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Breakfast Key to Growth of Foreign Fast Food Market in China

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Breakfast Key to Growth of Foreign Fast Food Market in China

Breakfast Key to Growth of Foreign Fast Food Market in China
August 16
10:31 2012

With the total amount of foreign fast food outlets in China set to break the 50,000 mark this year – up from 48,477 in 2011 and 36,037 in 2006 – and 44% of Chinese consumers saying that they plan to spend more on fast food in the coming year, the potential for the sector is clear.

However it seems that there is further opportunity for operators wanting to tap into this lucrative market, as new research from Mintel reveals that breakfast is still the under penetrated day-part for foreign fast food outlets. Indeed, only one in five (21%) urban Chinese consumers eat at fast food restaurants in the morning (4am-11am) – as opposed to 75% during lunchtime.

Tan Heng Hong, Senior China Research Analyst at Mintel, comments: “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. To increase consumption of foreign fast food, more has to be done to unlock opportunities in the breakfast market where usage is the lowest.”

Overall, it seems foreign fast food outlets still have a way to go to match their Chinese counterparts. Mintel’s research has found 86% of respondents have eaten at Chinese fast food restaurants compared to 68% at foreign fast food restaurants in the past year. However, inclusion of local menu items could help bridge this gap.

Mintel’s research finds nearly three quarters (76%) of consumers express an interest to see more fast food options with local flavours on the menu. When asked about what consumers would like to see more of at foreign or Chinese fast food restaurants, the majority of consumers selected the introduction of food with local flavours as their top pick (15%).

Tan Heng Hong continues: “Chinese fast food restaurants, which serve Chinese staples including rice and noodles, are more popular as they win on price, variety, nutrition and flavour. Hamburgers, pizza and Japanese noodle or rice dishes served by foreign fast food restaurants are less popular because they are perceived to be more expensive or less healthy, which makes foreign fast food an occasional indulgence, rather than an everyday purchase. It is clear that consumers demand local flavours on their menu and this can be applied to the breakfast day-part, especially with items that integrate well on the menu, like porridge. The challenge for foreign fast food chains is to come up with new innovative products that can meet the demand for a more localised taste.”

The market for foreign fast food inChinahas seen steady growth over the past five years as Chinese consumers have incorporated it ever more into their lives and culture.China’s foreign fast food sector grew at a compound annual growth rate (CAGR) of 19% from 2006-11 to reach a market value of RMB 75.1 billion or 11.8% of the overall fast food sector. And there is further good news for the market for foreign fast food in China, as Mintel forecasts the sector to increase to RMB 171 billion by 2017, growing by about 95% on the expected value for 2012 or a CAGR of 14.3%. Furthermore, the number of outlets, chained and independents, is expected to increase to 71,964 outlets by 2017, up 39% on the expected number for 2012.

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