Chickening out

Better days: Popeyes in Shanghai

Seeing the success of Kentucky Fried Chicken, American chicken burger chain Popeyes started out in 1972 as ‘Chicken on the Run’, serving traditional Southern fried chicken with a crunchy coating, in suburban Louisiana.

But sales were miserable so the owner changed tack, switching the name to Popeyes after Gene Hackman’s character from the 1971 movie The French Connection.

In 2017, Popeyes was acquired for $1.8 billion by Restaurant Brands International. RBI, which is controlled by 3G Capital and Warren Buffett’s Berkshire Hathaway, wanted to double down on the Popeyes brand to expand into emerging markets where fried chicken has continued to gain in popularity. The chain opened its first store in Shanghai in 2020. Even though it was the middle of a pandemic, opening day caused a stir, with some fans reportedly waiting for eight hours for a taste of the signature chicken sandwich. The menu has also been slightly adapted to local tastes, meaning that the fried chicken is made with darker meat instead of white.

“China is one of the largest chicken-eating markets in the world and we are committed to establishing and growing the Popeyes brand over the long term,” Sami Siddiqui, the company’s Asia-Pacific boss, promised on debut day.

Last week Popeyes announced that it would be closing seven stores around the country, leaving just two outlets in Shanghai. However, the fast food chain clarified that it was not retreating from the China market. Instead, it has signed a deal with a new franchisee, Cartesian Capital Group, which also operates Tim Hortons cafes in China (the previous operator was Turkey’s TFI TAB Food Investments, which runs Burger King restaurants in China).

Industry observers haven’t been hugely optimistic about Popeyes’ prospects in China. The fast food industry is extremely competitive, especially in first and second-tier cities. It is also difficult for international entrants like Popeyes to take market share from existing chains like KFC and McDonald’s, food industry analyst Zhu Danpeng told newspaper CBN.

If the fortunes of Tim Hortons are anything to go by, Popeyes could face a tough road ahead. After three years in China, the Toronto-based coffee chain is still strugging financially there. Between 2019 and 2021, it reported revenues of Rmb57.3 million, Rmb210 million and Rmb640 million respectively. However, the brand’s losses grew from Rmb87.8 million to Rmb380 million during the same period. By the end of 2021, the brand had opened nearly 400 stores around the country.

Meanwhile, there was news that a separate US consumer brand is battling to make its business work in the Chinese market. In early August, make-up marque Maybelline, which is owned by French beauty giant L’Oréal, announced that it will close all 80 of its stores in China. Maybelline products will still be sold at around 10,000 bricks-and-mortar drugstores like Watsons, as well as on e-commerce sites like Tmall and JD.com, the company added.

The move wasn’t completely unexpected. Back in 2018, the beauty brand announced a withdrawal from supermarket chains like Carrefour and Walmart.

Maybelline was the first foreign make-up brand to enter China in 1997. Its TV commercials of that era, which featured actress Zhang Ziyi were ubiquitous. It was hard to miss its tagline – “Beauty comes from within. Beauty comes from Maybelline New York” — at department stores. But the company’s positioning – targeting consumers in the mid-price demographic – also meant that it has faced intense competition from domestic brands like Perfect Diary and Florasis, which have captivated millions of new customers with their savvy social media presence and the hyper-frequency of their new product launches.

After news about Maybelline’s change of approach began to spread, some shoppers expressed nostalgia for the brand. “I remember my first bottle of nail varnish, my first lipstick and my first powder were all from Maybelline,” one netizen reminisced.

“I remember all of Maybelline’s commercials. When I was little, Maybelline was what Chanel is for me today,” another wrote.

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