Like everyone else, Chinese people love fast food. Western purveyors of salty, fatty delectables such as McDonald’s and KFC serve up vast quantities of lunch and dinner to the world’s most populous nation. But not breakfast. Chinese consumers have yet to be won over by the Egg McMuffin or even the breakfast platter (a mix of sausage, scrambled eggs and hash browns). No Western fast-food chain has figured out how to please hungry Chinese mouths in the morning.
Paul French of Mintel, a research firm, reckons that the Chinese foreign fast-food market, valued at RMB 87.8 ($13.9) billion, is “underpenetrated” at breakfast time. Only 21% of Chinese eat fast food in the morning, compared to over 75% at lunch time. Why is this? “People want congee [a sort of porridge with goodies in it] for breakfast, not a sausage sandwich,” says Mr French.
Domestic restaurants see a gap in the market, and are rising early to fill it. They are copying the foreigners’ chief selling points—fashionable decor and clean tables—but keeping the menu strictly Chinese. Local fast-food chains such as Manfadu and 82 degrees are building new stores with plastic menus and western-style layouts. They serve congee with pickled vegetables and youtiao (deep-fried dough). Hungry locals flock in. Mr French reckons that 82 degrees is opening two stores a week to meet growing demand. He also reckons Manfadu now holds 10% of the Shanghai breakfast market, up from 2% in 2008.
McDonald’s, which has got away with peddling the same breakfast products everywhere with a few minor tweaks (an Egg McMuffin with chicken is an option in China), may have to think harder. Though breakfast accounts for around a quarter of the firm’s American sales, in China this number is less than 10%. McDonald’s says it is playing the long game. “We know breakfast isn’t going to be an overnight sensation,” says Jessica Lee, a senior director in McDonald’s Asia, “it wasn’t in the US either”.
McDonald’s are making inroads into the breakfast market with new combinations, “the egg McMuffin with chicken is selling well” says Miss Lee. But the company’s commitment to their current model of minor tweaking rather than truly new products may hold them back. They should heed the Chinese proverb, “do not fear going forward slowly, fear standing still.”
Source: Business Insider Oct 2012