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Fast food in China

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A Pizza Hut restaurant in Shenyang
A McDonald's sign in Taiwan

Western-style fast food in mainland China is a recent phenomenon. McDonald's opened its first outlet in Republic of China in January 1984 before opening franchises in mainland China in 1990. In October 1987, Kentucky Fried Chicken, still the most popular fast food chain in China, established its first restaurant in Mainland China, located in Beijing. KFC was later followed by McDonald's, which remains China's number two foreign fast food option.[1] In addition to American style fast food, China has many local options, including restaurants that imitate fast food, particularly KFC.[1]

History

Pizza Hut and McDonald's[2] both entered the country in September and October 1984 respectively, three years before KFC entered in 1987. The first McDonald's in Shenzhen was supplied from Hong Kong from 1990 to 1992 but by the time the first McDonald's in Beijing opened in 1992, mainland China had proper infrastructure to supply the restaurants.

There are now 4,200 KFCs in 850 Chinese cities (as of 2013).[3] Pizza Hut has over 1,300 stores in China.[4][5]

Franchises

Kentucky Fried Chicken

A Kentucky Fried Chicken restaurant in China

Establishments in Beijing

KFC experienced extreme success in China, breaking several world records for restaurants in its early years. KFC's first establishment in Beijing opened doors in November 1987 as the world's largest fast-food restaurant with 500 seats. In 1988 it fried 2,200 chickens daily and earned more than any other KFC location with a turnover of 14 million yuan. KFC opened 28 restaurants across China in 1994, with 7 of them being located in Beijing.

Children as a Target Audience

KFC quickly found that it appealed strongly to children. Chinese parents reported that they had no preference for any particular fast food restaurant and simply let their children choose. As a result, KFC worked harder to figure out how to appeal to the kids even further. One of the first things KFC found was that children were not at all interested in its logo. In 1995, the bearded, elderly white man that Chinese children found so off-putting was exchanged for a playful cartoon character dubbed "Chicky." Other efforts to entice children included play areas, child-height sinks, smaller furniture and settings for birthday parties, which are a very recent phenomenon in China.

Competition with local Chinese fried-chicken restaurants

The KFC in Dongsi sits across the street from a Chinese fried-chicken restaurant called "Glorious China Chicken." Despite Glorious China Chicken's cheaper prices, larger portions, choices of rice, soup, and vegetables, and draft beer, the KFC consistently had more customers because of one factor: its cleanliness. Regardless of the number of people being served, the Chinese KFC employees were constantly cleaning the restaurant and its bathrooms and surpassed the vast majority of China's local restaurants in terms of cleanliness. As a result, Chinese people highly favoured KFC and began to complain of other restaurants' lack of bathrooms and general untidiness.[6]

KFC’s Success in China

KFC’s brand identity can be identified as customers' different satisfaction on the brand’s property, products, presentations, and publications. By analyzing a questionnaire on basic information of eating at KFC in both United States and China, Chinese consumers generally eat more often at KFC and have a more positive impression on it than American consumers do. Chinese consumers prefer the clean space and wide opening hours of KFC while Americans favour it being affordable and being a meal instead of a snack.[7] Besides the satisfaction on brand identity, KFC specifically came up with the unique menu only in China where you can easily get different flavors of rice porridge, deep fried dough sticks, and soy milk in the morning.[8]

McDonald's

A McDonald's restaurant in Xi'an

Establishments in Beijing

The first McDonald's opened in mainland China in 1990 in the Shenzhen Special Economic Zone. More prominently, the largest McDonald's in the world opened on April 23, 1992 in Beijing. It had 700 seats, 29 cash registers, and served over 40,000 on its opening day. By 1996, 29 restaurants had opened in Beijing alone. Initially, mainly affluent families ate there to distinguish themselves and as a result McDonald's became a symbol of a new lifestyle of seeking out foreign cultural influences. One of the biggest reasons McDonald's has experienced more success than other fast food restaurants in China is its high standards of hygiene. Beijing media consistently praises McDonald's cleanliness and frames it against the poor cleanliness of its competitors.[9]

