Chinese burger innovations bolster local brands

But, in spite of initial investor enthusiasm, biz growth stutters

Every Tuesday, Lu Jin, 22, who is pursuing his bachelor's degree at the Beijing University of Chemical Technology, visits Tastien (also known as Tasiting) restaurant located in the capital's North Third Ring area, within the campus neighborhood. The restaurant's member card entitles him to a buy-one-get-one-free deal.

"The buns here are handmade, still hot when served. They are not your typical bread," said Lu.

He and his friend ordered two sets of fried chicken burgers for 41 yuan ($5.6). Thousands of Chinese consumers such as Lu find Tastien's deals and fast food irresistible. Positioning itself as the "Chinese burger" brand, Tastien has developed its own "hand-rolled burger buns" as a speciality. The buns incorporate Chinese culinary elements like braised pork belly, Peking duck and shredded pork with garlic sauce.

These are burger innovations, Chinese-style, which have helped Tastien to distinguish itself from Western fast-food burger brands such as McDonald's, KFC and Wallace.

Tastien primarily targets third- and fourth-tier cities and even smaller places. It has rapidly expanded its presence in rural areas and now has a network of more than 7,000 stores, the largest Chinese-style burger maker in the country.

According to Chenzhi Data, in the second quarter of 2023, hamburger outlets of all brands across China reached a historic high, surpassing 120,000 outlets.

Cultural elements associated with Chinese cuisine inform the Western fast-food model adopted by the Fujian province-based Tastien. In July 2023, the brand underwent an upgrade, complete with a tagline: "For the Chinese taste, love Chinese burgers". This move proved effective as it established a strong association between burgers and the varieties of Chinese cuisine, which resonated with certain groups of local consumers.

But not everyone is attracted by the domestic flavors alone. "For us, the chief attraction is the promotional price. Of course, the food tastes good, but, it's still fast food," said Lu.

The runaway success of Western fast-food brands such as KFC and McDonald's in China, which are known for their standardized hamburgers, and low entry barriers in this segment of the food and beverage sector have attracted numerous investors in recent years.

In addition to Tastien, 10 "Chinese-style burger" brands, including Chuzheng and Linbaobao, received funding in 2023 alone, according to Chenzhi Data.

According to Zhaimen Restaurant data, among Chinese hamburger brands, Panda Now Chinese Burger has 38 stores, Generous Chinese Burger has 33, Linbaobao has 20 and Chu Zheng Chinese Burger 11.

To be sure, not everyone is thriving. Expansion has proved to be a struggle for most of them. At the end of the first quarter, the Chinese burger segment appeared to have lost steam with investors steering clear of it, market insiders said.

Jia Guolong, founder of Xibei, a prominent catering group, knows all about the ups and downs in the market. In March 2023, Xibei launched its first store of Jia Guolong Chinese Burger. The plan was to open 50 burger stores in the first half of 2023.

The plan did not pan out. Xibei closed all of its Jia Guolong Chinese Burger stores. Some of them shuttered outright; others were renamed Jia Guolong Small Pot Beef. Xibei said the Jia Guolong Chinese Burger chain has been completely rebranded as Longbao and will be repositioned in the fast-food market. Pilot stores debuted in Hohhot, Inner Mongolia autonomous region, to explore the lower-tier market.

Xibei said the decision whether or not to retain a subsidiary brand hinges on its potential for global expansion. "The Chinese bun is actually derived from roujiamo, a local snack from Shaanxi province," said Song Xuan, a marketing executive at Xibei. "With its convenient hand-held format and savory filling, it was supposed to have the potential for worldwide appeal."

But theory and practice proved to be divergent. The intricacies involved in crafting Chinese foods, coupled with supply chain management issues related to Chinese cuisine, meant Chinese burgers presented challenges not typically encountered in making Western fast food.

"Scaling up the intangible artistry of Chinese culinary traditions is quite daunting," Song said. As a result, Xibei opted to halt Jia Guolong's expansion into first-tier cities.

But, in China's fast-food landscape, there is still potential to develop a Chinese cuisine-based fast-food product, said Song.

"We foresee the catering industry embracing increasing diversity, moving beyond rigid distinctions between fast food and formal dining.

"While the Chinese burger may not represent the ultimate future, it undeniably reflects a current trend. However, the true future lies in the emerging influence of lower-tier cities on the F&B sector."

After the initial surge in popularity, businesses specializing in Chinese-style burgers began to reveal some underlying issues, like the high homogeneity among signature dishes.

Most Chinese burger joints still adhere to the approach of Western fast-food labels, incorporating Chinese elements into design, product packaging and burger flavors. It remains unclear, however, whether such innovations are genuinely "Chinese" or merely gimmicks.

In some Tastien stores, the bestselling burger is still the "Spicy Fried Chicken Burger", indicating that consumers may purchase Chinese-style burgers merely for novelty or promotional prices.

Second, the advantage of cost-effectiveness is not always apparent. Despite positioning themselves as low-cost options and targeting the lower-tier market primarily through franchising, brands such as Tastien have been dubbed the "McDonald's of Chinese burgers".

Following KFC and McDonald's promotional campaigns, Tastien introduced its own "Member Tuesday" promotions and developed "Tastien Literature" on platforms like Douyin, Xiaohongshu and Bilibili to attract young consumers such as Lu.

According to Chenzhi Data, a consumer on average spends about 19.6 yuan at Tastien, which is 2 yuan more than what is spent at Wallace but way lower than the 33.8 yuan spent at KFC and the 27.6 yuan spent at McDonald's.

However, compared to the promotional campaigns of KFC and McDonald's, Tastien's pricing advantage does not seem like an advantage at all.

The well-known Spicy Chicken Burger is priced at 16 yuan at Tastien but retails at 19.5 yuan at KFC and 10.9 yuan at McDonald's (in-store prices are compiled from their mini programs).

The expansion rate of Western fast-food players in China has been rapid, piling greater pressure on Tastien.

In December, KFC opened its 10,000th store in China, becoming the first overseas brand to reach that milestone. KFC promptly announced plans to accelerate store openings in the next three years, aiming for a net addition of over 1,200 stores annually, hoping to expand its membership base from 400 million to 700 million.

wangzhuoqiong@chinadaily.com.cn