The Truth About China’s Restaurant and Food Industry


STEVEN: What about KFC cause you mention caps in your book as well, right?

JEFF: I think for most restaurants that's true. You can be popular as a restaurant and rise and fall based on the year. KFC is a bit of an exception. They've had some ups and downs a little bit, But, actually probably stable. It turns out Chinese consumers really like chicken.

STEVEN: Chicken, yes.

JEFF: Yes, they really liked KFC chicken, it is incredibly popular. So they're a bit of an outlier. A more normal case might be Burger King. Where could you have a good year? Then you can have a bad year. You could go up and you could go down. Most restaurants, it's let's see how we do this season. There are some exceptions, kid. KFC is a bit of an exception. That's not normal, you go to any shopping mall. Like a nice shopping mall and go up to the third or to where the restaurants are or the basement. How many restaurants, there’s like 30 restaurants competing like crazy as you walk by. Right, it's a brutal difficulty game from most restaurants.

STEVEN: Right, there all in one level, too. so

JEFF: They're all there and then you open up Meituan and you look at food you want to get.

STEVEN: Yeah, and they eat what they deliver to.

JEFF: It’s all a discount for this special today. They are all going for you. Like I'm glad I'm not in that game. That’s a tough game

STEVEN: But what about what about McDonald's? What do you think of McDonald's?

JEFF: I would put them as an outlier.

STEVEN: As well

JEFF: I think there's a couple and if you look it up for me restaurants Mcdonalds have probably now about 3,000 outlets. KFC plus Pizza Hut probably has 7500. If you look at it as a percentage of the market and those of the biggest players, it is a very small percentage. I mean, they are not dominated. It's you know, you're talking about a couple percent of the restaurant business of China.

STEVEN: Right,

JEFF: It’s usually a fragmented market.

STEVEN: Right,

JEFF: So, even if you win you're still small, you know, you're still fighting every year. You want to look at winner-take-all? That's WeChat. They compete with nobody. You know 

STEVEN: That's true.

JEFF: That's Meituan Waimai and Alibaba 90% of the food delivery business.


JEFF: So, it's just a fragmented hyper-competitive business. There's ways to win but it's tough and McDonald's has a bit of an outlier like KFC, Pizza Hut. 

STEVEN: Which is

JEFF: Haidilao, you know


JEFF: Shabu Shabu. There are some winners. But, you know, that's 8% of the market collectively

STEVEN: Right, Shabu Shabu

JEFF: Beyond that are fighting it out.

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