Dairy Queen opts to go premium in Chinese market

CHINA- Blizzard & Burgers, owned by fast food chain Dairy Queen, has revealed it is not waging a price war against other QSR chains in China and is targeting premium customers. 

According to Alan Hsu, owner of Dairy Queen’s master franchisee in China, the ongoing QSR pricing war in China has become more aggressive for chains competing for the lower-priced market segment. 

He dismissed the common notion in China’s QSR market, which postulates for a brand to succeed in the country, it needs to price its menu offering on the lower side. However, Hsu argues this has the direct effect of turning the menu offering into a commodity. 

The CEO argues a brand can be successful in China and still go premium. 

Hsu said, “In China, it’s not those on the bottom or top that decline; it’s the middle player.” 

“We don’t want to become a middle-mainstream player. We want to go to that segment where consumers care about quality more than about money.” 

Hsu went on to reveal Blizzard & Burgers desires to be a value-for-quality brand and not a value for money brand.  

The CEO reiterated this point by highlighting how the restaurant uses premium ingredients like 100% Angus Beef to make burger patties and brioche buns made with New Zealand Butter. 

Hsu further argued numerous players in the Chinese QSR market actively participating in the pricing war have reported declining profitability in the past year. 

However, market analysts remain sceptical over the QSR chain’s decision to go premium amid high inflation. 

According to a report by consultancy firm McKinsey and Company, confidence remained low among Chinese consumers due to financial uncertainty. However, there are signs of gradual recovery, with retail sales in Q2 2024 rising by 4.7% after a 3.7% increase in Q1 2024. 

The market analysis also revealed that consumers are purchasing certain product categories while cutting back on spending on other categories.  

This selective pricing pattern reveals there is a segment of the market that prioritizes quality and value in some cases, even as they seek to save money on other categories. 

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