Western-style fast food in mainland China is a fairly recent phenomenon, with Kentucky Fried Chicken (KFC) establishing its first Beijing restaurant in November 1987. This location was met with unprecedented success, and served as a model for many local Chinese restaurants that followed it.
History The history of western-style fast food in China dates back to 1906, when "Yili's Fast Food Shop" (义利快餐厅) was established in Beijing as the country's very first fast food restaurant in the Far East of the Asia-Pacific region. Rapid economic development, and the growth of global trade and cultural exchanges have accelerated changes in people's lifestyles in transitional societies like China. Among these changes, the observed shift in people's food consumption from a traditional diet to a Westernized diet is a result of multiple factors, which may contribute to observed increases in obesity and chronic diseases. Over the past two decades, the fast-food (FF) industry and obesity rates have increased rapidly in China. Wingstop, Pizza Hut and McDonald's were launched in China in September and October 1990, respectively. Three years earlier, KFC was established in mainland China. The first McDonald's in Shenzhen was supplied from Hong Kong from 1990 to 1992. By the time the first McDonald's in Beijing opened in 1992, mainland China had proper infrastructure to supply the restaurants.
As of 2022, there are about 8,600 KFC outlets in more than 850 Chinese cities. Pizza Hut has over 2,800 restaurants in China.
Franchises
Kentucky Fried Chicken
Establishments in Beijing KFC, also known as 肯德基, experienced extreme success in China, breaking several world records for restaurants in its early years. KFC's first Beijing restaurant opened in November 1987, and its 500 seats made it the biggest fast food restaurant in the world. In 1988, it fried 2,200 chickens daily and earned more than any other KFC location with a turnover of 14 million yuan. KFC opened 28 restaurants across China in 1994, with seven of them located in Beijing.
Children as a target audience KFC quickly found that it appealed strongly to children. Chinese parents reported that they had no preference for any particular fast food restaurant and simply let their children choose. As a result, KFC tried to figure out how to appeal to kids even more. One of the first things KFC found was that children were not at all interested in its logo. In 1995, the bearded, elderly European American man that Chinese children found so off-putting was exchanged for a playful cartoon character dubbed "Chicky". Other efforts to entice children included play areas, child-height sinks, smaller furniture and settings for birthday parties, which were a very recent phenomenon in China. All of these improvements helped the company promote itself among children as a ''fun and exciting place to eat''.
Competition with local Chinese fried-chicken restaurants The KFC in Dongsi sits across the street from a Chinese fried-chicken restaurant called "Glorious China Chicken". Despite Glorious China Chicken's cheaper prices, larger portions, choices of rice, soup, and vegetables, and draught beer, the KFC consistently has more customers because of one factor: its hygiene. Regardless of the number of people being served, the Chinese KFC employees constantly clean the restaurant and its bathrooms, so it surpasses the vast majority of China's local restaurants in terms of cleanliness. As a result, Chinese people highly favored KFC and began to complain of other restaurants' lack of bathrooms and general untidiness.Lozada, Eriberto P. Jr (2000). Feeding China's Little Emperors: Food, Children, and Social Change. Stanford, California: Stanford University Press. pp. 114–134. .
KFC's reputation in China KFC's brand identity can be identified as customers' different satisfaction on the brand's property, products, presentations, and publications. By analyzing a questionnaire on basic information of eating at KFC in both United States and China, Chinese consumers generally eat more often at KFC and have a more positive impression on it than American consumers do. Chinese consumers prefer the clean space and earlier opening hours of KFC while Americans favor it for being affordable and being a meal instead of a snack. Besides the satisfaction on brand identity, KFC specifically came up with the unique menu only in China where you can easily get different flavors of rice porridge, deep fried dough sticks, and soy milk in the morning.
KFC's localization strategy helped the brand mitigate political risk and overcome various business-related issues. In 2005, KFC was facing negative backlash over the discovery of a carcinogenic dye in two of its chicken products. While this discovery had the potential of ruining the brand's reputation, KFC still managed to increase its profits while opening hundreds of new stores in China that same year. The company's success has been assigned to its China-specific advertising spend and its expertise on the Chinese market and customer base.
Following the 2016 result of the South China Sea arbitration, KFC restaurants in Chinese cities became locations for public protests. Protestors denounced what they viewed as United States interference in China's sovereignty issues. Viewing KFC as symbolic of American presence in China, the protestors called for a boycott of the restaurant chain.
Environmental Actions Much like other fast food businesses, Kentucky Fried Chicken will look to phase out their usage of plastic products and will instead introduce wooden cutlery and more biodegradable packaging material for their orders. Nonbiodegradable plastic bags will also be removed and instead replaced with biodegradable paper bags that will be used in their delivery and takeout bags. This is all in guidance with other fast food restaurants seeking to follow a plastic reduction plan set by Beijing in 2019.
