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Competition gearing up in China's fast food industry

(China Daily)
Updated: 2008-06-30 15:50

In a nation that has taken pride in the delicacy and diversity of a cuisine which dates back thousands of years, it is astonishing that foreign fast food chains like Kentucky Fried Chicken (KFC) and McDonald's have dominated the fast food industry in China. Over the past two decades, domestic competitors have come and gone, but now a new round of competition is gearing up in China's fast food industry.

November 12, 1987 was a milestone in the fast food industry in China. That was the day KFC, the world's leading fast food chain, having failed in Hong Kong in 1975, made its first foray into the Chinese mainland. It was three years before the global behemoth McDonald's came to China and built its first outlet in Shenzhen.

KFC's entry marked the beginning of the fast food industry in China. Many Beijingers still recall the opening day of the first KFC store. It was in a three-story building of 1,100 square meters in Qianmen, about a five-minute walk from Tian'anmen Square. It is still the largest KFC store worldwide, by floor space.

The line of consumers wanting to purchase the 12-yuan KFC hamburger or 8-yuan fried chicken, or those just wanting a glimpse of the store, extended 50 meters down the road to Tian'anmen Square. On that day, the Qianmen store sold out its 2,200 buckets of fried chicken and made 83,000 yuan.

Such avid consumer enthusiasm may have been beyond the fast food giant's expectations, but it was not implausible. KFC brought the idea of "fast food" to China nine years after China embraced the opening-up and reform policy in 1978, when Chinese curiosity about the West was at a peak.

Given the 120 to 130 yuan monthly salary of Beijing urban residents at that time, KFC prices were not affordable to most, but many still flocked to the store. The KFC store had many attractions. Besides the delicious and crispy fried chicken, there was the image of an affable Colonel Sanders, the striking red, white and blue decor, the smiling attendants and the quick service.

The success of the Beijing KFC prompted the chain to open more stores in China's major cities. By the end of 1992, there were nine KFCs on the mainland.

KFC's booming sales also provided a big incentive to McDonald's to enter the Chinese market in October 1990. The leading global fast food chain chose Shenzhen, a major southern city where there was no KFC at the time, to open its first 500-seat store on Jiefang Road, in the city's busiest area. Its Ronald McDonald clown, yellow M logo and Big Mac helped McDonald's quickly won over local consumers. A plaque on the store's wall testifies to its historic significance in Chinese culinary cultural history.

That same year, Pizza Hut opened its first restaurant at Dongzhimen in Beijing. Pizza Hut brought in another new fast food concept, that of "casual dining". Customers were greeted warmly at the door, escorted to their tables and dined in a relaxed atmosphere with music playing in the background. It was in sharp contrast to poor service consumers had long encountered at local restaurants.

Despite the attractiveness of these fast food chains, local consumers in those early days could seldom afford to eat at KFC, McDonald's or Pizza Hut. The most frequent customers were foreigners living in China. Dining at these establishments was considered such a luxury that some couples chose to hold their small wedding banquets there.

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