Fri, May 09, 2003 - Page 10 News List

Fried chicken franchises hatch new pecking order

BIRD IN THE HAND In the midst of depressed sales, one fast-food chain in Taiwan has found a winning strategy to revamp its sales and expand on the cheap

By Annabel Lue  /  STAFF REPORTER

Taiwanese fried chicken chain Ting Kua Kua International (頂呱呱) yesterday confirmed it had gob-bled up two of eight stores from recently collapsed rival Gold in Tex Fried Chicken (小鬥士炸雞).

"Over the last couple of weeks, we opened up two new stores by converting two Gold in Tex Fried Chicken stores into Ting Kua Kua," Teng Yu-sung (鄧有松), spokesman for Ting Kua Kua told the Taipei Times yesterday.

The two outlets are in Taipei City's Shihling District and Taipei County's Sanchung City, Teng said.

Gold in Tex Fried Chicken was formerly known as Church's Fried Chicken (德州炸雞). Church's entered the local market in late 1980s and was renamed Gold in Tex Fried Chicken after the Taiwanese partner ended a franchise contract with Church's parent company, American Favorite Chicken Enterprise Inc in 1995.

Market competition drove the company into the red in January, forcing Gold in Tex to hold talks with Ting Kua Kua on possible take over.

"After evaluating locations and rental fees, we decided to take over two of their old stores [including equipment]," Teng said.

The two new stores reopened in mid-April, while the remaining six stores were shuttered.

Ting Kua Kua is also considering taking over another former Gold in Tex outlet in Taipei County's Luchou township, Teng said.

Ting Kua Kua, established in 1974, is the nation's first fried chicken chain fully owned by a Taiwanese family, which is surnamed Shih. The family started out as chicken breeders and still owns several chicken farms in southern Taiwan today.

Taking over rival coops has proven a big cost savings.

"The cost of setting up a new store is estimated at NT$8 million," Teng said, "but it only costs us about NT$3 million in these takeover deals."

Last year, Ting Kua Kua also took over a three-level fast food store at the intersection of Taipei's Hsinsheng South Road and Roosevelt Road. That location, near National Taiwan University, used to be home to a Kentucky Fried Chicken (KFC) store.

Ting Kua Kua, which posted NT$500 million in sales last year, has 32 stores nationwide and is expected to open five more stores by year end, Teng said. But he stressed that the company will be more cautious in store expansion this year, amid concerns over the spread of severe acute respiratory syndrome (SARS).

One Ting Kua Kua store in Hsimenting's movie theater district has reportedly seen sales drop 30 percent last month.

"Therefore we decide to temporarily shut down that store for remodeling," he said.

Meanwhile, KFC yesterday announced a new pricing strategy to lure customers.

"Starting May 9, we will offer a discount of up to 30 percent on 11 selected items," said Olga Wu (吳美君), managing director of Yum! Restaurants (Taiwan) Co, parent company of KFC.

Wu said the price adjustment has been discussed for months, and was not developed especially to cope with the SARS impact.

She added that the company's bottom line was slightly hurt by SARS, with 70 percent of KFC sales currently coming from take--out orders.

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