Middle-aged and anxious McDonald's KFC is frantically "pleasing" 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, which was contrary to public order, good customs and the spirit of the law.

　　In fact, whether it is Coriander Xindi or a blind box set meal, the middle-aged anxiety of KFC and McDonald's is reflected behind it.

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

　(1)

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

As of October 2021, the number of McDonald's restaurants in China has reached 4,300; as of the end of 2021, the total number of KFC restaurants in China has reached 8,168.

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

As a result, companies began to innovate at the product level and marketing level to stimulate and please their core consumer groups.

　　The first is the product level.

　　When the two major brands first entered the Chinese market, their product categories were relatively simple, mostly fried chicken and burger-related products.

In recent years, on the one hand, it is to "do as the locals do" to meet the diversified needs of users; on the other hand, it is also to create a gimmick and gain more attention. Both companies have embarked on the road of "bold innovation" at the product level.

　　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 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.

　　The second is the marketing level.

　　At the marketing level, spokespersons are naturally indispensable; in order to attract young groups, McDonald's KFC has also invited many traffic stars to endorse.

　　For example, McDonald's has invited stars such as Yi Yang Qianxi and Rocket Girls to speak for it; while KFC's "star lineup" is even stronger, and has invited Lu Han, Huang Zitao, Wang Yuan, Zhou Dongyu, Wang Junkai, Wang Yibo and many other stars to speak for it .

　　In addition to celebrity endorsements, the two companies have not fallen behind in participating in marketing activities such as event sponsorship, trend co-branding, and limited products.

　　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 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.

　　(2) The financial report shows that McDonald's KFC enters middle-aged anxiety

　　Doing marketing and launching new products frequently are actually the countermeasures that McDonald's KFC is now taking to relieve anxiety.

And their anxiety is all reflected in the financial report.

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

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

　　KFC has had a tough time, too.

According to the financial report, from 2018 to 2021, KFC parent company Yum China (09987.HK) achieved operating income 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 990 million were respectively 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.

　　The capital market also responded quickly. After the results were released, Yum China once fell by more than 4% on February 9, hitting the lowest price since listing at HK$341.2 per share.

(3) The nature of McDonald's KFC anxiety:

　　    The rise of Chinese fast food, the concept of healthy eating 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 that is more acceptable to 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 healthy eating with low sugar and low fat is becoming mainstream. According to the "2021 Digital Research Report on China's Catering Industry" released by the China Chain Store and Franchise Association (CCFA), 85% of the respondents born in the 1995s believe that in the long run, they will be more Concerned about physical health, 82% of respondents said they would be willing to choose healthier foods, 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.

　summary

　　Whether it is because of the development bottleneck that it has fallen into, or in the face of menacing competitors in the industry, it has become the only choice for 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 life of the two fast food giants is no longer as "easy" as it was 30 years ago.

　　Red Star News reporter Yu Yao Liu Mi