China may be losing its appetite for fast foods. Sales at KFC and McDonald’s have declined recently, following several years of accelerated growth.
Yum Brands (owner of KFC) registered a mere 6% uptick in same-store sales in China, significantly down from last year’s 19% growth. McDonald’s had its worst quarter in sales growth in nine years, with Asia/Pacific store sales up only 1.4%.
McDonald’s doesn’t see any improvement for the fourth quarter, said Don Thompson, CEO. “Global economies remain challenging and our comparable sales for October are currently trending negative.”
The numbers likely are tied to a slowing down of the Chinese economy, with the National Bureau of Statistics saying the economy registered its lowest level last quarter in nearly four years. Manufacturing has been down, and Chinese equity markets have been impacted as well.
Analysts point out that companies with Asian locations have experienced lower earnings. “What we’ve seen is that those companies that are more U.S. focused have surprised on the upside, and those that have more of a more global bent have had more difficulties,” said Paul Zemsky, chief investment officer at ING Investment Management.
Source: CNN Money Oct 2012