Wednesday, 25 June 2008

Investors in China seek out fast food

HONG KONG: With the stock market debut this month of the hot-pot restaurant chain Little Sheep, brokers are promoting a new theme for investors hungry for a slice of China's consumer boom: home-grown fast food.
Chinese appetite for on-the-go burgers, fried chicken, pizza and noodles is expected to make fast food a $66 billion industry in China by 2009, up from $51.7 billion last year, according to the research firm Euromonitor.
The Chinese chains Little Sheep, Café de Coral and Fairwood, as well as Ajisen of Japan and the international behemoths KFC, Pizza Hut, McDonald's and Burger King, are all catering to growing demand for fast food.
But food prices in China, the world's fastest-growing major economy, are soaring, and experts say a lack of pricing power is squeezing firms in a crowded market, where scale is the key to long term success and profitability.
Food costs account for around a quarter of fast-food chains' expenses, analysts say. Adding pressure is an extremely fragmented market where the five largest Chinese companies account for just 3 percent of the market.

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