As the old Chinese saying goes, "food is heaven." Nothing takes higher priority to the Chinese than enjoying good food. That explains why I open this new series with a case study on restaurants. Let's take a peek at the success and missteps of American pizza restaurant chains in China.
"On the frontlines: Doing business in China" gave four reasons for why Pizza Hut succeeded and Domino's failed in that nation:1. Dine-in versus carryout: Pizza Hut makes itself a fine dining restaurant in China, while Domino's only offers carry-out.Actually, carryout can be a viable business model in China, but combining Domino's expensive (by Chinese standards) pricing with carry-out -- which usually is associated with $3 Chinese lunch boxes -- is unwise. The emerging Chinese middle class has deep pockets, but they are also quite demanding and particular on the value/price ratio. The carryout model doesn't come with much value.Don't forget about the Chinese urban lifestyle. Eating out is essential for business, social and everyday life. For that need, Pizza Hut provides quality and exotic experience that customers get excited about. Their menu is as fabulous as their decoration: Lamb balls with cumin, cheese-stuffed wings, calamari, sausage and oyster mushroom kebab, herbal shrimps, escargots, waffle crispers, onion rings, cherry tomato and bacon roll, barbecue ribs, New Orleans wings, and much more. Not exactly what the Pizza Hut down the street in Akron offers.Ten years ago in Beijing, I stood in the line outside a Pizza Hut for half an hour on a freezing winter night. My friends and I thought the wait was worthwhile when we finished the meal. Not because the pizza was much better than Domino's (let's face it, pizza is at best an acquired taste for the Chinese). It was worthwhile because we got in the hot spot of the town, because we had plenty of self-serve fruit salad, because we tried clam chowder soup for the first time in our lives, and because we really enjoyed the nice eating atmosphere.Food is heaven in China. But it's the whole eating experience that delivers value. The same holds true for any other product or service you try to sell in China. The key is to create a unique and meaningful user experience.
2. Local flavor: Pizza Hut designs flavors specifically for the Chinese, while Domino's uses toppings that are popular in Japan and Taiwan.
3. Traffic: Beijing's traffic jams make Domino's 30-minute delivery promise impossible to achieve.
4. Size: Pizza Hut trims down the pizza size for the Chinese, while Domino's sticks to the American portion.
