(Yicai Global) July 6 -- Kentucky Fried Chicken is moving into China’s huge and popular market for shop-bought tea drinks. Last week, the US fast-food giant opened its first Grandpa Comfy Tea outlet in Suzhou, a Chinese city renowned for its picturesque waterways and gardens.

The new shop offers tea beverages with characteristics from the Yangtze River Delta region, Yicai Global learned. Priced between CNY13 and CNY23 (USD1.94 and USD3.34) per item, its offering also includes ice creams jointly created by KFC and Swedish food company Oatly Group.

Grandpa Comfy Tea’s logo depicts Colonel Sanders dressed in traditional Chinese clothing and holding a cup of tea. The brand colors are pink, green, and white, and the shop’s interior echoes the Yangtze River Delta’s style.

The Chinese market for tea drinks is saturated, as the barriers to enter are relatively low. Nearly 60 percent of tea companies cannot survive more than three years, according to data on corporate information platform to Tianyancha. A quarter only last a year, while 35 percent close within one to three years.

A spin-off tea brand like Grandpa Comfy Tea has more room for development, according to Wen Zhihong, a catering chain expert and general manager of Hehong Consulting, but the profit model and store’s operations need to be built independently, requiring greater resources and capabilities.

Wen said KFC’s brand power, the multi-brand catering sector experience of operator Yum China Holdings, and the strong supply chain support are all competitive advantages for Grandpa Comfy Tea. But he still expects the new brand to face challenges, with its product innovation and business model yet to be explored and proven.

Grandpa Free Tea’s customers so far have left mixed reviews on the Chinese lifestyle platform Dianping. Some said the drinks did not match their tastes and suggested KFC focus only on fast food, while others were satisfied with both the in-store environment and the beverages.

Editors: Tang Shihua, Futura Costaglione