CBI member, Burger King opened it’s 1,000th restaurant in the Chinese mainland in late December. Upon opening, the American fast food giant announced that it would be launching an expansion plan across China, which would see a further 1,000 restaurants open over the next three years.
Burger King’s 1,000th restaurant opened in the cosmopolitan district of Qingpu in Shanghai, and despite other US chains such as Starbucks and KFC opting to embrace Chinese styling for their establishments, is decorated in traditional US style.
Ekrem Ozer, CEO of Burger King (China) said: “It [the opening of the 1,000th restaurant] is a milestone, but also a starting point […] the company will continue to accelerate its development in the Chinese market.”
American fast food has proven to be an anomaly with regard to any detrimental impact to business caused by the US-China trade war. This is predominantly because China’s catering industry has grown at an annual average rate which is far faster than the growth of GDP over the same period. Whilst GDP growth has been hovering around 7%, China’s catering industry has risen to 18% over the same 30-year period.
Another factor resulting in Burger King being an outlier within the US business community in China, is that the US restaurant chain has cooperated with many third-party e-commerce platforms, including Ele.me and Meituan. As documented in previous China Direct posts, foreign brands selling into the China market which utilise e-commerce platforms have managed to avoid the sales shortfalls that have afflicted brands who operate through traditional shopfronts. Furthermore, by partnering with Ele.me and Meituan, Burger King has been able to outsource delivery logistics, allowing the chain to save money and protect itself from risks related to higher ingredient costs.
Burger King’s model for growth in China has proven to be both sustainable and effective. Since 2012, the company has opened one restaurant every two days over a sustained period of 6 years. Nonetheless, the company still has a long way to go in China.
Irrespective of the Chinese catering industry’s growth rates, finding space to grow within the market is already a tall order because it is a congested and competitive space. Furthermore, the US-style fast-food corner of this market now only contains established and sophisticated players. Burger King will continue to face substantial competition from its nearest burger-flipping rival, McDonald’s, and will have to compete with the current king of fast-food in China, KFC; who already have over 5,000 stores in operation in China.
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