Invest1 publisher2 min readPublished
Three American chains have announced 4,267 new restaurants in China
Mixue's answer, going the other way, is three US stores plus two dozen announcements. The American build-out runs through Chinese partners who find the sites and share the risk, and a Chinese firm now owns 60% of Starbucks China.
The Investor · Invest desk
What happened
- China is KFC's largest market by far, with about 13,000 restaurants there against around 3,750 in the United States.
- McDonald's plans 1,000 new restaurants in China this year and 10,000 in total by 2028.
- The first Church's Texas Chicken in Shanghai opened last month, with customers queuing in the rain, and the chain plans at least 600 more across China.
- Mixue, which has more than 53,000 locations, opened its first three US stores in December, drawing a queue in the cold at Herald Square in New York.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- constraint Tariffs price goods that cross a border, and these chains are crossing as brands: the American growth in China is leases and local builds arranged by Chinese partners who share the financial risk.
- decision Every US chain scaling in China now has to decide how much of the local company to keep; Starbucks kept 40% of its own China arm and handed the majority to local capital.
- exposure Thousands of units of committed expansion sit on the assumption that Chinese consumers keep wanting American logos, which Shaun Rein says politics has not dented.
- contradiction Fortune describes a two-way cultural bridge, but the inbound lane is 0.006% of Mixue's own network.
Divide KFC's roughly 13,000 Chinese restaurants by the four-to-one population ratio Fortune cites and you get 3,250 stores for every US-sized group of consumers, below the roughly 3,750 KFC runs at home [2][4][1]. The chain has had a long run at it. It opened in Beijing in 1987, three years ahead of McDonald's and Pizza Hut [3].
Burger King supplies a base to work from: tripling to 4,000 stores by 2035 implies about 1,333 today and roughly 2,667 still to open [6][2]. Add Wendy's 1,000 over the next decade [8] and Church's Texas Chicken's at least 600 [7], and three chains have announced about 4,267 Chinese restaurants [3]. Mixue, travelling the other way, has announced at least two dozen US stores beyond its first three [16]. That is roughly 175 announced American units in China for every announced Chinese unit in America [4].
The push outward has pressure behind it. China's languishing economy and cutthroat industry competition are what have Chinese chains trying their luck in the US, Fortune reported [18]. Yaling Jiang, founder of the market research firm ApertureChina, said "Consumerism builds a safe, introductory channel for contemporary Chinese culture and can be a great way to elevate China's soft power" [14].
A restaurant opened by a Chinese partner comes down to a lease and a build. Most American chains now rely on Chinese partners to find locations and share the financial risk, according to Fortune [9], and KFC's Chinese menu sells custardy egg tarts and congee alongside french fries and Original Recipe chicken [11]. "They need to operate like a Chinese company but deliver American menus that incorporate Chinese values, eating habits, and tastes," said Sory Park, a project manager at Daxue Consulting [12].
The ownership direction interests me more than the brand direction. Chinese capital now holds 60% of Starbucks' China operation, bought earlier this year after several years of falling store traffic [10]; Fortune does not give the price [20]. The American side still owns the demand outright. "Despite political tensions between the U.S. and China, Chinese actually still go crazy for American brands," said Shaun Rein, founder and managing director of the Shanghai-based China Market Research Group [13].
If the chains chasing 4,000 and 10,000 Chinese stores get there holding their local arms whole, then the Starbucks sale was one tired asset changing hands, and I have this wrong [5][6][10]. The test is whether the next American brand to pass a thousand Chinese restaurants funds them itself, or finds a partner in Shanghai to carry the sites.
What to watch
- Whether McDonald's actually opens 1,000 Chinese restaurants this year, the cadence its 10,000-by-2028 target needs.
- Whether Mixue converts its two dozen announced US stores into openings, or stops near the three it has.
- The menu for Thursday's state dinner, which the White House has not revealed.