KFC Plans to Open 300 Outlets in China in 2009; McDonald’s About 150

DUBLIN, Ireland—Is there a Recession in China’s American-style, fast-food industry? You can’t prove it by the expansion plans of KFC and McDonald’s.

The Kentucky Colonel and the Golden Arches, long-established icons in China’s growing fast-food industry, plan to grow even more.

Research and Markets, a Dublin-based business information-gathering company, reports KFC plans to open 300 outlets in 2009; McDonald’s about 150.

KFC already has more than 2,000 stores in China; McDonald's over 1,000. The average price of a fast food item in China varies from 50 cents to $3.

“There is huge potential in the fast food industry in China,” the research group states. It is a $30 billion-a-year industry right now.
But if you are an independent entrepreneur planning to follow the big boys of the industry, do your homework carefully, advises Research and Markets.

“The fast food industry in China is imperfect in market environment, inadequate in laws and regulations, imperfect in the distribution systems, non-standard in the consumption environment and numerous in the food safety problems,” the Ireland-based company says.

“Therefore, investors should take the policies, places, the consumers’ incomes and cultural elements into consideration when investing into the fast food industry in China.

Despite the growth of American-style fast-food, the scale of Chinese-style fast food is still “all very small,” Research and Markets reports.

Still, the giant enterprises of Chinese style fast food, Kungfu Catering Management Co., Ltd. and Changzhou Lihua Fast-Food Ltd., also plan to speed up their expansions.

“As far as the fast food industry is concerned, the financial crisis turns down the costs for the labor forces and house rents in China and provides more development space,” the research group says.

“Under the circumstances of the financial crisis, many domestic and foreign enterprises are taking aim at the fast food industry in China, exclusive the possibility of new western style fast food entering China.”

Jollibee Foods Corp. for example, has already entered the Chinese market through its merger with Yonghe King.

At present, the major western style fast food brands are KFC, McDonald's and Dicos. Chinese style fast food mainly includes Lihua fast food, Kungfu, Malan noodle, Yonghe King and Daniang dumplings.

The fast food industry in China started late and only has a little more than 20 years of history.

KFC introduced American-style fast food to China in 1987, opening its first store in Beijing. Other American fast-food companies followed during the 1980s and 1990s. #