- RBI to open Shanghai outlet in the first quarter, the first of its ambitious plan for 1,500 restaurants in the next 10 years
- China’s fast-food industry is worth about US$11.6 billion, and growth is expected to slow in the years through 2023, according to Mintel research
Restaurant Brands International is planning to open the first of its Popeyes fast-food restaurants in China by the first quarter of next year, in an expansion drive to catch up with rivals with decades of head start in the world's most populous nation.
The operator has signed a lease for 430 square metres of space on the corner of Huahai Middle Road in Shanghai's shopping belt, chief executive Jose Cil said. The store opening is a follow up to an announcement in July of a 10-year plan to open more than 1,500 Popeyes restaurants in the country.
China's fast-food industry was worth an estimated 82 billion yuan (US$11.6 billion) last year, dominated by early movers like KFC and McDonald's, which arrived in China in 1987 and 1990 respectively. Popeyes is the last of RBI's three brands to open in China, following Burger King in 2005 and Canadian coffee chain Tim Hortons in Shanghai in February this year.
KFC opens restaurant in China to promote spirit of model soldier
"We will become the top chicken brand player in China which is a critical market to us," said Cil about its long-term plan. "We are in competition with everybody, with your grandmother when she cooks at home, with other players in the chicken spaces."
The Shanghai store will also bring Beyonce Knowles's favourite fried chicken to mainland Chinese consumers. The US singer, who performed in Shanghai in her 2007 World Tour, has a membership card entitling her to a lifetime of supply, she once said on an Oprah Winfrey show. Popeyes was also served to guests at her wedding with rapper Jay-Z in 2008, according to reports.
How Hong Kong's fast-food restaurants serve up a mountain of waste
Popeyes itself had attempted to break into China's market through its chain in Beijing in late 1990s under its previous owner, only to pull out in 2003. RBI acquired the chain in 2017.
The belated return means RBI has a tough task of powering its growth in a saturated market, according to Jack Chen, an equity research analyst at BOC International. Yum! Brands China operates 6,300 KFC stores while McDonald's has 3,000 across the country, both competing against a host of home-grown franchises.
"It is a bit late as most of its competitors, at each price level, mass-market and premium segment, have completed their set-up in the country and already have a pretty solid business base," Chen said. "But it still makes sense, as a small share of the market still represents a pretty large business" in a huge pool of consumers, he added.
Popeyes ranked 20th among 50 of the biggest fast-food chain operators in the US, with US$3.3 billion of sales in 2018, according to a QSR report in August. McDonald's topped the list with US$38.5 billion.
China can handle slower GDP growth and still create enough jobs, economists say
Western-style fast-food businesses in China grew by 7.4 per cent last year to 82 billion yuan, according to an estimate by London-based market research company Mintel. The pace may cool to 2.6 per cent in the five years through 2023, Mintel said, as the economy faces challenges from a trade war with the US.
"We are super excited in bringing our business to China with the three brands," Cil said. "We do not have short term aspirations. We want to be in China as a contributor to the economy and contributor to the local communities for a long time to come."
Cil also said RBI is planning to increase the number of Tim Hortons outlets in mainland China to 1,000, without specifying a time frame. In January, the group announced a plan to add another 1,000 Burger King restaurants there over the next three years.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.