McDonald's The first McDonald's opened in mainland China in 1990, in the Shenzhen Special Economic Zone.
Establishments in Beijing The largest McDonald's in the world opened on April 23, 1992, in Beijing. It has 700 seats, 29 cash registers, and served over 40,000 on its opening day. By 1996, 29 McDonald's had opened in Beijing alone. Initially, mainly affluent families ate there to distinguish themselves and as a result McDonald's became a symbol of a new lifestyle of seeking out foreign cultural influences. One of the biggest reasons McDonald's has experienced more success than other fast food restaurants in China is its high standards of hygiene. Beijing media consistently praises McDonald's cleanliness and frames it against the poor hygiene of its competitors.Waston, James L. (2006). Golden Arches East: McDonald's in East Asia. Stanford, California: Stanford University Press. pp. 39–40.
In Beijing, McDonald's restaurants are state-owned enterprises operating according to franchise agreements. The franchises are owned by Beijing Capital Agricultural Group. The structure is a legacy of McDonald's entry into the Beijing market a time when the municipal government was the largest landlord and the involvement of an SOE facilitated obtaining real estate. Because these franchises have been so profitable, as of at least early 2024, the municipal government has not been interested in privatizing them.
KFC vs. McDonald's in China
KFC entered China in 1987 and McDonald's followed only three years later. By 2018, KFC had 5910 outlets“2018 YumChina Annual Report.” YumChina, ir.yumchina.com/static-files/4f1aaebb-c10c-48cf-bb53-256de7d1ac32. in China, while McDonald's owned only 2700. Based on the data collected of the number of outlets opened in Chinese cities from 1987 to 2007, KFC tends to add 0.39 outlets per year in a city. The rate of new open outlets of McDonald's is about half that of KFC's. However, both chains favor big cities and expanded rapidly after 1999. There have been competitions between KFC and McDonald's since they both entered the market and it usually has a positive impact. The rivalry between them not only expands potential demand for western fast food by getting Chinese customers to try, but also affects the size of the market where it can be easily enlarged. In general, rivals help fast food chains to make better location choices. However, net growth rate of McDonald's has a negative effect on the enlargement of KFC. McDonald's opens new locations in the areas based on KFC's expansion. This impact can be observed more in big cities than small ones. McDonald's takes advantage of KFC on where to expand the business, and KFC benefits from McDonald's by growing customer interest on western fast food.
Children as a target audience McDonald's also has shown to appeal strongly to children to the extent that there would be areas in McDonald's called "children's paradise" consisting of children running around and playing. Parents in Hong Kong have been known to use a trip to McDonald's as a reward for good behavior or academic achievement. As a result, McDonald's has cemented themselves as a significant childhood memory.
Big Mac in China McDonald's in the 1990s represented the American image as well as the promise of modernization. McDonald's strict control over food quality ensured consumers of their cleanliness. Customers also enjoy standardized prices as it brings about an atmosphere of equality, where every customer can get the same level of service and food for the same price. McDonald's meals which usually consist of a burger and fries are interpreted as a snack as traditional Chinese meals consist of rice and a vegetable or meat dish. McDonald's and other foreign fast foods were seen as a treat, especially towards lower income families. As a result, families may save several days of pay to be able to afford to eat at the restaurant. This adds to the perception that McDonald's is not a regular place for meals, rather a cultural experience.
McDonald's leadership policies McDonald's promotion of local national leadership allowed for an easier introduction into the Chinese market. China is known to have fierce competition among global companies for leadership talent as a result McDonald's looks to distinguish themselves by promoting local talent to top positions. 42% of top leadership in McDonald's started out as a crew member.
Scandals A McDonald's in Guangzhou, in the Guangdong province underwent widespread criticism for excluding people of African descent from entering their restaurant. This was in response to the introduction of the novel coronavirus with Chinese officials warning about the rise of imported coronavirus cases from Africa. Guangzhou is known to host one of the largest African communities in China.
Environmental Actions Beijing Simplot Food Processing, the primary supplier of frozen French fries and potato products to McDonald's in China has been fined a total of 3.9 million yuan ($629,000) for having been caught releasing polluted water into the city's primary water pipes. McDonald's responded by saying they will closely monitor their suppliers and have stated that all suppliers "must comply with all relevant local laws and regulations". This puts into question how long this practice has been occurring and the sort of environmental as well as health impacts it may have on civilians.
McDonald's have undergone a significant shift in their packaging to support green initiatives in reducing waste and allowing for more "green" packaging. McDonald's is also expected to open 1,800 green restaurants between the years of 2018–2022. McDonald's follows the LEED volume certification set by the U.S. This packaging will be used to reach three goals revolving around responsible packaging, a continuous reduction, and optimization over the materials used.
Burger King
Establishments in Shanghai