Fried Chicken Battle Heats Up as Popeyes Returns to China

Tims China, the operator of Canadian coffee chain Tim Hortons, has announced a partnership with Miami-based Popeyes in a bid to reopen the fried chicken chain in China. The two companies plan to open 1,700 outlets in the next decade. Popeyes previously attempted to enter the Chinese market in 2020 but was forced to retreat during the pandemic. The move comes as the food and beverage franchise sector are making use of low rent prices to snap up retail space in anticipation of a post-lockdown consumption rebound.

The move is a vote of confidence in the Chinese market, which has seen foreign capital flow back into equities and investors seek to capitalize on the country’s reopening. The Hang Seng China Enterprises index has risen 46% since the end of October. The strong appetite for fast food in China has made the country a vital growth market for KFC, McDonald’s, and Burger King. An estimated $82bn was spent on quick-service restaurants in China last year.

Popeyes faces tough competition from KFC China, which has a loyal customer base and the backing of deep-pocketed parent company Yum China. KFC China reported $7.2bn in sales and $787mn in operating profit for 2022. Popeyes plans to localize its menu and invest in research and development to appeal to trend-conscious Chinese consumers. The franchise plans to adopt the same growth strategy as Tim Hortons, first opening stores in high-profile locations to build brand awareness before expanding to other locations.

Tims China is among the private equity and venture capital-backed food and beverage chains making use of low rent prices to sign leases and capture more of China’s retail real estate. The pandemic saw many small independent restaurants and shops close, leaving an opening for well-funded players. The partnership of the two chains is expected to bring down costs in property and have synergies in real estate.

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