Cooking up a challenge

Bearing rice burgers and lotus roots, an army of Chinese fast-food firms is cooking up a challenge to McDonald’s and Yum Brands, tempting cost-conscious diners with healthy, home-grown fare and causing a drag on growth for the US chains in the country’s US$174 billion fast-food market.

McDonald’s said last week it was thinking of slowing expansion in China as diners are tempted by local rivals. Yum, KFC’s parent, warned this month economic weakness in the country would drag on a recovery in sales dented by a food safety scare at the end of last year.

Meanwhile, local firms such as chicken chain Dicos, Country Style Cooking and Kung Fu Catering have been nibbling away at the dominance of their US rivals.

“I’m a bit sick of Western fast food. There’s too much oil, and you hear things like chickens having six legs,” said student Tang Mei, 25, as she dined at Taiwanese-owned fast-food outlet Dicos. “Health concerns have really made people worried.”

Yum and McDonald’s are still the largest fast-food chains in China, but, despite heavy investment, McDonald’s has seen its market share by value stagnate at 2.3 per cent since 2007, according to data from market research firm Euromonitor.

Yum, which held 6.5 per cent last year, is up slightly over the same period, but its same-store sales were hit after a food scare last year and a local outbreak of avian flu. Yum has 5,600 KFC and Pizza Hut China stores, and McDonald’s has 1,800 local outlets.