A rapid growth in China
The rapid growing Chinese consumer class certainly has more spending power today. Therefore, they also have less and less time cooking at home. The combination of exhausting work hours, long commutes in heavy traffic, a later marriage age with smaller families, gives to the average Chinese citizens fewer motivations to make their own meals. That situation creates a perfect and ideal recipe for fast food chains. So the fight for China’s growing of fast-food and convenient meals is heating up.
China’s food service industry
China’s food service industry has witnessed double-digit annual growth since 2004. And it’s still only half the size of its U.S. Estimated at $303 billion in 2009, and it reach around $450 billion in 2014.
The multinational fast-food chains such as Burger King, McDonald’s and Yum Brands arrived early in China, Mcdonalds has entered in mainland China in 1990. And they’ve come to dominate the market of western fast food services. KFC and Pizza Hut, two brands that are part of the um Brands Group has pushed ahead McDonald’s.
In 2013, Yum Brands, which owns KFC and Pizza Hut, opens every day another new restaurant in China. In fact, for the first time ever in 2013, it earned more profits there than in the U.S.A And it soon expects to have a 3 to 1 market share, one lead over McDonald’s, the closest rival. The brand KFC is currently the number one fast food chain in China. The American famous brand did so by offering local tastes with adapted dishes such as rice porridge with pork.
Pizza Hut remains China’s number one casual dining chain, an image an image that is lost in the U.S. from decades ago. But McDonald’s is still investing a lot trying to catch up with Yum Group. It took two decades to launch 1,000 restaurants in China, but now expects it needs only four years to double that. in 2013, the company says it plans to “re-image” about 80% of its stores. That will involve European and Australian designs, comfortable chairs, with warmer colors and facilities such as WiFi. McDonald’s is playing catch-up by offering the “McDelivery” service. Chinese like the 24-hour option available in major cities, so McDonald’s is offering another real American experience. The plan is to open drive-through windows at half of its new restaurants in the next coming years.
Chinese Fast Food VS Western Fast Food
The Chinese fast food chains also represent a Threat to those big American brands, KFC and McDonald’s, the battle for stomach share in China goes beyond fried chicken and Big Macs. The Chinese and Asian fast food chains are becoming more and more competitive, despite their current low market share.
This is hardly surprising considering how many opinion polls show how locals are opting for Chinese and Asian food when given the choice. There is indeed, two particular chains that are especially eating up that penchant. The Asian Style Cooking Restaurant was just recently added to the New York Stock Exchange. Indeed, it has over 100 locations in the Chongqing municipality and Sichuan Province. There’s also the following brand Little Sheep Group, which Yum Brands partially owns. It currently has over 300 restaurants in China, Japan and the U.S. Their appearance on the scene, along with other Asian restaurant chains, prove that the Chinese market is about more than just convenient. Xia Lianyue, the vice-chairman of the China Fast Food Association, says rising urban salaries and long commutes are driving the all-new “simple meal” market. That market averages 50-100 RMB, or about $7.50 to $15.00 per meal per person, a cut above fast food at 30 RMB or $4.50. Yum Brands seems well positioned in this segment with Pizza Hut. But local competitors could still eat into its market share.
Understanding Chinese Consumers:
— Daxue Consulting (@DaxueConsulting) August 21, 2015