China boom in foreign fast foods mixed with local breakfast
China is set to break the 50,000 mark for foreign fast food outlets this year. This is a rise from 48,477 fast food outlets in 2011 and 36,037 in 2006. Study also reveals 44 percent of Chinese consumers say they plan to spend more on fast food in the future. At present 75 percent of Chinese consumers favour lunchtime as their first choice for eating at fast food restaurants where as only 21 percent, or 1 in 5, eat out in the morning (4am – 11am).
‘Local’ breakfast menus
New research from Mintel reports that addressing the divide between consumer behaviour at breakfast and lunch is the key to the continued growth of the foreign fast food market. The breakfast market has huge potential and operators are attempting to tap into the lucrative market. Although foreign fast food outlets still haven’t matched their Chinese counterparts, with a comparison consumption rate of 68 percent to 86 percent respectively, the key to bridging the divide is the inclusion of “local menu items”, says Mintel’s report.
Senior China Research Analyst at Mintel, Mr Tan Heng Hong says “despite having the upper hand in quality, safety and service, foreign fast food still has much work to do in flavour affordability, health and variety in order to compete more effectively against Chinese fast food, which has the largest share of the fast food sector.”
Local fast food potential
Further research has revealed nearly three quarters of consumers (76%) have expressed their desire to see an increase in local flavours on menus as fast food options. The majority of consumers also expressed an interest in seeing the introduction of food with local flavours for foreign fast food restaurants. These findings could help identity a key opportunity for higher consumption rates in all areas of the Chinese and foreign fast food industry.
At present Chinese fast food restaurants favour Chinese staples such as rice and noodles for their variety, flavour and nutritional values, plus they are a winner on price. Foreign fast food restaurants that serve hamburgers, pizza, Japanese noodle or rice dishes are “perceived to be more expensive or less healthy, which makes foreign fast food an occasional indulgence, rather than an everyday purchase”, says the Mintel report.
Localise the taste
Heng Hong claims the challenge at present for foreign fast food restaurants is to take an innovative approach to its products in order to provide the consumer with a more localised taste menu that caters for their demands. Addressing the demand for local flavours on menus could further be applied to the breakfast component and thus open up a new competitors market.
Demographical and growth aspects
According to Mintel’s research, China’s foreign fast food market has seen steady growth over the past 5 years, at a compound annual growth rate (CAGR) of 19 percent from 2006-11, reaching a market value of RMB 75.1 billion. This equates to 11.8 percent of the overall fast food sector. Mintel expects this sector to increase further, growing to RMB 171 billion by 2012 which is a growth of about 95 percent on the 2012 expected value. Chained and independent outlets are also forecast to increase to 71,964, which is an increase of 39 percent on the expected number for 2012.
Women (71%) eat at foreign fast food restaurants more than men (66%) and 75 % of Chinese consumers are willing to try new fast food products. Women are also more likely to eat where businesses are offering promotions such as vouchers and coupons. Heng Hong claims these types of marketing tools are useful in attracting new business and also tap into 51 percent of the urban population, especially Chinese women, who are “always on the lookout for special offers”.