China as a Fast Food Frontier

NEW YORK CITY-As China’s economy continues to boom, so do opportunities for US chain stores, including fast-food restaurants. The two domestic operators making the most headway in the country, which is experience 8% annual GDP growth compared to 3% to 4% here, are Yum! Brands and McDonald’s, according to a Lehman Brothers report.

Louisville, KY-based Yum! operates just over 1,900 restaurants in China, a majority of them KFCs. Sales in that country have increased from $246 million in 1998 to nearly $1.1 billion last year, according to the report. Yum! executives plan 15% to 20% unit growth annually over the next few years.

Meanwhile, McDonald’s, based in Oak Brook, IL, has just about 640 restaurants in China, and 1,000 units are planned by 2008. McDonald’s does not break out its sales figures for units in China, but the Lehman report says that they have not fared as well as other international markets because it has only been in the country since 1990.