McDonald’s U.S. stores hasn’t happened since at least 1970, the Associated Press reports.

In a May press release, McDonald’s President and Chief Executive Officer Steve Easterbrook said, “As we look to shape McDonald’s future as a modern, progressive burger company, our priorities are threefold — driving operational growth, returning excitement to our brand and unlocking financial value.”

In China, McDonald’s hopes to excite its young customers with its “Create Your Taste” program that lets customers customize their hamburgers via kiosks. Initially launched in the U.S., the program has been expanded there since late 2015. In China, however, the program will be run in Shanghai only in three of its stores and will expand next year in Beijing and Shenzhen based on how successful it is.

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