KFC vs. McDonald's in China

KFC in Shanghai

KFC entered China in the late 20th century and McDonald's followed only 3 years later. By 2018, KFC has 5910 outlets[10] in China while McDonald's owns only 2700 operating outlets[11]which is less than half of KFC’s. Based on the data collected for number of outlets they opened in different cities from 1987 to 2007, KFC tends to add 0.39 outlets per year in a city and the rate of new open outlets of McDonald's is about half of KFC’s. However, both chains favoured big cities and expanded rapidly after 1999.[12] There have been competitions between KFC and McDonald's since they both entered the market and it usually has a positive impact.[13] The rivals between them not only can expand potential demand for western fast food by getting Chinese customers to try, but also can affect the size of the market where it can be easily enlarged. In general, rivals help fast food chains to make better location choice. However, net growth rate of McDonald's has a negative effect on the enlargement of KFC. McDonald's were smart enough that it prefers to open new locations in the areas based on KFC’s expansion. This impact can be observed more in the big cities than small cities. McDonald's takes advantage of KFC on where to expand the business. KFC benefits from McDonald's by growing customer interest on western fast food. [12]

Chinese fast-food restaurants vs American fast food

One reason that Chinese fast-food companies have not been successful in China is that Chinese food in general is already fast and convenient by nature. Chinese people are already used to fast, cheap food, but the exotic nature of American food makes it somewhat more desirable. The second major reason is that China has almost no food regulations and as a result many Chinese restaurants are fairly unsanitary, especially when compared to American fast food restaurants. McDonald's and KFC establishments in China have placed a massive emphasis on cleanliness to the point that they would choose them over a Chinese fast-food counterpart.[14]

Use of coupons has also played a major role in American fast-food success over Chinese chains. While McDonald's and Kentucky's prices are not any cheaper than those of Chinese chains, coupons made their food much more affordable for poor people and increasing brand recognition. By spreading coupons around and advertising cheaper deals to Chinese locals, McDonald's and KFC made themselves immediately noticeable to almost every person in urban Chinese settings.[15]

KFC in China
KFC in China with egg tart promotions

KFC employed an extended menu that contained Chinese food in addition to the food that its American counterparts sell. By doing this it was able to nearly match the items Chinese fast-food restaurants sell while putting an Americanized spin on it that readily drew in Chinese locals. The sheer speed at which KFC expanded also played a major role in its success over Chinese fast food chains. By opening restaurants extremely quickly and strategically placing them in major cities, it overshadowed beginning Chinese chains before they had the chance to develop. [16]. KFC usually gives the public a image of a specialist in fried chicken. However, KFC started to add more Chinese food ingredients into its new menu as it entered the Chinese market. KFC is one of the few fast food restaurant that sells breakfast. Congee, egg tarts, and breakfast rice roll are some  signature Chinese dishes added to the KFC menu. The company started designing more product that favor local customer’s taste, which made KFC a more competitive fast food company in China. The localization strategy helped KFC to reach to its revenue peak in 2004. The revenue of KFC took over the 46.4% of the fast food market during that year.[17]

The fast food industry in China has made many changes to help them adapt to the new market. Flavors and menus are very different compared to those in the U.S. Companies also have new marketing strategies directed toward Chinese customers.

Pizza Hut is one of America’s fast food companies that repackaged their brand when they entered the Chinese market. Pizza Hut has a image of being a low priced pizza place in the U.S[18]. However, it has transformed into a medium priced restaurant in China. Pizza Hut in China has added wine lists and a three course menu with fine desserts, which creates a more classic image for the brand. However, the price does not change drastically due to the currency exchange rate.  A meal set for 2 persons is around 189 yuan which is 28 dollars. Pizza Hut has also added Chinese ingredients in their foods to suit Chinese customers’ taste. For example, there is the Beijing duck pizza, Szechuan flavored lobster spaghetti, and bubble tea as a drink option.[19]

The spread of fast food in China

First Phase: Establishing anchor points (1994-2000)

In the beginning of their businesses in China, McDonald's and KFC represented the elites of western culture to the Chinese locals. This was because McDonald's and KFC established their first restaurants in high-end shopping centers, office areas, and near universities.

