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QSR brands rethink Asia

News, 12 January 2017
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MUMBAI/BEIJING: A spate of business restructuring, revamped menus and new brand launches is reshaping the fast food sector, as global brands look to boost growth in the major Asian markets of India and China.

Earlier this week, McDonald's sold an 80% stake in its China business to a consortium led by state-run investor Citic. Meanwhile, last October Yum Brands, which owns the KFC, Pizza Hut and Taco Bell chains, spun off its Chinese operations into a separate company, Yum China.

Handing control to local management is intended to enable faster expansion. McDonald's owners plan on adding another 1,500 restaurants over the next five years, mostly in smaller cities, to the existing 2,400. Yum China has ambitions to eventually have 20,000 restaurants, compared to the current figure of 7,000.

The latter has just opened its first Taco Bell outlet in China, adapting the menu for local tastes. CEO Micky Pant reported that "the initial response from customers is very encouraging", adding that he believed the brand "will resonate well with Chinese millennials".

In India, the focus is less on corporate structures and increasing the number of outlets than on simply getting customers through the door.

Rahul Shinde, managing director of KFC India, outlined to the Economic Times several factors that had forced the brand to reconsider its approach, including a slowdown in consumer sentiment, Nestle's Maggi recall, pressure on rentals and operational efficiencies, online food aggregators and the influx of many new brands.

"The challenge was to get the consumer to give us one more visit," he said, to which end the brand has refocused on chicken and dialled down its vegetarian offering while also redesigning its Hangout stores to appeal to a younger demographic.

McDonald's, meanwhile, is rolling out a new breakfast menu across India, which combines local options such as anda bhurji with waffles and muffins and is aimed at attracting customers earlier in the day.

"We are going to grow the Indian breakfast market dramatically," said Amit Jatia, vice-chairman of Westlife Development, which operates McDonald's restaurants in the west and south.

Data sourced from Economic Times, Nation's Restaurant News, Financial Times; additional content by Warc staff

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