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Fast Food - China - October 2017

“As food delivery has changed what convenience means, fast food brands need to establish other competitiveness than speedy services or convenient locations. Premiumisation is now the key word in the industry, whether in terms of food offerings, store designs or ordering and payment process. In particular, high quality ingredients are what consumers desire most.”

– Summer Chen, Research Analyst

This report looks at the following areas:

  • How to stay trendy?
  • Explore the late night snacking occasion
  • Localising with fusion rather than Chinese dishes

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
        • Definitions
          • Figure 1: Definition of low/mid/high MHI groups, by city tier
      • Executive Summary

          • The market
            • Figure 2: Best- and worst-case value sales forecast of fast food and takeaway market, China, 2012-22
          • Companies and brands
            • The consumer
              • Opportunity for late night snacking occasion
                • Figure 3: Visiting occasion by brand, late night snack, July 2017
              • Convenient location is the top purchasing driver of Western brands
                • Figure 4: Purchasing driver by brand, July 2017
              • Western foods are more preferred than Chinese foods from a Western brand
                • Figure 5: Interested menu innovations from Western brands, July 2017
              • High quality ingredients are what consumers desire most
                • Figure 6: Favourable changes, product quality improvement, July 2017
                • Figure 7: Favourable changes, marketing and promotion, July 2017
              • What we think
              • Issues and Insights

                • How to stay trendy?
                  • The facts
                    • The implications
                      • Figure 8: Culinary examples of active charcoal
                    • Explore the late night snacking occasion
                      • The facts
                        • The implications
                          • Figure 9: Late night snacking campaign, KFC
                        • Localising with fusion rather than Chinese dishes
                          • The facts
                            • The implications
                            • The Market – What You Need to Know

                              • Market growing at a solid pace
                                • Premiumisation is the key word while competition stiffens
                                  • Proliferation of food delivery drives the growth of independents
                                  • Market Size and Forecast

                                    • Market growing at a solid pace
                                      • Figure 10: Market size of fast food and takeaway market, China, 2012-17
                                      • Figure 11: Best- and worst-case value sales forecast of fast food and takeaway market, China, 2012-22
                                      • Figure 12: Best- and worst-case market volume forecast of fast food and takeaway market, China, 2012-22
                                  • Market Factors

                                    • Eating out becomes a key spending area
                                      • Figure 13: Foodservice expenditure in China, 2011-16
                                    • Trading up to premium fast food options
                                      • Delivery has changed what convenience means
                                        • Competition from other categories
                                          • Coffee houses target at meal occasions
                                            • Convenience stores and supermarkets tap into food catering
                                              • Figure 14: Seating area, 7-11, Shanghai
                                              • Figure 15: Wine bar and seafood bar, City Super, Shanghai
                                          • Market Segmentation

                                            • Proliferation of food delivery encourages independents to grow robustly
                                              • Figure 16: Best- and worst-case value sales forecast of independent fast food and takeaway market, China, 2012-22
                                              • Figure 17: Best- and worst-case market volume forecast of independent fast food and takeaway market, China, 2012-22
                                            • Smaller but specialised fast food chains rise
                                              • Figure 18: Best- and worst-case value sales forecast of chained fast food and takeaway market, China, 2012-22
                                              • Figure 19: Best- and worst-case market volume forecast of chained fast food and takeaway market, China, 2012-22
                                          • Key Players – What You Need to Know

                                            • Leading Chinese brands face difficulty in expansion
                                              • Brands explore casual store formats, healthier meals, advanced technologies and marketing schemes to stay competitive
                                                • Innovation highlights
                                                • Market Share

                                                  • Leading Western brands continue expansion
                                                    • Figure 20: Leading chains in the Chinese fast food and takeaway market, by market volume (number of outlets), 2015 and 2016
                                                  • Traditional Chinese brands face difficulty in expansion
                                                  • Competitive Strategies

                                                    • Store upgrade continues
                                                      • Figure 21: Flagship store of Sha Xian Xiao Chi, Guomao, Beijing
                                                      • Figure 22: Designs of new Yang’s Braised Chicken store
                                                      • Figure 23: Old and new outlets of Slap Dumplings, Shanghai
                                                    • Going healthy and premium
                                                      • Figure 24: Black and white Shengjian, Yang’s Dumpling
                                                    • Tech turns wild
                                                      • Dico’s unmanned store
                                                        • Figure 25: Automated dispenser, Dico’s, Shanghai
                                                      • KFC’s payment with facial ID
                                                        • McDonald’s Future 2.0
                                                          • Celebrity endorsement to draw attention
                                                            • Figure 26: Nicholas Chicken Burger, McDonald’s
                                                          • Crossover marketing to create buzz
                                                            • International brands keep localisation while Chinese brands explore the overseas market
                                                            • Global Innovation Trends

