Five Guys to open in Beijing as more US chains hunger for success in China
Unlike earlier attempts that relied on management by overseas headquarters, US firms now favour franchising, analyst says
American burger chain Five Guys will debut its first Beijing store next month, the company said last week, joining a group of US fast-food brands newly entering or accelerating their expansion in China.
Chains including Wendy’s, Chili’s, Texas Chicken and Popeyes are hoping to grab a slice of the world’s second-largest consumer market as they face saturation at home, analysts said.
Five Guys opened its first China outlet in Shanghai in 2021 and drew large crowds. It plans to open three locations in Beijing at popular shopping centres catering to young consumers, with site hoardings indicating opening soon.
“Some smaller American chains are seeking opportunities in China to offset saturation in their domestic markets,” said Sandy Lim, China consumer analyst at S&P Global Ratings. “Despite fierce competition, there are still pockets of demand within China’s large catering market.”
Unlike earlier foreign brands that relied on direct-operation models managed by overseas headquarters – fully exposing them to profits, losses and volatility and causing some to eventually leave the market – many US brands now favour franchising, Lim added.
Fu Yifu, a special research fellow at Su Merchants Bank in Nanjing, in eastern China’s Jiangsu province, said inflation had continued to squeeze household spending power in the US, while the penetration rate of Western fast food in China continued to rise.
Early entrants including KFC, McDonald’s and Starbucks have refined a local franchising model to reduce risk. Five Guys targets quality-focused diners in first-tier cities. As Chinese consumers no longer blindly prefer foreign brands, these chains must rely on distinct products and localised operations to grow, Fu said.