Yum China's Innovation Center could help fend off US transplants

Dive Brief:

Yum China Holdings recently opened its Innovation Center in downtown Shanghai, the home of its company headquarters, according to a press release. The 27,000-square-foot building was created specifically to test fresh concepts in on-site kitchens and quickly bring them to market. The facility includes sensory test areas, multiple labs tackling quality assurance and restaurant equipment for content production, packaging and store prototypes.
Yum China CEO Joey Wat stated in the release that product innovation is what enables Yum China to thrive in the ever-changing industry and helps with the company's goal to enhance customer experiences.
On average, the company launches more than 300 new products, such as KFC's Okinawa sea salt ice cream and Pizza Hut's durian pizza, across its portfolio each year.

Dive Insight:

China has been fertile territory for fast food experimentation of late, with U.S. brands quickly expanding their footprints in the Eastern market.

Starbucks CEO Kevin Johnson told CNBC in November that the pace of China's innovation is "faster than any other part of the world." The coffee giant piloted delivery service in Beijing and Shanghai last fall before expanding the service to 1,000 stores through a deal with Alibaba, and wants to open 3,000 new Starbucks stores in China throughout the next few years.

An innovation center could help Yum China compete in the increasingly crowded and cutthroat fast food market, especially as more American competitors use its region as a test market. Shake Shack is expanding beyond the U.S. and has tapped China as an international experiment alongside Mexico, Singapore and the Philippines. Starbucks, too, is rolling out initial testing for its all-day Reserve Bakery Café in the Far East. And while Taco Bell's more of a U.S. staple, Yum China relaunched the brand in Shanghai in 2017.

Yum China announced last year that it would open more Taco Bell stores after relaunching the franchise in Shanghai two years ago. The new menu is designed with the Chinese consumer in mind, including a shrimp and avocado burrito, and the stores feature a more upscale design and alcohol on tap.