The fast food market has demonstrated strong growth resilience after experiencing fluctuations in store numbers and average spending per customer, showing signs of stabilization and recovery. Influenced by macroeconomic factors, evolving market demand, and ongoing structural adjustments, the restaurant industry has undergone a rapid reshuffle. Currently, the fast food sector is trending toward deeper store penetration in lower-tier cities, greater product diversity, and longer operating hours. It is recommended to focus on YUM CHINA (09987), a leading Western fast food chain with a leading store scale, a well-developed supply chain, and strong R&D and innovation capabilities.

Key observations are as follows: According to industry data, Chinese fast food accounts for over 47.0% of China’s restaurant market, while Western fast food stores make up 2.1%. Combined, they represent nearly 4 million stores, forming a significant portion of the Chinese dining landscape. In terms of store numbers, both Chinese and Western fast food have shown a pattern of initial decline followed by a gradual recovery in recent years. By category, Western fast food is growing at the fastest pace in the snack and fast food segment, with its market size expected to exceed 300 billion yuan by 2025, indicating continued expansion in the domestic market.

From a spending perspective, the majority of fast food transactions fall within the 30 yuan or below per person range. Average spending per customer for Chinese fast food shows a K-shaped divergence, while Western fast food experienced a slight decline in 2024, stabilizing in the first quarter of 2025. This trend reflects that when choosing brands, consumers prioritize a wider variety of options and richer dining experiences within their budget, shifting focus from price alone to a balance between quality and cost. As a result, companies capable of rapid product development and new launches are likely to capture more consumer demand.

Reviewing the development of Chinese and Western fast food in recent years reveals three key trends: First, store expansion is increasingly targeting third-tier cities and below. Second, product innovation is accelerating, showing integration and health-oriented trends. In terms of product categories, fusion concepts, combination meal and beverage models, and nutritious offerings are gaining attention. KFC leads the segment with an average of 7.5 new product launches per month, introducing items such as Chinese breakfast, rice meals, late-night skewers, protein-rich wraps, and its healthier sub-brand KPRO. Third, brands are enhancing all-day operations to maximize store utilization. Examples include limited-time afternoon tea sets and late-night snack series, which help increase order share during afternoon and late-night hours.

Risks include slower-than-expected store expansion, changes in consumer demand, significant increases in raw material and labor costs, delays in research updates, inaccuracies in third-party data, and deviations in market size estimates.