CHINA- The Service Economy and Catering Industry Research Center (SECIRC) has revealed that foreign QSR chains in China are engaged in fierce pricing competition as brands seek to attract value-conscious customers and gain market share.
Western fast-food chains are ramping up efforts to cement their position in the highly competitive, promising Chinese QSR market through value-led promotions as the market continues to expand exponentially.
The Research Center cited iiMedia Research Institute’s recent market analysis that valued the Chinese QSR market at CN¥ 368.78 billion (US$ 51.7 billion) in 2023, a 36.3% year-on-year (YoY) increase, the highest growth trajectory across the hospitality and food sector.
The Research Institute also predicts the market to reach the CN¥ 427.78 billion (US$ 59.9 billion) valuation by the end of the year, amid the exponential expansion of China’s fast-paced urban lifestyle and population.
This growth potential has attracted many players, which has led to what SECIRC describes as fierce pricing competition to woo customers and gain market share.
SECIRC cited Burger King’s recent announcement to kick start its CN¥ 9.9 (US$1.37) campaign on August 5, a new value-led promotional strategy that will see the company sell its cheapest burger ever in China.
The promotional campaign will see Burger King’s four signature burgers sold at this price for four consecutive weeks.
The Research center also cited similarities with McDonald’s recent decision to cut down prices to draw customers. In early July, McDonald’s offered burgers starting from CN¥ 10 (US$1.41) for two consecutive weeks.
SECIRC reiterated that the move is a strong signal that foreign QSR brands want to tap into the potential of the Chinese market.
The Research Center also reports many local players are rapidly expanding their operations in China, which further intensifies the competitive pressure.
Zhao Jingqiao, SECIRC’s Director, said, “On the other hand, it is evident that foreign food and beverage enterprises remain optimistic about the domestic consumption market. Given China’s large population, with significant consumption potential in third- and fourth-tier cities, there are numerous opportunities in the lower-tier markets for domestic companies.”
Domestic brands like Wallace (Hua Lai Shi in Chinese) have demonstrated this trend through rapid expansion efforts in lower-tiered cities, offering affordable value meals and intensifying competition in the market.
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