Considering the recent changes in operating costs, McDonald's China has adjusted some product prices starting from today (December 27, 2023), with an average increase of about 3%. Currently, prices have been clearly marked on various ordering channels.
The reporter found that some sets, hamburger items, and snacks at McDonald's have all increased in price by 0.5 yuan to 2 yuan, for example, the most classic spicy chicken leg burger has increased from 24 yuan to 24.5 yuan. However, there are also some products and services that have not been changed, such as the 13.9 yuan on-demand package mocked as the "poor guy package", Hi Flip Monday, 60% off breakfast card, O McKinsey membership, and so on. Recently, McDonald's has also launched a designated package with a "half price for the second order" and a "buy one get one free" discount for the first bucket of gold in the new year.
Will other Western fast food prices increase in the near future? Regarding this, Burger King officials responded to First Financial reporters that Burger King has no plans to raise prices in the near future. KFC customer service also stated that they have not received any relevant notification so far.
In recent years, McDonald's has raised prices on average once a year or so. In December 2021, McDonald's China raised the price of the Suixin Pai Meal from 12 yuan to 12.9 yuan. In December 2022, McDonald's once again raised the price of the Suixin Pai Meal by 1 yuan to 13.9 yuan. At the same time, some of McDonald's products have also increased in price by 0.5 to 1 yuan.
KFC seems to have a lower frequency of price increases, but its average order value is higher. According to data from Narrow Door Meal Eye, as of December 27th, McDonald's had a unit price of 27.96 yuan and KFC had a unit price of 33.99 yuan.
Zhu Danpeng, Vice President of Guangdong Food Safety Promotion Association, analyzed that the price increase of Western fast food is mainly due to the increase in various costs. The audience for businesses like McDonald's and KFC is mainly the younger generation, and in fact, their sensitivity to price is not very high. Therefore, a slight price increase has little impact on the overall Western style fast food.
Regardless of whether the price increases or not, focusing on the sinking market and continuously expanding the Chinese market is the common goal of McDonald's and KFC.
Zhu Danpeng believes that the overall development of Western fast food is relatively stable. At present, McDonald's and KFC are focusing on expanding their stores in the lower tier market, and the overall activity of the lower tier market is in line with the expansion strategy, as the saturation of stores in the first and second tier markets is already very high.
Previously, according to Zhang Jiayin, CEO of McDonald's China, according to the annual plan for 2023, McDonald's will add more than 900 new stores. By 2028, McDonald's plans to increase the number of restaurants to 10000. According to data from Narrow Door Meal Eye, as of December 27th, the number of McDonald's stores in China is 6420.
While the number of stores is doubling, McDonald's is also sinking more into lower tier cities in China. Before the Golden Arch era, McDonald's focused more on market development in first and second tier cities. Currently, approximately 50% of McDonald's restaurants are located in third, fourth, and fifth tier cities. Out of the 10000 restaurants to be opened by 2028, lower tier cities also account for half of the volume.
KFC has already achieved its goal of ten thousand stores. On December 15th, with the opening of KFC Beijing Hangzhou Grand Canal Restaurant at the Wulinmen Wharf in Hangzhou, KFC China's store size officially exceeded 10000. KFC's next goal is to reach over 700 million Chinese consumers with its food and services by 2026, achieving a population growth of over 50%.
Yum! Brands China Chief Financial Officer Yang Jiawei stated during the 2023 Q3 financial report conference call that the company is expanding its price range to attract more customer groups, and KFC has also launched Chinese style burgers in its lower tier markets.