KFC’s parent company, Yum! Brands, announced on March 25 it would buy 20 percent of the Little Sheep Group, China’s leading hotpot chain restaurant based in Baotou City, Inner Mongolia.
Yum! Brand has 2,300 KFC and 400 Pizza Hut stores in China so far, while Little Sheep was operating 375 restaurants in mainland China, Hong Kong, the US and Japan at the end of last year, according to London-based research company Euromonitor International.
On the contrary, soft drink giant Coca-Cola was not lucky. Its take-over bid for China’s top pure juice maker, Huiyuan Group, was rejected by the Chinese central government days ago under the country’s anti-monopoly law which took effect last August.
Shares of Little Sheep traded at the Hong Kong Stock Exchange gained 13.7 percent to HK $2.98(US $0.38) on the same day.
The HK $493 million (US$63.6 million) deal is expected to be finalized in this summer. Sam Su, Yum! Brand China’s president, said China remains the biggest growth opportunity in the restaurant industry in the 21st century.
Key Themes Behind This Trend
- Rapid Fast Food Growth
- The fast food industry, particularly in Asia, is experiencing quick expansion and companies should concentrate on innovative methods to capture the market faster.
- Mergers and Acquisitions in the Restaurant Industry
- Mergers and acquisitions activity in the restaurant industry could open up significant expansion opportunities and access to consumers for fast food companies.
- Focus on Regional Dishes
- Fast food companies could consider paying more attention to regional dishes to cater to the preferences of the local market and provide more diverse offerings.
Where This Applies
- Fast Food
- Fast food companies can expand their reach and market penetration with innovative growth methods.
- Restaurant
- Mergers and acquisitions in the restaurant industry offer new possibilities for expansion and access to diverse consumer bases for fast food companies.
- Beverage
- Beverage companies, particularly those looking to expand in Asia, should consider anti-monopoly laws when making investments in the region and explore other potential acquisition opportunities.
