U.S. Fast-Food Chains See Opportunity in China’s Smaller Towns

U.S. fast-food chains are opening thousands of stores in China’s smaller towns as its population ditches megacities like Shanghai.
May 8, 2024
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KFC delivery driver on a scooter in China

What is the recipe for U.S. fast food chains to win the China market? Some brands believe expanding into smaller towns is important.

China’s youth is reverse migrating from megacities to smaller towns, driven by significant economic challenges.

U.S. fast food chains are following them with thousands of stores as they chase growth in these smaller towns:

  • Yum China, the holding company and operator of KFC and Pizza Hut, reported more than half of its new stores have been in smaller cities in recent years
  • Domino’s operator, DPC Dash, disclosed more than half of its 835 restaurants in China are outside Beijing and Shanghai
  • To date, some 33 percent of the more than 6,800 Starbucks outlets in the nation are currently located in smaller markets, according to Canyan Data

Local Chinese restaurants are cashing in, too. About half of the stores by burger joint Fuzhou Tastien and bubble tea chain Mixue Bingcheng are in third-tier or lower cities, per Bloomberg.

China’s fast food landscape is evolving quickly. One small-town bite at a time.

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