Foreign fast food brands cut prices amid growing competitive pressure
A consumer orders food at a Burger King branch in Shanghai on Friday. Photo: GT
US fast food giant Burger King will begin its “9.9 yuan ($1.37) era” on Monday, selling its cheapest hamburger ever in China as part of a new round of promotional activities aimed at capturing market share amid growing competition.
Rival McDonald’s is also cutting prices to attract consumers, which experts and media say shows foreign fast food brands are keen to expand their market share and tap China’s greater potential.
Starting Monday, four of Burger King’s signature burgers will be sold at 9.9 yuan each for four consecutive weeks. For example, the price of a fruitwood-grilled chicken burger will drop from 24 yuan to 9.9 yuan. The prices of other burgers will be reduced by the same amount.
The company describes the promotion as an unprecedented initiative, aimed at engaging consumers with extended duration and competitive prices across dine-in, delivery and e-commerce platforms, with no membership restrictions, according to media reports.
The move is part of Burger King’s strategy of regularly running low-price promotions in the second half of this year. The 9.9 yuan burgers are comparable to McDonald’s recent promotion, which began in early July and offered burgers starting at 10 yuan for 14 consecutive days.
It’s time for burgers to quickly enter the catering market in China, Yicai Global reported, citing Tang Junzhang, marketing director of Burger King China.
Tang told thepaper.cn that with burgers costing 2 to 2.5 times that of coffee, selling them at 9.9 yuan would not bring immediate profits. But in the highly competitive fast food market, the company may not be able to survive without price promotions, he told the paper.
“In today’s highly competitive Chinese market, consumers are looking for discounts, influencing their purchasing decisions based on the best deals available,” a McDonald’s executive commented when reviewing the company’s second-quarter performance in China.
As foreign fast food chains unveil promotional activities, domestic brands like Wallace (Hua Lai Shi in Chinese) are growing rapidly with low average transaction values, intensifying competition in China’s fast food chain market, the Global Times has learned.
Faced with multiple market challenges, Burger King, positioned in the mid- and high-end segment, was forced to join the price competition.
Burger King has been steadily seeking to expand its market share in China. In late 2018, the company announced plans to open more than 200 new stores by 2024. Currently, Burger King stores are mainly concentrated in first- and second-tier cities, but the company will expand to more third- and fourth-tier cities, according to media reports.
In recent years, China’s Western fast food market has continued to expand. According to iiMedia Research Institute, the market size will reach 368.78 billion yuan in 2023, an increase of 36.3% over the previous year, exceeding the average development level of the entire catering industry.
The market size is expected to reach 427.78 billion yuan this year, indicating significant growth potential amid urban residents’ faster pace of life.
Price competition among Western fast food brands is driven by multiple factors. On the one hand, competition is intense this year, requiring competitive pricing to win market share, Zhao Jingqiao, director of the Service Economy and Catering Industry Research Center of the Chinese Academy of Social Sciences, told the Global Times on Sunday.
Zhao said that many domestic private enterprises are also expanding rapidly in the Western fast food industry and intensifying competitive pressure.
“On the other hand, it is obvious that foreign food and beverage companies remain optimistic about the domestic consumption market. Given China’s large population and the significant consumption potential of third- and fourth-tier cities, there are many opportunities in lower-tier markets,” Zhao said.
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