                                                              • Food hybrids
                                                                • Figure 27: Examples of hybrid food
                                                              • Bowls, bowls, bowls
                                                                • Figure 28: Poke and Buddha bowls
                                                              • Exploring pop-ups
                                                                • Souvenirs rolling out
                                                                  • Figure 29: Gifts and merchandise from KFC and McDonald’s
                                                                  • Figure 30: Christmas sweater of Burger King (France)
                                                                • Hybrid restaurant concept: springboard for growth?
                                                                • The Consumer – What You Need to Know

                                                                  • Opportunity for late night snacking occasion
                                                                    • Convenient location is the top purchasing driver of Western brands
                                                                      • Western foods are more preferred than Chinese foods from a Western brand
                                                                        • High quality ingredients are what consumers desire most
                                                                        • Brand Penetration

                                                                          • Real Kungfu surpasses Yonghe King
                                                                            • Figure 31: Fast food brand penetration, July 2017
                                                                          • Burger King and Subway: disparate penetration with comparable store numbers
                                                                            • Figure 32: Fast food brand penetration, Burger King and Subway against average, by gender and age, July 2017
                                                                          • Dicos now sees same penetration across city tiers
                                                                            • Figure 33: Fast food brand penetration, Dicos, by city tier, July 2017
                                                                          • Chinese brands less popular among young consumers
                                                                            • Figure 34: Fast food brand penetration, Western and Chinese style, by age, July 2017
                                                                        • Visiting Occasion by Brand

                                                                          • Breakfast can be a winning occasion that leads to growth
                                                                            • Figure 35: Visiting occasion by brand, July 2017
                                                                          • Double-digit visitation rates for late night snack occasion
                                                                            • Figure 36: Visiting occasion by brand, late night snack, July 2017
                                                                          • Opportunity for Chinese brands to explore afternoon tea
                                                                            • Figure 37: Visiting occasion by brand, afternoon tea, July 2017
                                                                        • Purchasing Driver by Brand

                                                                          • Top driver: convenient location for Western brands and tasty foods for Chinese brands
                                                                            • Figure 38: Purchasing driver by brand, July 2017
                                                                          • KFC and McDonald’s share similar purchasing drivers
                                                                            • Figure 39: Purchasing driver by brand, KFC and McDonald’s, July 2017
                                                                          • Healthier image of Subway among Western brands
                                                                            • Figure 40: Selected purchasing driver by brand, July 2017
                                                                        • Types of Fast Food Had Most Often

                                                                          • Popularity of Western fast food is widely varied
                                                                            • Figure 41: Types of fast food had most often, July 2017
                                                                            • Figure 42: Selected types of fast food had most often, by income, July 2017
                                                                          • Regional difference of Chinese fast foods
                                                                            • Figure 43: Types of fast food had most often, Chinese style, by region, July 2017
                                                                          • Chinese fast foods less appealing to the younger generation
                                                                            • Figure 44: Selected types of Chinese fast food had most often, by age, July 2017
                                                                        • Interested Menu Innovations from Western Brands

                                                                          • Western foods favoured over Chinese foods
                                                                            • Figure 45: Interested menu innovations from Western brands, July 2017
                                                                          • Lighter options more favoured among women
                                                                            • Figure 46: Selected interested menu innovations from Western brands, by gender, July 2017
                                                                          • Chinese festive foods definitely no, but Chinese staple dishes maybe
                                                                            • Figure 47: Interested menu innovations from Western brands, Chinese staple dishes, by age, July 2017
                                                                          • Embrace popular foods to stay trendy
                                                                            • Alcoholic drinks are not going to be a source of growth
                                                                              • Figure 48: Interested menu innovations from Western brands, alcoholic drinks, by age and MHI, July 2017
                                                                          • Favourable Changes

                                                                            • Ingredients come before cooking methods
                                                                              • Figure 49: Favourable changes, product quality improvement, July 2017
                                                                            • Regular menu updates bring excitement, while member-exclusive discounts build on brand loyalty
                                                                              • Figure 50: Favourable changes, marketing and promotion, July 2017
                                                                            • Marketing schemes especially attractive to young consumers
                                                                              • Figure 51: Selected favourable changes, by age, July 2017
                                                                          • Meet the Mintropolitans

                                                                            • Higher interest in cereals and popular foods from Western brands
                                                                              • Figure 52: Selected interested menu innovations from Western brands, by consumer classification, July 2017
                                                                            • Eager to see high quality vegetables
                                                                              • Figure 53: Selected favourable changes, by consumer classification, July 2017
                                                                          • Appendix – Market Size and Forecast

                                                                              • Figure 54: Value sales of fast food and takeaway market, China, 2012-22
                                                                              • Figure 55: Market volume of fast food and takeaway market, China, 2012-22
                                                                          • Appendix – Market Segmentation

                                                                              • Figure 56: Value sales of fast food and takeaway market, by market segments, China, 2012-22
                                                                              • Figure 57: Market volume of fast food and takeaway market, by market segments, China, 2012-22
                                                                          • Appendix – Methodology and Abbreviations

                                                                            • Methodology
                                                                              • Fan chart forecast
                                                                                • Abbreviations

                                                                                Fast Food - China - October 2017

                                                                                US $4,460.00 (Excl.Tax)