The best restaurant promotions in China

This weekend I was in Flagstaff vacationing at our family cottage. If you are not familiar with Arizona, Flagstaff is the largest city in Northern Arizona. It is home to Northern Arizona University and is often used as a stopover for travelers heading to the Grand Canyon.

The cabin is a great escape option. It is the perfect place to escape the heat of the desert, the hustle and bustle of the city and everyday life. Temperatures this time of year reach the high 70s, with nighttime lows in the mid-50s. The only problem is the end of the weekend when you have to talk yourself into packing up and leaving.

Simply put, it’s the perfect place to relax.

As you can imagine, I do quite a bit of reading in the cabin. Of course, I read financial magazines, news and industry reports. I know, I’m a little crazy. Anyway, one of the articles I read was about China. The proposed investment ideas made no sense to me. A lot of twisted numbers and incorrect conclusions were made.

That’s when I thought there must be an easier way. So, I did a bunch of research and discovered some interesting facts. . . but more on that in a minute.

Many of you have read my other articles about China. I think it is very good for a developing country to be behind in terms of investment. Investing at such early stages is always risky, but the rewards are huge.

The nation is in the middle of one of the biggest events we will see in our lifetime. Development is going at a crazy pace. Roads and bridges are being built, industry is developing, and the workforce is developing.

What do I mean?

I mean, just 20 years ago, the country was focused primarily on agriculture. Now a significant part of the country’s territory is focused on production, construction and other industries. Products are designed and created in China. As a result, the labor force is growing, as is the middle class.

Opportunities are everywhere in China. So how can the average American investor take advantage of this great opportunity? I already talked about Chinese ETFs. These baskets of promotions are great, but what if you want something more specific?

I started thinking about all the American companies expanding into China. It seems that not a day goes by without someone announcing a new Chinese initiative. Cars, industrial plants, energy companies, even restaurants. Everyone is jumping on China’s rise.

Then I had another thought. . .

Asian diets are changing. It used to be rice and vegetables. The Chinese diet now includes more protein and packaged and processed foods. American fast food culture (for better or worse) is crossing the ocean and setting up shop in China.

Big three of fast food.

McDonald’s (MCD) sees growth in China. They plan to open about 275 new stores by the end of 2009. This will bring their total to about 1,000 restaurants. Burger King (BKC) was early in China’s trend, but has clearly stumbled. They opened their first store in 2005 with much fanfare. Today, they added a total of 12 new stores, according to China Retail News.

What a missed opportunity.

There is one company that beats both Burger King and McDonald’s. yum! Brands (YUM) is clearly breaking away from the pack. I know. They have a strange name, but I didn’t come up with it.

Now that Yum! doesn’t sound familiar to you, don’t despair. You probably know them by the names of the restaurants. In fact, I can bet that you’ve probably eaten at one of their stores in the last month.

yum! operates stores and franchises under the Long John Silver’s, Pizza Hut, Taco Bell, A&W and, of course, KFC banners.

Is this a call? I thought it would. This company is really amazing; it’s like owning five different fast food companies at once. They have over 35,000 restaurants in over 110 countries. And in 2007, their sales amounted to more than 10 billion dollars. Not bad for a fast food chain.

But that’s not even the most exciting part.

Remember the facts I promised you? Here they are.

The real excitement for Yum! The brand is China. Since 2005, the company has been reporting results for its Chinese division. That’s how important this growth is to Yum. The company has opened more than 3,100 stores in China, with more opening every day.

This is their number one market for expansion. Last year alone, the Chinese division generated more than $375 million in operating profit. They opened their first KFC in China in 1987 and now employ over 2,200. Their Pizza Hut franchise is working hard to catch up. They opened the first Pizza Hut in 1990. Now they have 360 ​​stores. . . and more on the way.

For Yum! The growth potential for brands seems limitless. If you ask me, Yum! Brands are the American way to capture growth in China!

Leave a Reply

%d bloggers like this: