McDonald’s, Apple and Tesla can’t bet on making a fortune in China anymore
- by CNN
- May 14, 2024
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The average check paid by a Starbucks customer declined 9% in China in the first quarter of the year, mainly because of promotions and lower sales of higher priced merchandise, the company said.
âOur consumers are now more cautious in their spending,â said Belinda Wong, chairwoman and co-CEO of Starbucks China, on an earnings call in January. âYou see mass influx of mass market competitors focus on fast store expansion and low price tactics to drive trial.â
Fast food chains have also gotten into the act.
âPoor manâs dealâ has become a trending term among Chinese youth since 2022. It initially referred to McDonaldâs â1+1 = 13.9-yuan pair as you wishâ $1.90 set meal, which was extremely popular among customers.
Other Western fast food chains have subsequently jumped on the bandwagon, launching their own low-price set meals.
Online guides for getting weekly fast food discounts have gone viral on social media.
âMondays at McDonalds for free McNuggets, Tuesdays at Tastien for a âone-for-oneâ offer, Wednesdays at Dominos for 30% off, Thursdays at KFC for the âcrazy Thursdayâ deal, Fridays at Burger King for a half-priced weekday set deal, then heading to Wallace for the weekends. Repeat next week,â according to one guide.
Nanchengxiang, a Beijing-based fast food chain, has even launched an ultra-cheap â3 yuan (41 cents) breakfast buffet,â setting a record for all-you-can-eat meals.
The set, dubbed by many netizens as âa must-have for poor people working in Beijing,â has more than doubled sales during breakfast hours, according to canyin168, a data tracking and analytical website in the catering industry.
âNo easy fixâ
The âdepressedâ consumer sentiment is likely to stay for a while, said Yang from Counterpoint Research.
Some Western brands âinevitablyâ will be forced to reconsider pricing to defend market share.
However, that will be âno easy fix,â as foreign brands are at a disadvantage vis-a-vis domestic brands due to higher operating costs, he added.
Pan Gongsheng, governor at the People's Bank of China (PBOC), speaks at the HKMA-BIS High-Level Conference in Hong Kong, China, on Tuesday, November 28, 2023.
Anthony Kwan/Bloomberg/Getty Images
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