The entry of a competitor hurts sales and profit, especially when both are operating close by and targeting similar customers.

KFC and McDonald’s are direct competitors. However, they have also benefited from each other’s presence in China’s emerging fast food industry.

We found that a rival’s presence drives a chain to expand, but for different reasons for McDonald’s and KFC.

KFC introduced concept of fast food for first time to China in 1987. It now dominates the Chinese fast-food market with more than 5,000 outlets in more than 1,100 Chinese cities.

KFC enters the capital city of a province first and then expands to nearby cities – Beijing, as the home of its first outlet and quickly spread to the east and south coast, which is economically more developed…