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Chinese embrace fast food chains

KFC Restaurant at CNPC Xifu Road Gas Station, Kunming

As the Chinese enjoyed less lesure time over recent years, consumers have shifted away from traditional full-service restaurants towards fast-food establishments.

In addition, increased Western influences and higher incomes have boosted demand for fast food. Over the five years to 2012, revenue for the fast food restaurant industry in China grew at an annualised rate of 16.9 per cent to $89.6 billion, says IBISWorld.

With improvements in chain store and franchising management, and new brands and food styles, the industry has been developing rapidly. There are almost 2 million enterprises in this industry, says IBISWorld.

However, only an estimated 7000 are the establishments of 130 large franchising or chain operators with revenue of over 2 million yuan. The majority of enterprises are small, independent facilities engaged in traditional Chinese-style fast food.

The combined revenue of the industry’s four largest companies – Yum! Restaurants, McDonald’s, Dico’s Food Development, and Ajisen (China) Holdings – is low at about 10.4 per cent of total industry revenue.

As the trend of chain operation management pick up, with an increasing number of domestic companies following the example of their foreign competitors, IBISWorld expects the industry’s market share concentration to increase.

Over the next five years, competition within the fast food restaurant industry in China is expected to intensify, especially in regions with well-developed fast-food markets.

Increased competition will push players to look for new opportunities into less-developed regions. In addition, chain operations will continue spreading from east to west, and from tier-one and -two to tier-three and -four cities, says IBISWorld.


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