On December 24, a prominent global fast-food chain, KFC, announced its first price adjustment in nearly two years, a move that has sparked considerable discussion among customers and industry observers alike.

Reports suggest that the average increase across its menu items will be approximately 2%, with specific price changes ranging from 0.5 yuan to 2 yuan

This adjustment aims to better align the menu pricing with market cost fluctuations, thereby ensuring the company's sustainable growth and stability in a competitive environment.

A spokesperson from KFC mentioned that the company conducts regular assessments of its pricing strategy, integrating changes in operational costsInterestingly, despite some products experiencing price hikes, popular deals, such as the “Crazy Four” bargain, “Crazy Day” promotions, “OK Meal,” and kid's meals, will remain at their current pricesThis decision reflects an effort to maintain favorable value dining options for consumers, addressing the diverse preferences of various customer groups while also considering loyalty and consumption habits.

“Crazy Four” remains unchanged in price, striking a balance for working-class individuals.

This pricing strategy by KFC, intentionally excluding discount meals from the list of items subjected to price increases, cleverly appeals to budget-conscious workers.

However, many social media users have voiced their concerns about this change

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While this marks KFC's first price adjustment in two years, it’s clear that customers remain skeptical of the company's motivations and the economic realities behind such decisions.

One user succinctly summarized the frustration, stating, "Burgers are shrinking, service is declining, collaborations are increasing, and prices are soaring." This sentiment resonates with those who continue to frequent KFC.

As for loyal customers, it seems that the consensus is that the menu has become streamlined to: “KFC for fried chicken, McDonald's for burgers, Pizza Hut for pizza.” Such distinctions have narrowed consumer perceptions of fast-food chains.

The branding recognition here serves to create a differentiation between various fast food outlets but inevitably diminishes the appeal of other types of dining options.

To illustrate, let’s take the “Crazy Four” meal, which typically includes an entire chicken marinated with secret sauce, golden chicken nuggets, spicy chicken wings, and the signature crispy chicken

Promotions sometimes extend to involve desserts like egg tartsYet, among my circles, there is a general consensus that while the crispy chicken is a must-try, the other items are optional selections.

Is operational cost really increasing?

While attention is drawn to the price hike by KFC, my main concern is the claim of "operational cost changes.”

A simple question arises: why would operational costs rise?

The operational costs of fast food restaurants, which include rent, utilities, employee wages, and administrative expenditures, are public knowledge

Financial factors also include depreciation and losses from store closures

Overall, rents, employee wages, and materials don't seem to have inflated; utility prices vary by region, and even when they do increase, such changes are typically minimal.

Specifically speaking about rent, more shops are displaying "for lease" signs than ever, indicating that commercial rental prices are under pressure overall.

Wage-related issues have hardly budged; KFC's part-time workers consistently make between 20 to 25 yuan an hour, a rate established for quite some time on various job platforms.

As for materials, frequent shoppers and those who visit supermarkets know that most food prices, while they experience monthly fluctuations, have not seen significant changes in the last couple of years; in some cases, they may have even decreased.

This is reflected in relevant data from the National Bureau of Statistics

Within the first eleven months this year, the consumer price index for food, tobacco, and alcohol has decreased year-on-year in various degreesIn simpler terms, food, tobacco, and alcohol prices have dropped.

If KFC were closing numerous stores resulting in substantial capital expenditures, that might justify "increased operational costs," however, such has not occurred.

As a result, looking at each factor reveals no valid reasoning behind a rise in KFC's operational costs.

The true strength behind the price increase

Perhaps some might argue that the previous statements were largely speculative based on logical deductions, so let’s look directly at the financial reports.

In the third quarter of this year, Yum China reported a revenue of $3.07 billion, marking a 5% increase compared to the previous year and setting a record for the highest quarterly revenue in history

Operating profits grew by 15% to $371 million, while core operating profits surged by 18%.

Cash, cash equivalents, and cash restricted have consistently hovered around the 8 billion mark, with a stable debt-to-asset ratio of approximately 40%.

Yum China's gross margin has remained stable at around 20% for the last three years, with net profit margins consistently around 10%.

As for the number of outlets, by September 30, 2024, Yum China will have expanded its network to 15,861 stores—including 11,283 KFC outlets and 3,606 Pizza Huts.

The combined memberships of KFC and Pizza Hut exceed 510 million, with membership sales accounting for roughly 64% of total system sales for both brands.

From any perspective, KFC shows no signs of being pressured by operational costs or financial burdens

While profits may not be extravagant, it is certainly a company that manages to sustain steady earnings.

This recent price hike feels somewhat like a betrayal to consumers, especially given that many restaurants are struggling to survive in a less vibrant consumer environmentKFC appears to be thriving and even confident enough to increase pricesWhat gives them this confidence to raise prices?

There are many potential reasons for this, but one factor stands out significantly in discussions among consumers.

Many consumers believe that fast food chains are among the few that can guarantee cleanliness and hygiene standards for takeout.

This perception is both a triumph for KFC and McDonald's and a challenge for local fast-food brands

These global giants have been in China for over 30 years, and their market status remains unshaken by domestic competitors, highlighting an interesting aspect of the fast-food landscape.

This situation reveals that consumers prioritize food safety highly, yet it also underscores the long path ahead in ensuring comprehensive food safety across the board.

Conclusion

An interesting note is that Pizza Hut, also under Yum China, recently rolled out a new menu at the beginning of December, significantly lowering prices across 30 items, including pizzas, snacks, and beverages

Seven snack items now have a flat price of 9.9 yuan.

According to the 2025 Chinese Consumer Overview published by NielsenIQ at the end of November, 47% of consumers stated that they “only purchase what they know they'll use to avoid waste,” a 7% increase compared to earlier surveys this year.

From a consumer standpoint, the share of "budget-conscious" shoppers, who value price-performance ratios and compare prices across platforms, has ascended from 30% to 39%, now becoming the dominant group in the Chinese market.

Ultimately, KFC's price hike appears to be not only about food safety but also strategically aligns with common consumer price expectations, raising prices from 0.5 yuan to 2 yuan—just enough to prompt feelings of discomfort without pushing loyal customers away