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Popeyes Muscles In on KFC's Turf With This Move

Popeyes' menu may look a bit different in its new geography.

Known for its cajun flavor and unwavering devotion to frying as many pieces of food as humanly possible (well, except certain desserts), Restaurant Brand International's  (QSR)  Popeyes has been a delight to many ever since it opened its doors in 1972 in the New Orleans suburb of Arabi.

Popeyes is celebrating its 50th anniversary this year in a variety of ways. It offered two pieces of chicken at 59 cents in June, the price the meal originally cost when Popeyes first launched. 

And it's opening a new flagship location on the edge of the French Quarter in New Orleans.

But the fried-chicken chain has major new goals, and it's setting its sights overseas to accomplish them.

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Popeyes Has Big International Plans

Popeyes has been focused on big expansion as of late. In 2022 alone, the chain committed to opening 200 more stores across the U.S., Canada, and international markets such as Spain, Brazil, and the U.K.

It's also pushed into new countries for the first time, such as South Korea, France, India, and Romania.

Now, it adds China to that list, drumming up some competition for the country's current favorite fast-food chicken brand.

KFC Is Huge in China

Yum Brands  (YUM)  made its way into China early with its American-founded Kentucky Fried Chicken, opening its first location in the country in Beijing in 1987.

Today, there are 8,500 locations across 1,700 cities in China, easily making KFC the country's most ubiquitous fast-food chain.

Naturally, KFC China's menu is vastly different from the American one, to cater to local taste. The menu features soy sauce chicken wings, congee (a classic Chinese breakfast porridge), shrimp sandwiches, and egg tarts for dessert.

But in the past decade KFC has hit a few bumps that have done some damage to its reputation. 

In 2012 the chain was accused of injecting its chicken with an excessive amount of antibiotics. Then, in 2014, a video surfaced on television showing workers at KFC's chicken supplier reusing meat that had fallen on the floor and mixing fresh and expired meat together.

Yum seems undaunted by these setbacks. In its Q2 earnings call, David Gibbs, KFC's chief executive, had positive things to say about the brand's status in China.

"But as I mentioned earlier, the exciting thing is that we've got 20% of our business [in] emerging markets like China," Gibbs said. 

"That business is on fire. As we anticipated, it's recovering from covid and lockdowns with increased mobility and new capabilities on the digital front that [Yum Chief Financial Officer Chris Turner] talked about. And that's really driving our business there. And that should be a growth driver."

Can Popeyes Take On KFC?

Moving in on this territory is an ambitious move for Popeyes, especially when KFC has had a hold in the country for so long.

But China is the world's second largest economy and presents a potential gold mine for fast-food businesses. Many have made an aggressive push to expand there, such as McDonald's  (MCD)  and Starbucks  (SBUX) , and now Popeyes will follow suit.

In it's Q2 earnings call, Restaurant Brands reported global systemwide sales growth of 14%, up nearly $1 billion year over year. International sales are a big part of that, especially at sister restaurant Burger King, which saw a $3 billion increase in 2021 sales there from the year prior.

Restaurant Brands is clearly in a good place to move into the Chinese market, and its easy to see why it's making that move. 

Whether Popeyes can spirit away any longtime KFC customers remains to be seen. But after 25 years of KFC, China just might be ready for something new.