Second Phase: Commercial centers and transport hubs (2001-2005)

As McDonald's and KFC extended their reach to commercial centers and transportation hubs and began to appeal more to pop culture, they extended their reach to young, white-collar and trendy demographics and the fast food enterprises began to appear less foreign to Chinese locals.

Third Phase: Daily zones (2006-2012)

The final phase of the spread of fast food in China occurred when McDonald's and KFC stopped targeting universities and urban hot-spots and began expanding outward and focusing on residential areas. McDonald's and KFC also incorporated more Chinese flavors into their food and reduced American symbolism in their restaurants, making their restaurants seem even less foreign to Chinese locals. With this, eating at American fast food restaurants ceased being something Chinese families did on special occasions and became routine for them.[20]

Health impacts

Correlation between fast food and rising obesity before 2006

A 2005 study by the Obesity Society has found that country-wide, fast-food had not yet spread far enough across China to have resulted in significant rises in obesity. Chinese children generally ate very few meals away from home. While children in urban areas did eat more fast food than those in rural areas, the difference was considerably small. It is important to note that this study was performed in 2005, before the Third Phase of fast food's spread in China occurred in which McDonald's and KFC began marketing heavily toward children and extending their outreach.

– Source: [21]

A study conducted by the International Journal of Pediatric Obesity between April and October 2004 compared BMI to fast-food consumption in Chinese children between the ages of 2 and 18 and found that the highest correlation between the two occurred between the ages of 10 and 12. Despite this, they were unable to find very much correlation between fast food and obesity and concluded that increased obesity was largely a result of environment and lifestyle.

– Source: [22]

Correlation between fast food and rising obesity after 2012[edit]

Due to a lack of study on the subject, a 2016 journal by Elsevier uses a theory-based approach to assess the effects of fast food on Chinese obesity among youth. While Chinese children statically consume less fast food than American children, Chinese children are becoming increasingly obese and it is likely that the influx of fast food in China is a contributing factor even though it might not be the principle culprit.[23] Of those who frequent Chinese fast food institutions the most, the vast majority do so in groups as a social activity. Fast food restaurants are also a hot-spot for birthday parties or hosting social events, furthering this idea of a fast food being primarily a social activity.[24] From this, it is reasonable to suppose that the Chinese do not necessarily consume fast food because of the convenience and cheap prices that entice Americans. This idea of fast-food restaurants as an exotic social destination draws youth away from Chinese restaurants, coupled with the increased number of fast-food restaurants near transport hubs, could very well be negatively impacting their health. Recent Chinese domestic food scandals have Chinese customers shying away from domestic food, leading to a belief that Western brands hold a higher standard and thus making Western fast food increasingly popular within urban cities.[25]

A study published in 2016 connects the expanding number of Western fast food enterprises in China to rising rates of obesity. Fast Food industry revenue in China grew over six times from 2000 to 2012, accumulating 80611 million US dollars in 2012.[26] From 2002 to 2012, obesity and overweight rates, using Chinese BMI cut points(24 < BMI < 28 for overweight, and BMI>28 for obesity), among adults grew 12%.[26] A cross sectional study on 3140 primary and middle school students showed having lunch in FF restaurant (versus home) was positively associated with overweight.[27]


Instant noodle business in China

Chinese consumers are renewing their love for instant noodle. People in China used to eat plenty of instant noodles for saving time, but with the advanced of today's society, more and more fast food restaurants develop in an unimaginable speed. Food delivery apps could represent the biggest threat to instant noodle's resurgence in China.[28] The threat from the food delivery apps extremely affects the market of instant noodles, and this directly shows the one of the main reasons behind the sales decrease in instant noodles. In addition, another extra article shows more specifically details about how does the food delivery system affects instant food.[29] Because of the quickly born out of the food delivery system, people more likely to eat food from fast food restaurants to save time instead of eating instant food. Also, the demand and the consideration of people who buy the instant food more likely to seem it like a snack. Thus, it is reasonable to understand why the sales of instant noodles decrease.


