Fast food chains eye Asia for future growth

Global Business

Americans spend more than $683 billion dining out every year. But the world’s largest fast food brands got failing marks from consumers. For those on a budget, a meal out often means fast food but a new report shows even price conscious diners increasingly care about taste and sales reflect this trend.

Fast food chains eye Asia for future growth

Americans spend more than $683 billion dollars dining out every year. But the world's largest fast food brands got failing marks from consumers. For those on a budget, a meal out often means fast food but a new report shows even price conscious diners increasingly care about taste and sales reflect this trend.

When it comes to fast food, big isn’t better. More than 30,000 subscribers of Consumer Reports ranked McDonald’s hamburger as the worst. Taco Bell got worst burrito and KFC worst chicken.

“When you go to McDonald’s or Burger King what you’re doing is primarily getting frozen beef patties that have been precooked and then reheated in a microwave and then thrown on a bun to you,” said Scott Rothbort, the President of Lakeview Asset Management.

Rothbort, who manages investments in the food industry, says despite the sluggish economy, middle-class Americans have become pickier about their food even if it costs them a bit more. And there’s no shortage of competitors that can provide those options. Fast casual restaurants like Chipotle and Panera are relative new entrants into the dining scene but their popularity is growing rapidly. U.S. sales grew by 11 percent last year.

“So they’re providing you an atmosphere. They’re providing you with higher quality food and they’re providing you with better service. So you put all that together and it’s worth spending a couple extra dollars,” said Rothbort. By comparison, McDonald’s U.S. same store sales fell 0.2 percent last year. Efraim Levy, an analyst at S&P Capital IQ says the U.S. market is saturated for fast food chains like McDonald’s.

“Well McDonalds, it still the largest seller of hamburgers and I think that’s going to stay for a long time but their growth in the U.S. has been disappointing,” said Levy. That’s why it and Yum Brands, the parent company of Taco Bell and KFC are eyeing Asia for growth. More than half of Yum’s sales come from China. Earlier this year, McDonald’s said it would add 300 locations in China in 2014.

“These companies are doing really well internationally. China’s been a growth market. The sheer size means they’re going to grow for a long time,” said Levy.

Fore more, CCTV America spoke to Andy Brennan. Lead Research Analyst at IBIS World, a global market research firm. He focuses on the fast-food industry.

What are major trends in food services sector?

Fore more, CCTV America spoke to Andy Brennan. Lead Research Analyst at IBIS World, a global market research firm. He focuses on the fast-food industry.