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How KFC And McDonald’s Conquered The Chinese Market


Western fast food was introduced into China in the 1980s when KFC opened its first outlet in Beijing. Since then, the sector has experienced substantial growth, with other international brands, such as McDonald’s, Subway, Domino’s Pizza, and Pizza Hut joining the market.


As of April 13, 2023, KFC has maintained 9,650 outlets in China. Meanwhile, McDonald’s has 5,746 outlets, Subway 718 outlets, Domino’s Pizza 613 outlets, Burger King 1,494, and Taco Bell over 50.

In the early 2000s, domestic fast-food chains began to emerge, offering Chinese-style fast food with a modern twist. For instance, brands such as Dicos and Yonghe King offered Chinese-style breakfast options, while Ajisen Ramen introduced Japanese-style ramen noodles to the Chinese market.

China’s fast food market is now among the largest in the world, demonstrating a continuing upward growth trajectory. In 2023, the market size of China’s fast-food industry is estimated to reach RMB 3,687.8 billion (US$536.33 billion).

What kind of fast foods do Chinese consumers like?

In 2021, hamburgers ranked third in popularity among the top 10 categories of online food and beverage orders, just behind milk tea and rice combo meals. Notably, Chinese hamburger brands that cater to lower-tier cities and offer lower per capita prices are also experiencing rapid growth, with brands like Dicos, Pailahamburg and Tasting Burger already boasting thousands of stores.


Furthermore, the boundaries between various culinary genres, such as main meals, fast food, Chinese cuisine and Western cuisine are gradually blurring, leading the catering industry to adopt a new era of integration. For example, Chinese brand Xi Bei has launched a new fast food sub-brand called Jia Guolong Wine-Air Buns, which offers a unique spin on traditional Chinese-style hamburgers using speciality buns from Tonglu, Zhejiang Province. Xi Bei, traditionally known for its main meal offerings, has been making inroads into the fast-food market in recent years. By introducing the easily standardisable roujiamo (a Chinese hamburger-style street snack from Shaanxi Province) as a breakthrough point, they are poised for rapid replication and expansion in the fast-food market.


According to recent data from iiMedia Research, more than half of Chinese consumers dine at Western-style fast food restaurants, while 40.4% of respondents prefer a blend of Chinese and Western-style fast food. Therefore, as Western-style fast food becomes increasingly popular and consumer preferences become more varied, restaurants that offer a fusion of Chinese and Western-style fast food are more likely to appeal to customers in China.


Trends driving changes in China’s fast-food market

Emphasis on healthier options and sustainability

The fast food industry in China is placing more emphasis on providing healthier options to consumers. Many fast food chains are offering more vegetarian and vegan options, as well as reducing sodium and sugar in their menu items. In addition, some chains are incorporating organic and locally sourced ingredients into their menus to appeal to health-conscious consumers.


Furthermore, sustainability is also becoming a key consideration for fast food chains in China. Many are implementing eco-friendly practices, such as reducing packaging waste, using renewable energy sources and promoting recycling. This not only appeals to environmentally conscious consumers but also helps fast food chains to reduce costs and improve their overall brand image.


Advances in technology

The fast food industry in China is rapidly evolving with advancements in technology. Many chains are adopting digital ordering systems, self-service kiosks and mobile payment options to improve efficiency and enhance the overall customer experience. Moreover, some chains are experimenting with automation and artificial intelligence (AI) to streamline operations and reduce costs. For example, some restaurants have implemented robots to prepare and serve food, while others are using AI to analyse customer data and personalise menus based on individual preferences.


These technological advancements enhance efficiency and provide valuable data insights for fast food chains. By collecting and analysing data from digital ordering systems and customer interactions, chains can better understand consumer preferences and make data-driven decisions to improve their overall operations and customer experience.


Growth of delivery and online ordering

The rise of delivery and online ordering platforms has hugely impacted China’s fast-food landscape. Many consumers now prefer to order food online and have it delivered to their door rather than dining in fast-food restaurants. This has led to a surge in delivery and online ordering services, with many fast food chains partnering with these platforms to reach more customers. Moreover, some chains are even developing their own delivery platforms to compete with third-party services.


As the market for delivery and online ordering continues to grow, fast food chains in China are adjusting their strategies to capitalise on this trend. Many are investing in digital marketing campaigns and optimising their menus for online ordering, while others are improving their delivery logistics to ensure timely and accurate delivery of food. These efforts are crucial in maintaining a competitive edge in a market that is rapidly shifting towards online and delivery channels.


Lessons for foreign investors

Location is notorious for playing a key role in guaranteeing the success of Western fast food brands in China, as they have excelled in securing prime locations in China’s top-tier cities, particularly near major sights. For example, KFC’s first restaurant was located on the edge of Tiananmen Square in Beijing. Acquiring real estate in heavily trafficked areas has been a crucial strategy for these companies. When fast food restaurants are located next to tourist sites in China, they can attract both foreign and domestic customers. Expanding into the inland regions of China, especially tier-3 and tier-4 cities with a growing middle class, is also a profitable venture.


On the other hand, experience has shown that adapting to local tastes is vital to the success of foreign brands in China. KFC is the best example of a fast food specialist that understood how to capture Chinese tastes while maintaining its American brand identity. Fast food restaurants in China offer pork chops, curry, and Chinese staples like congee and youtiao (a fried donut). In this respect, KFC demonstrates exceptional cross-cultural adaptation in China.


Read More at https://focus.cbbc.org/how-kfc-and-mcdonalds-conquered-the-chinese-market/


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