Dining out, is mainly done by youngsters, who are very online. I reckon KFC, and Pizza are not "cheap" in China, comparing with other local casual dining options, and youngsters are usually with lesser budget...
Hungry? China's food delivery apps bite into Yum revival
09 Oct 2015 18:51
[SHANGHAI] As China's economy stutters, growing numbers of diners on a budget are tapping into smartphone applications to snap up meal delivery deals, spelling big trouble for fast food chains like Yum Brands Inc's KFC and Pizza Hut.
People like Li Jiali, a 20-year-old Shanghai student, say they have all the dining options they need nestling in their phones, without needing to venture out of the house. Yum's shares dived this week after it said it's way behind target in a bid to recover from damaging food scandals in China, its top driver for profit and revenue.
Li's Huawei smartphone is packed with cut-price food delivery apps from some of China's biggest internet firms, like Baidu Inc's Waimai, Alibaba-linked Meituan and Tencent-backed Ele.me - meaning "Hungry?". These allow thousands of mom-and-pop restaurants to lure diners previously beyond their marketing reach. "On my phone I have Meituan, Baidu and Ele.me, and I use whichever one has the biggest discount," Ms Li said. Baidu's platform is currently offering the best deals at around 40 per cent off, she said, evidence of a price war raging online.
Yum this week pointed the finger at a "savage battle" under way between apps to explain why China same-store sales grew only 2 per cent in the third quarter, well below the expected 9.6 per cent jump. Yum cut its global forecasts on weakness in China, where the firm has been whipsawed by food safety scandals and marketing missteps over the last few years.
The rise of online apps is a extra blow to Yum, already facing a crowded fast food market, where consultants Euromonitor forecast growth will slow to around 4 per cent by 2019, less than a third of the pace a decade before. "We are experiencing what we believe is a short-term but significant impact of online ordering aggregators entering the casual dining space," Yum's chief financial officer Pat Grismer said on an earnings call after the results.
Source: Business Times Breaking News