US fast food giant Burger King is set to kick off its “9.9-yuan ($1.37) era” starting Monday, offering its lowest-priced burger ever in China as part of a major promotional push to capture market share amid growing competition.
Burger King is launching a promotion where four of its signature burgers will be available for 9.9 yuan each for four weeks. For instance, a fruitwood-grilled chicken burger will drop from 24 yuan to 9.9 yuan. Other burgers will see similar price reductions.
The company has labeled this promotion as unprecedented, aiming to attract customers with extended deals available across dine-in, delivery, and e-commerce platforms, with no membership restrictions.
This strategy follows Burger King’s pattern of frequent low-price promotions this year. The 9.9-yuan burgers are similar to McDonald’s recent promotion, which featured burgers starting at 10 yuan for 14 days beginning in early July.
According to Yicai Global, Tang Junzhang, chief marketing officer of Burger King China, stated that selling burgers at 9.9 yuan is not immediately profitable due to their higher production costs compared to coffee. However, he noted that price promotions are essential for survival in the highly competitive fast-food market.
A McDonald’s executive commented on the company’s second-quarter performance in China, noting that consumers are increasingly seeking discounts and making purchasing decisions based on the best deals available.
As foreign fast-food chains engage in promotional activities, domestic brands like Wallace (Hua Lai Shi) are also expanding rapidly with lower average transaction values, further intensifying competition in China’s fast-food market.
Faced with these challenges, Burger King, which traditionally operates in the medium- to high-end segment, has been pushed to participate in price competition.
The company plans to open over 200 new stores in 2024, expanding beyond first- and second-tier cities into third- and fourth-tier cities.
The Western fast-food market in China has been growing steadily. iiMedia Research Institute reports that the market was valued at 368.78 billion yuan in 2023, a 36.3 percent increase from the previous year, surpassing the overall growth rate of the catering industry. This year, the market is expected to reach 427.78 billion yuan, reflecting significant growth potential.
Several factors are driving the price competition among Western fast-food brands. Zhao Jingqiao, director of the Service Economy and Catering Industry Research Center at the Chinese Academy of Social Sciences, explained that intense competition this year necessitates aggressive pricing strategies to gain market share. Additionally, the rapid expansion of domestic private enterprises into the Western fast-food sector is adding to the competitive pressure.
Zhao also highlighted that foreign food and beverage companies remain optimistic about the Chinese market, noting the significant consumption potential in third- and fourth-tier cities.