Tough rivalry between KFC and McDonald’s in China

Tough rivalry between KFC and McDonald’s in China


The top most junk food giants namely KFC (Kentucky Fried Chicken) and McDonald’s are facing a tougher competition in China from local food vendors which have been created by App-based start-ups.

As per Wall Street Journal reports, the App-based start-up  companies incorporate * and Meituan Waimai which are backed respectively by Tencent and Alibaba, are aggregating tens of thousands of food outlets across China and offer door-to-door delivery, which previously made the Western companies so popular among urban consumers.

(*both are dominating the market with 40% and 34% share respectively)

UPDATE: The annual sales of food-delivery apps are rising fast in China, and are expected to cross US$ 25 billion this year.

INSIGHT: In china, Yum Brands (owing Pizza Hut and KFC) and McDonald’s have also faced tainted meat scandal which made them lose much of their revenues in the Chinese continent. Yum’s same-store sales in China, one of its prime markets, have declined by 10% in 2Q, in comparison to a 12% decrease in 1Q and a 15% increase in the same Q in year 2014. As for McDonalds, the earlier reports have found a 2.5% decline in global sales within Asia, Africa and Middle East. On the other hand there has been a 7.3% decrease on Africa due to food unhygienic scandals in China.

In order to sustain their business, McDonald’s and Yum are now merging with the delivery start-ups – Wall Street Journal.

In short, to invest heavily to dominate the market for everything from cinema tickets to taxi rides, the internet companies in China are working hard to diversify their operations.

Let’s see where the junk food giants sail through in these tough times.

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Brayden Fortin is a American with numerous years of investment experience in the American Equity Market and in the Global Commodity Market. He has a B.Com degree from a well respected Canadian university and has experience working in the wealth management industry. He is interested in delving into numbers to analyze companies and markets. He won a couple of international strategy simulation competitions involving decision making through numerical analysis, and also scored in the top 50 on the Bloomberg Aptitude Test (out of nearly 200,000 test takers).