Fast food and takeaways in Chinese market hit RMB 1 Trillion in 2012 report

NEW YORK, May 23, 2013 /PRNewswire/ -- According to a new report released today by market insight leader Mintel, the fast food and takeaway market is expected to reach RMB 1.8 trillion by 2017 largely bolstered by rising economic power in lower-tier cities. This growth compounds growth in recent years; the value of the fast food market in China doubled between 2007-2012 to reach RMB 1 trillion with 80% growth in outlet numbers since 2007.

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However, while fast food outlets are expected to continue to see explosive growth in China, that growth is actually slowing.

David Zhang, China research analyst at Mintel, said:

"Much of the growth to date has continued to benefit from a perceived 'novelty factor' enjoyed by fast food as the segment expands into smaller cities in China. The consumers in first- and a few second-tier cities where fast food has now been available for quite some time are becoming more attuned to the health issues often associated with fast food and are actively choosing healthier options when dining out."

"Greater transparency will be key to maintaining market share, as Chinese consumers begin to demand more information about ingredient sourcing and food preparation. Widespread food scandals have meant greater scrutiny on all aspects of the food industry, and fast food outlets are not immune to this, fueling recent trends for organic and 'green' food products in the marketplace," David Zhang continues.

In addition, it seems that health is a growing concern for fast food customers too: less than half (40%) of Chinese fast food eaters perceive it as not being 'bad for them,' suggesting a need for expansion of healthy product lines and further education about the food industry.

Significant fragmentation in the market is also a challenge for industry players. Yum! Brands, Inc., operators of KFC and Pizza Hut, is the largest fast food group in the country, with 5,275 outlets nationwide in 2012. "For foreign fast food brands to compete with Chinese independent operations, they will need to diversify their product offering to include more Chinese-style food offerings. In order to compete, foreign brands will need to be innovative to appeal to Chinese consumers, either by further modifying their product ranges to include more Chinese flavors or by including new products specifically to appeal to a Chinese audience," David Zhang adds.

Though the market faces significant challenges, the fast food industry can still expect robust growth in the near future, especially if fast food outlets are able to market their product offerings for different meal occasions. Today, most of China's fast food customers eat fast food for lunch (71%); breakfast, weekends, and dinner offer solid future potential, with 54%, 52%, and 50% of respondents, respectively having eaten these at fast food venues.

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SOURCE Mintel