皇冠体育app

Pedestrians walk past Yum Brands Inc's Pizza Hut and KFC restaurants in Shanghai.[Photo/VCG]

The Chinese middle class is upgrading to products in the "affordable premium" segment, accounting for the popularity of chains like Starbucks, which is opening up about 500 stores a year in the country.

"The volume that Chinese are consuming is not growing rapidly, but they are trading up in terms of what they are buying, and we are seeing this not just in the first and second-tier cities but across lower-tier cities as well," said OC&C Strategy Consultant's Greater 皇冠体育app partner Jack Chuang.

This trend is benefiting foreign consumer brands that have been positioned as premium from the beginning, like Danone's Evian mineral water brand, he said.

"Chains like Starbucks are walking into the right moment now in 皇冠体育app," said Hao Yongqiang, vice-director of the 皇冠体育app Chain Store and Franchise Association. "Just like ... how, long ago, everyone wanted to eat hamburgers."

Still, it is foreign brands that hold sway. For, the historical dominance of McDonald's and Yum's KFC and Pizza Hut in the Chinese fast-food industry has meant that there are almost no home-grown fast-food chains with enough experience and scale to run massive operations like them.

The popularity of KFC and McDonald's in 皇冠体育app has stemmed from their novelty as Americana, not their low prices, said management professor Li Weihua of the 皇冠体育app University of Political Science and Law. "Once the novelty factor wears off, there's nothing keeping consumers going there as local chains are cheaper and often more dynamic in meeting local tastes and preferences," he said.

James Roy, a senior analyst at 皇冠体育app Market Research Group, said, "The problem with franchising in a developing country is how to control for quality. Not many players have the scale or depth that can take on the entire country's franchise rights. Dicos or Real Kungfu might also be waiting for the price to come down."

Yum 皇冠体育app is providing high-quality food and continually "adapting menus to cater to the evolving preferences of Chinese consumers," said the company in an e-mail statement.

Yum's KFC chain in 皇冠体育app performed better than the company expected in the second quarter, after a two-year slump sparked by a food-safety scare, bird flu outbreak and competition from local restaurants.

In an e-mail statement, McDonald's 皇冠体育app said it is committed to providing healthier choices such as whole-wheat McMuffins and chicken cereal congee (porridge) to customers in 皇冠体育app.

Bloomberg contributed to the story.

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