Middle-aged foreign fast food is trying to win over young people

  "Sweet, sweet and fragrant, you can taste it" - can you imagine that this is the slogan of the new coriander Xindi launched by fast food giant McDonald's (NYSE: MCD)?

  The Red Star Capital Bureau noticed that on February 21, McDonald's launched a new limited-time new product, Coriander Xindi. Once the magical combination of coriander and ice cream was launched, it quickly became a hot search on Weibo.

Although netizens have mixed opinions on the taste, there is no doubt that McDonald's has once again succeeded in attracting everyone's attention.

  Different from the "dark cuisine" route taken by McDonald's, another foreign fast food giant, KFC, chose to use blind boxes to please young people.

At the beginning of this year, KFC and Bubble Mart (09992.HK) jointly launched the "DIMOO Co-branded Blind Box Package".

However, the move subsequently sparked a lot of controversy.

The China Consumers Association directly criticized KFC, arguing that as a food operator, it used limited-edition blind boxes to stimulate consumption by means of "hunger marketing", inducing and condoning consumers to buy food packages irrationally and excessively.

  In fact, whether it's Coriander Xindi or a blind box set, it reflects the mid-life crisis of KFC and McDonald's.

When the freshness brought by "foreign fast food" is no longer, the development encounters a bottleneck, the industry is crowded and the competitors are fierce, how should McDonald's and KFC today handle themselves?

  Chengdu Business Daily-Red Star News reporter Yu Yao and Liu Mi

  "People" to middle-aged Quartet "flanking"

  Dividends disappear

  After a long period of development and the popularity of stores, today's McDonald's KFC is difficult to bring scarcity and freshness to consumers from the brand level.

  impact of the epidemic

  In 2020, McDonald's operating income was US$19.208 billion, a year-on-year decrease of 8.87%; the net profit attributable to ordinary shareholders was US$4.730 billion, a year-on-year decrease of 21.49%.

Excluding the impact of foreign exchange rates, Yum China's full-year same-store sales in 2021 fell 1% from a year earlier, with KFC down 3%.

  The track is crowded

  In the first quarter of 2021, there were 1.103 million fast-food restaurants in China, of which 951,000 were Chinese-style fast-food outlets, accounting for 86%; the number of Western-style fast-food outlets was 152,000, accounting for 14%.

  Consumption upgrade

  As a representative of high-oil and high-calorie fried chicken burgers, McDonald's KFC has been rejected by more and more young consumer groups who pursue health and body management.

  "Middle-aged" can't stop

  McDonald's and KFC have both entered the Chinese market for over 30 years.

As of October 2021, McDonald's has more than 4,300 stores in China; as of the end of 2021, KFC has more than 8,000 restaurants in China.

  Today, McDonald's KFC has lost its scarcity and freshness from the brand level.

As a result, companies are changing tricks to innovate to stimulate and please their core consumer groups.

  Making Products: Do as the Romans do

  On the road of "Chinese food", in addition to "regular meals" such as old Beijing chicken rolls, soy milk fritters, and preserved egg lean meat porridge, KFC has also launched different regional delicacies in combination with consumers in different regions of China.

For example, in 2019, KFC will sell cold pot skewers in ten cities across the country; in January 2021, it will launch a bowl of hot dry noodles for 7 yuan in Wuhan; in May 2021, it will start selling Xiaolong in Hangzhou, Wenzhou, and Shaoxing. Bao; in September 2021, it will enter Henan to sell Hu spicy soup.

  McDonald's is also not to be outdone in product innovation. For example, in December 2020, it launched the magical combination of "biscuits and luncheon meat" "Gilio" burger; in January 2021, McDonald's also launched the magical combination of "oily chili + ice cream". ; During the period of February 21-25 this year, the new Coriander Xindi will be launched for a limited time.

  These behaviors show that the two fast food giants have made many attempts to cater to the local Chinese audience and stimulate young consumers who love early adopters.

Whether it is the appearance or taste of the product, each of their attempts is also very bold and novel.

  Although consumers have mixed reviews of these new products, for these two companies, product-level creativity is particularly important, whether it is to awaken consumers' taste buds or simply brush their presence.

  Doing Marketing: Traffic Blessing

  At the marketing level, spokespersons are naturally indispensable.

McDonald's has invited traffic stars such as Yi Yang Qianxi and Rocket Girl to be their endorsers; while KFC has invited Lu Han, Huang Zitao, Wang Yuan, Zhou Dongyu, Wang Junkai, Wang Yibo, etc. to be their endorsers.

  In terms of marketing activities such as event sponsorship, trend co-branding, limited products, etc., the two companies are not left behind.

  For example, McDonald's sponsored e-sports events for the first time in 2017, successively titled the La Liga e-sports league, sponsored KPL (King of Glory Professional League), and cooperated with "King of Glory" to launch limited skins.

In the first half of 2021, McDonald's held an e-sports campus tour. Over 67,000 students signed up for the competition and formed tens of thousands of teams.

  McDonald's recent marketing case is "Cat Cat Den", which was launched on December 7, 2021. All 100,000 cat dens were sold out in just one day after the launch, and related topics have also brought over 100 million yuan on Weibo. of attention.

  There are also many joint activities that KFC has participated in.

At the beginning of this year, KFC and Bubble Mart jointly launched the DIMOO series of blind boxes. Although they were criticized and almost overturned, it also proved that KFC is very clear about exploring the preferences of young people.