Customers want better food which include better taste or smell. But the instant noodles are pretty simple, they do not have too much technical content or skills to make them. About 730 million people in China now have access to the internet according to government figures. And about 95% of those are using smartphones to connect. And apps that offer food delivery to your home, office or wherever you happen to be are a real boom industry. Their menus are undoubtedly more expensive than a pot of instant noodles. But these meals can still be inexpensive. [30] Also, one of the big customers of instant noodles is a large number of people who come from rural but working in the city. The shift of this group of people extremely affects the sales of instant noodles. In addition, the infrastructure improving and habit changing influence the market of instant noodles. Finally, the same as the latter reading material, smartphone and internet which could use food delivery system affects the sales of instant noodles.

Characteristics

McDonald's in China is generally fairly similar in menu and taste to how it is in the US, but Pizza Hut is considered upscale in China [31] and KFC offers many locally popular dishes such as fishball soup.

See also

References

  1. ^ a b "West Meets East: KFC and Its Success in China". armstrong.edu. Archived from the original on 2014-04-23. {{cite web}}: Unknown parameter |deadurl= ignored (|url-status= suggested) (help)
  2. ^ "McDonald's has a big appetite for China". msnbc.com.
  3. ^ Liza Lin, Leslie Patton. "KFC Loses Its Touch in China, Its Biggest Overseas Market". Businessweek.com.
  4. ^ Chan, S.; Zakkour, M. (2014). China's Super Consumers: What 1 Billion Customers Want and How to Sell it to Them. Wiley. pp. 96–97. ISBN 978-1-118-90590-6. Retrieved July 16, 2017.
  5. ^ Yu, F.L.T. (2012). Entrepreneurship and Taiwan's Economic Dynamics. Springer Science & Business Media. pp. 50–51. ISBN 978-3-642-28264-5. Retrieved July 16, 2017.
  6. ^ Lozada, Eriberto P. Jr (2000). Feeding China's Little Emperors: Food, Children, and Social Change. Stanford, California: Stanford University Press. pp. 114–134. ISBN 0804731349.
  7. ^ Witkowski, Terrence H.; Ma, Yulong; Zheng, Dan (2003-04-01). "Cross‐cultural influences on brand identity impressions: KFC in China and the United States". Asia Pacific Journal of Marketing and Logistics. 15 (1/2): 74–88. doi:10.1108/13555850310765088. ISSN 1355-5855.
  8. ^ "Local menu, managers are KFC's secret in China". Washington Post. Retrieved 2019-04-02.
  9. ^ Waston, James L. (2006). Golden Arches East: McDonald's in East Asia. Stanford, California: Stanford University Press. pp. 39–40.
  10. ^ “2018 YumChina Annual Report.” YumChina, ir.yumchina.com/static-files/4f1aaebb-c10c-48cf-bb53-256de7d1ac32.
  11. ^ "品牌介绍 | 麦当劳中国". www.mcdonalds.com.cn (in Chinese (China)). Retrieved 2019-04-01.
  12. ^ a b Shen, Qiaowei; Xiao, Ping (2014-03-01). "McDonald's and KFC in China: Competitors or Companions?". Marketing Science. 33 (2): 287–307. doi:10.1287/mksc.2013.0824. ISSN 0732-2399.
  13. ^ "Competitors and Companions: KFC and McDonald's in China". The Global Network for Advanced Management. 2017-01-04. Retrieved 2019-03-29.
