How to Build a Fast Food Empire on a Single Recipe
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2017-05-17 03:58:15

Foreign chains like McDonald’s, KFC, and Subway no longer top the menu for China’s fast food-craving masses. Instead, Chinese-style restaurants now control 90 percent of the national fast food market, with the remaining 10 percent belonging to Western chains. Instead of burgers and subs, hungry Chinese have been chowing down on steaming bowls of Lanzhou Beef Noodles and guzzling wontons and duck soup at Shaxian Delicacies — two restaurant chains named after the traditional hometowns of the food they serve, in northwestern China’s Gansu province and the eastern coastal province of Fujian, respectively.

While Western brands continue to fight tooth and nail in the battle for Chinese stomachs, they have been unable to match the growth of domestic chains. One such local brand, the straightforwardly named Braised Chicken With Rice, has almost 10 times as many restaurants as KFC, even though there is, unsurprisingly, only one option on the menu: golden-brown chicken in a glistening red sauce, served alongside a small mound of white rice.

Statistics from Alipay, a Chinese mobile payment platform similar to Apple Pay, show that the Braised Chicken brand overtook Shaxian Delicacies and Lanzhou Beef Noodles in 2015 to become China’s most popular fast food outlet. According to Baidu Maps, China’s version of Google Maps, Shaxian Delicacies currently has around 25,000 storefronts nationwide, a number that has remained roughly unchanged since 2013. The number of Braised Chicken branches, on the other hand, jumped fivefold between 2014 and 2016; the brand currently has more than 40,000 locations in 329 cities across China.

In the 1990s, a wave of rural residents left Sha County in Fujian province and began opening Shaxian Delicacies restaurants all over China. Since then, even as the chain has grown, each store remains an independently operating entity.

Shaxian Delicacies was able to establish a presence across China due to a combination of low prices and decent food. Primarily targeted at students and single men, its products, prices, and locations were all set with these two demographics in mind.

A view of a Braised Chicken With Rice restaurant in Nanjing, Jiangsu province, Nov. 11, 2013. Wang Luxian/VCG

A view of a Braised Chicken With Rice restaurant in Nanjing, Jiangsu province, Nov. 11, 2013. Wang Luxian/VCG

Braised Chicken competes with Shaxian Delicacies for a similar clientele, but its rapid rise over the past three years is a testament to the savviness of the Braised Chicken model. To start with, Braised Chicken is very popular on online and mobile food ordering platforms such as Meituan, Dianping, and Ele.me. According to surveys of Chinese young people born after 1990, more than 40 percent said they preferred Braised Chicken to Lanzhou Beef Noodles or Shaxian Delicacies. Those hankering for a bowl of Gansu grub or Fujian’s finest snacks were limited to 20 and 15 percent of respondents, respectively.

Braised Chicken’s popularity is all the more astounding due to the fact that, compared with the abundant menu options of the so-called Lanzhou Clique or Shaxian Gang, the brand has remained true to its “one item only” slogan. In an era when consumer tastes are growing ever more diverse, how has a chain managed to turn a single dish into a hugely successful fast food empire?

The answer is actually quite simple. The core ingredient, braised chicken, is common in many types of Chinese cuisine and very easy to make. The barriers to opening a Braised Chicken franchise are also quite low, with startup costs usually hovering around the 100,000-yuan mark (about $14,500).

In terms of the food itself, consumers like to say that Braised Chicken is the perfect choice for indecisive people. Having just one item on the menu means the restaurant is well-suited to the fast pace and short mealtimes of modern society.

A glance at Braised Chicken With Rice’s growth pattern reveals that the start of the chain’s expansion coincided with the year that the Chinese economy entered what the government has called the “new normal,” a period of slower growth after a three-and-a-half decade economic boom. The news brought a wave of new startup enterprises, as more and more Chinese heeded the state’s call to establish private businesses and wean themselves off export- or manufacturing-driven jobs. According to statistics, 2014 saw a record number of new business entities: as many as 3.65 million, or about 10,000 per day.

Only having one menu item lets the chain shift toward an assembly line-style model, as opposed to one centered around a chef.

These new enterprises were concentrated primarily in low-skill industries. Consequently, 2014 was a year of explosive growth for the Chinese restaurant business, with various dining franchises rising up one after another. In this environment, Braised Chicken’s low startup costs and low-risk franchise model made it particularly appealing to budding entrepreneurs.

It should be noted that Braised Chicken is by no means a unified business empire. Only a fraction of the storefronts selling under the brand’s name are actual franchises. In spite of this, the food served in each one is surprisingly consistent. The brand’s focus on a singular product has become an advantage, as it is easier to standardize and reproduce, and also allows for rapid market rollout and expansion. Only having one menu item lets the chain shift toward an assembly line-style model, as opposed to one centered around a chef. Shaxian Delicacies offers more menu options and thus requires a higher level of skill in the kitchen; Braised Chicken, meanwhile, is pretty hard to mess up.

Fair pricing is also at the heart of the Braised Chicken brand. Compared to other low-end fast food chains, the price of 15 to 20 yuan for most Braised Chicken meals is rather on the high side. Over the past four or five years, however, as prices across the broader restaurant industry have risen, the one-item chain’s prices have remained steady, even as quality and portion size have stayed constant. When asked to comment on the chain’s food, most people tend to call it a “full meal” or compare it to “dinner in a proper restaurant.” This sentiment among diners has played an important role in the chain’s popularity.

Because Braised Chicken restaurants all tend to look the same, many customers assume they are all run as part of a single group. But they’re not: Each store is actually run by an independent manager. Shaxian Delicacies restaurants look the same, too, but are usually still run by a husband-and-wife team, the same way they were 20 years ago. Due to a lack of standardization and a tendency to go it alone, many Shaxian Delicacies owners have sought to lower costs by skirting sanitary standards and cutting corners when it comes to store design. The result is that they have developed a reputation for being zang luan cha — “dirty, messy, and crappy.”

For now, Braised Chicken has the upper hand, but potential problems are appearing on the horizon. Many Braised Chicken restaurants have yet to be integrated into an overarching system; management practices continue to lag behind those of their competitors; and there are no programs in place to develop talent. These issues, combined with the absence of systems for ensuring absolute standardization and maintaining franchise quality, could yet see Braised Chicken become a lame duck.

Translator: Kilian O’Donnell; editors: Lu Hongyong and Matthew Walsh.

(Header image: A dish of braised chicken is prepared at a restaurant in Shanghai, March 16, 2016. Weng Lei/IC)