Last year, KFC also co-branded with the popular game "Yuanshen" and launched the "Yuanshen Tivat Enjoying Bucket". In addition to the food in the package, you can also get a "Yuanshen Otherworldly Taste Gift". The gift package contains Wings of Wind Dress up + Currency * 30000 + Cooking Items.

In addition, KFC has also cooperated with the Palace Museum, Zhou Heiya and so on.

  In short, what young people like these days, McDonald's and KFC will find a way to "participate" and continue to attract the attention of young consumers through creative products, celebrities with traffic, and sticky trendy games.

  Read the financial report

  McDonald's KFC enters 'midlife crisis'

  Why does McDonald's KFC take its life to do marketing and frequently release new products?

The answer may be in the financial report.


  Weak performance highlights

  The first is McDonald's, whose weak performance has long been highlighted.

The financial report shows that since 2014, McDonald's has experienced negative revenue growth for five consecutive years, and it has improved slightly in 2019, but the epidemic in 2020 has made the company's operating conditions deteriorate again.

In 2020, McDonald's operating income was US$19.208 billion, a year-on-year decrease of 8.87%; the net profit attributable to ordinary shareholders was US$4.730 billion, a year-on-year decrease of 21.49%.

  In 2021, McDonald's appears to be handing over a deceptively good report card.

Its financial report shows that in 2021, McDonald's achieved operating income of 23.22 billion US dollars, a year-on-year increase of 21%; its net profit reached 7.545 billion US dollars, a year-on-year increase of 59%.

  However, McDonald's 2021Q4 revenue and earnings per share were lower than market expectations, while operating costs increased by 14% year-on-year.

McDonald's shares fell 2.15% in pre-market trading on January 27, 2022, after the earnings report was released, as the business did not meet expectations.


  Shares of parent company fall after results

  KFC is not having a good time either.

According to the financial report, from 2018 to 2021, KFC parent company Yum China (09987.HK) achieved revenue of US$8.415 billion, US$8.776 billion, US$8.263 billion and US$9.853 billion respectively, a year-on-year increase of 8.32%, an increase of 4.29%, and a decline of 5.85%. %, an increase of 21.19%; net profits of US$708 million, US$713 million, US$784 million, and US$990 million were realized, a year-on-year increase of 77.89%, an increase of 0.71%, an increase of 9.96%, and an increase of 26.28%; but the adjusted net profit in 2021 Profit was $525 million, down 15% from $615 million a year earlier.

  Taking a closer look at the 2021 financial report, excluding the impact of exchange rates, the same-store sales of Yum China in 2021 will decrease by 1% compared with the same period last year, of which KFC will decrease by 3%.

  In terms of restaurant profit margin, KFC's profit margin for the whole year of 2021 is 14.9%, a year-on-year decrease of 1.4 percentage points; in the fourth quarter, KFC's single-quarter restaurant profit margin halved to 8.6%, compared with 16.8% in the same period last year.

  After the results were released, Yum China fell by more than 4% on February 9, hitting its lowest price of HK$341.2 per share during the session.

  look at the root

  The rise of Chinese fast food, healthy food has become the mainstream

  The performance has encountered bottlenecks, on the one hand, because the user bonus period has long passed; on the other hand, the fierce industry competition has also put pressure on the fast food giants.

  According to the data from Zhiyan Consulting's "Analysis of the Operation Status and Future Development Trend of China's Fast Food Industry in 2021", there are 1.103 million fast food restaurants in China in the first quarter of 2021, of which the number of Chinese fast food stores is 951 thousand, accounting for 86%; Western fast food stores The number is 152,000, accounting for 14%.

  It can be seen that Chinese fast food is still a catering product more accepted by Chinese consumers. At the same time, the rise of Chinese fast food in recent years under the impetus of capital is also amazing.

According to a white paper released by the China Chain Store & Franchise Association, the chain rate of China's restaurant chain market has increased from 13.3% in 2019 to 15.0% in 2020.

  Today's chain Chinese fast food brands such as Yang Guofu Malatang, Mr. Rice, and Jie Xiaomen are strong competitors of McDonald's and KFC. Consumers have more and more choices, and McDonald's KFC has naturally become one of the many choices of consumers.

  On the other hand, McDonald's KFC's image of "fried chicken burger" has long been deeply ingrained in consumers' hearts, and now with the upgrade of consumption, consumers are beginning to pay more and more attention to healthy diet.

  The concept of low-sugar and low-fat healthy eating is becoming mainstream. According to the "2021 Digital Research Report on China's Catering Industry" released by the China Chain Store & Franchise Association (CCFA), 85% of post-95 respondents believe that in the long run, they will pay more attention to In good health, 82% of respondents said they would be willing to choose healthier food options, and 65% would be willing to pay a premium for high-quality products that are good for health.

As a representative of high-oil and high-calorie fried chicken burgers, McDonald's KFC is also being rejected by more and more young consumer groups who pursue health and body management.


  Whether it is because of the development bottleneck that it has fallen into, or in the face of fierce competitors in the industry, it has become the current choice of KFC McDonald's to please the young group.

However, frequent fancy marketing and avoiding the "rollover crisis" will inevitably lead to a day when consumers are fatigued.

  All in all, the days of the two fast-food giants are hardly as good as they were 30 years ago.