  14. ^ French, P. (2013). In search of Mickey Li's: why doesn't China have its own fast-food mega-chain? Foreign Policy, (201), 31+. Retrieved from http://go.galegroup.com/ps/i.do?p=AONE&sw=w&u=temple_main&v=2.1&it=r&id=GALE%7CA337368821&asid=c53a06f64ed3f90936690bc6bfa998f7
  15. ^ Laroche, Michel; Kalamas, Maria; Huang, Qinchao (2005). "Effects of coupons on brand categorization and choice of fast foods in China". Journal of Business Research. 58 (5): 674–86. doi:10.1016/j.jbusres.2003.09.007.
  16. ^ Bell, David E.; Shelman, Mary L. (November 2011). "KFC's Radical Approach to China". Harvard Business Review. 89 (11).
  17. ^ "How KFC Changed China and How China Changed KFC". MacroPolo. 2018-08-31. Retrieved 2019-04-17.
  18. ^ Wei, Clarissa (2018-03-20). "Why China Loves American Chain Restaurants So Much". Eater. Retrieved 2019-03-30.
  19. ^ "Pizza Hut China -Set Menu". www.pizzahut.com.cn. Retrieved 2019-03-30. {{cite web}}: Cite has empty unknown parameter: |dead-url= (help)
  20. ^ Zhang, Min; Wu, Weiping; Yao, Lei; Bai, Ye; Xiong, Guo (2014). "Transnational practices in urban China: Spatiality and localization of western fast food chains". Habitat International. 43: 22–31. doi:10.1016/j.habitatint.2014.01.003.
  21. ^ Adair, L. S. (2005). Obesity research: Are child eating patterns being transformed globally? North American Association for the Study of Obesity.
  22. ^ Shan, Xiao-Yi; Xi, Bo; Cheng, Hong; Hou, Dong-Qing; Wang, Youfa; Mi, Jie (2010). "Prevalence and behavioral risk factors of overweight and obesity among children aged 2–18 in Beijing, China". International Journal of Pediatric Obesity. 5 (5): 383–9. doi:10.3109/17477160903572001. PMID 20233154.
  23. ^ Bachman, Jessica (13 April 2013). "Identifying factors associated with fast food consumption among adolescents in Beijing China using a theory-based approach". US National Library of Medicine. {{cite journal}}: |access-date= requires |url= (help)
  24. ^ Yang, Yun Xiang. "Consuming McDonald's in Beijing". {{cite journal}}: Cite journal requires |journal= (help)
  25. ^ Wei, Clarissa. "Why China Loves American Chain Restaurants So Much". Eater.com. {{cite web}}: |access-date= requires |url= (help); Missing or empty |url= (help)
  26. ^ a b Wang, Youfa; Wang, Liang; Xue, Hong; Qu, Weidong (2016-11-09). "A Review of the Growth of the Fast Food Industry in China and Its Potential Impact on Obesity". International Journal of Environmental Research and Public Health. 13 (11): 1112. doi:10.3390/ijerph13111112. ISSN 1660-4601.{{cite journal}}: CS1 maint: unflagged free DOI (link)
  27. ^ Andegiorgish, Amanuel Kidane; Wang, Jianhua; Zhang, Xin; Liu, Xinmin; Zhu, Hong (2011-12-09). "Prevalence of overweight, obesity, and associated risk factors among school children and adolescents in Tianjin, China". European Journal of Pediatrics. 171 (4): 697–703. doi:10.1007/s00431-011-1636-x. ISSN 0340-6199.
  28. ^ "Kantar - Chinese consumers renew their love for instant noodles". us.kantar.com. Retrieved 2019-04-16.
  29. ^ "How the Chinese Instant Food Market is changing | Daxue Consulting". daxueconsulting.com. Retrieved 2019-04-10.
  30. ^ Atkinson, Simon (2017-12-20). "Why are China noodle sales going off the boil?". Retrieved 2019-04-15.
  31. ^ http://thestudyabroadblog.com/study-abroad-experiences/[full citation needed]

Further reading

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