Industry Report - Fast-Food Restaurants in China.pdf
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1、CONTENTS Error! No text of specified style in document. November 2011 | 1-800-330-3772 | IBISWorld Industry Report 6720 Fast-Food Restaurants in China November 2011 About This Industry . 2 Industry Definition . 2 Main Activities . 2 Similar Industries 2 Additional Resources 2 Industry Performance
2、3 Executive Summary 3 Key External Drivers . 3 Current Performance 4 Industry Outlook 7 Industry Life Cycle 9 Products the greater importance of brand image (and therefore the need for more investment in advertising); efficient chain management; and fast construction of restaurant and outlet network
3、s. The number of KFC restaurants has been increasing at a rate of one per day, while Dicos and McDonalds open one new restaurant every three days. Outlets of domestic and Asian fast-food operators, such as New Asia, Yonghe King, Yoshinoya and Malan Noodles, have been increasing at a slightly slower
4、rate. Rapidly growing industry establishment and enterprise numbers has caused competition to intensify. The basis of competition has shifted away from price, product quality and service toward brand image, network construction, location, product range and localization (for foreign players). Enterpr
5、ises in the industry have grown not only in numbers, but also in scale. The number of fast-food restaurants in the Top 100 catering enterprises increased from 20 with a revenue share of 33.3% in 2004, to an estimated 30 with a revenue share of 36.0% in 2010. The industry concentration level, althoug
6、h low, has slowly increased over the past five years, with chain and multi-establishment operators generating an increasing share of industry revenue. Foreign franchisors influence industry development Until recently, the main industry model has been the direct management of company-owned restaurant
7、s, as opposed to franchising. Multinational operators have been very cautious in franchising restaurants in China. KFC opened its first franchised restaurant in 1994, but since then the franchising business has accounted for only a small share of company revenue. McDonalds allowed its first franchis
8、ee to start operations in 2003, yet still has a very limited number of franchised restaurants. Large income differentials between regions and cities and a weak legal framework for franchisors in China have been inhibitors for the fast development of operators with this business model. McDonalds thor
9、oughly investigates the finances of all franchisees and selects applicants with a history at a large company. It does not allow its Chinese franchisees to borrow money from banks. Likewise, KFCs Chinese franchisees must provide almost all of the start-up capital from personal savings. Both companies
10、 build the restaurants themselves and hire and train the initial staff before turning a store over to a franchisee. Progress in the legal framework applicable to this industry was made in 2005, when the Ministry of Commerce issued the new Measures for the Administration of Commercial Franchises. Thi
11、s new regulation abolished the legal uncertainty regarding franchising in China. The new legislation encourages foreign franchisors in the retail, sport, restaurant, hotel and other service industries with business tax exemptions and other preferential tax conditions. The legislation defines two fra
12、nchise models: direct, where sub- franchising is not permitted; and sub-franchise, where the franchisor grants franchising rights for a particular region to the franchisee who then has the right to sub-franchise or set up its own operations. Franchise agreements must run for a minimum of three years
13、. The improvement in the legal framework has had a positive influence on industry development and encouraged new market entries, as the franchise operation model lowers the entry barriers for both franchisors and franchisees. In 2006, the number of franchised establishments increased by 15.0% and th
14、eir revenue grew by 21.7%. The proportion of total industry revenue generated by franchised operations also increased significantly. Partly due to the legal changes regarding franchises, foreign enterprises have grown faster than the industry as a whole over the past five years. With their strong ma
15、nagement, technological expertise and capital strength, foreign enterprises pose a serious challenge to their domestic competitors. However, the increasing influence of foreign enterprises has enhanced industry development and modernization by introducing new operation models and food concepts. Loca
16、l companies have followed their example by trying to establish their own brands and networks, and have gained a certain competitiveness over the years. They have the advantage of offering traditional Chinese food, which has higher nutritional value and WWW.IBISWORLD.COM.CN Fast-Food Restaurants in C
17、hina November 2011 6 lower prices. Now that local companies have been operating in the market for many years, there are fewer failures and more successful operators. WWW.IBISWORLD.COM.CN Fast-Food Restaurants in China November 2011 7 Industry Outlook ACMR-IBISWorld expects that in the next five year
18、s, the Fast-food Service Eating Places industry in China will continue to grow strongly. Industry revenue is forecast to increase by an annualized 14.5% to reach $147.0 billion in 2016. This is slower growth than that achieved by the industry in the past five years as the industry is maturing and th
19、e recovery from the global recession will continue to affect consumer confidence, spending and demand. Growth in the number of enterprises, establishments and employment is expected to slow considerably due to increasing competition and expected saturation in the most developed markets, such as thos
20、e in large cities and well-developed areas. In the five years through 2016, wages are forecast to account for between 14.6% and 15.0% of industry revenue. As the industry continues to develop and as competition intensifies, firms will be forced to hire more staff to provide enhanced services to cust
21、omers. Employment is forecast to increase at an annualized rate of 5.2% in the next five years, to total more than 8.7 million workers. Employment will increase at a slower rate than total wages, reflecting an increase in the average wage for industry employees, from $1,680 per annum in 2011 to $2,4
22、44 in 2016. The trend toward product and taste localization and product individualization will continue in the next five years and will have a greater influence on industry players. Product and market segments will become more diversified with the development of domestic Chinese-style fast-food serv
23、ice providers. This segment will attract an increasing number of both domestic and foreign participants. Yum! Restaurants has already established its first Chinese fast-food brand, East Dawning, and its success is likely to attract other large multinational operators. Revenue from franchising operat
24、ions will account for an increasing share of total industry revenue. Currently, franchises account for about 16.5% of industry revenue but improvements in Chinas legal framework will attract more foreign firms and their share is expected to exceed 19.0% in 2016. This segment is expected to continue
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