Another international restaurant brand has settled its presence in the Chinese market.
Recently, CPE Yuanfeng announced a strategic cooperation with Burger King, and the two parties will jointly establish a joint venture called &#34;Burger King China.&#34;
According to the agreement, CPE Yuanfeng will inject an initial capital of $350 million to support store expansion, marketing, menu innovation, and operational improvements, aiming to expand the number of stores to over 4,000 within ten years.
The affiliated company of Burger King China will also sign a 20-year master development agreement, obtaining exclusive authorization to operate the Burger King brand in the Chinese market.
After the transaction is completed, CPE Yuanfeng will hold approximately 83% of the equity in Burger King China, while the brand owner RBI will retain about 17%.
2025 marks the 20th anniversary of Burger King's entry into the Chinese market.
Looking back at its development history, this global fast-food giant has repeatedly &#34;missed the mark&#34; at several key points, gradually deviating from the rhythm of the Chinese market. Its number of stores peaked at the end of 2023 and has since stagnated.
To reverse the sluggish growth, Burger King has changed its CEO for the China region four times in six years, alternating between foreign and local executives.
However, the frequent changes, with an average tenure of less than a year and a half, have made it difficult for the company to maintain a consistent strategy, causing its business focus to constantly waver between supply chain, store expansion, and digitalization.
Now, this cooperation is seen as Burger King's &#34;second entry into China.&#34; With new capital and local partners, can it truly seize the opportunities it has repeatedly missed?
<h2>Catching Up Step by Step</h2>
Burger King's first step in the Chinese market was passive due to its &#34;late arrival.&#34;
In 2005, Burger King officially entered the Chinese market, 18 years later than KFC and 15 years later than McDonald's.
In the first seven years, Burger King adhered to a fully direct-operated model, opening only 52 stores. It wasn't until 2012 that the world's largest franchisee, TFI, took over its operations in China and introduced a franchise model, leading to some improvements.
By the end of 2018, Burger King China had surpassed 1,000 stores and set a goal of opening 300 new stores each year. A year later, the total number of stores nationwide increased to about 1,300 as planned.
At this time, KFC had nearly 6,000 stores in China, and McDonald's had over 3,000, with the market landscape basically formed.
With significant scale advantages and a localized operating team, McDonald's and KFC not only fully captured the market dividends during the early penetration of mobile payments and takeout but also seized the opportunities in the sinking market during the urbanization process, strategically positioning themselves ahead of time.
In the following three years, the industry as a whole faced external environmental shocks, and growth was generally under pressure.
However, for Burger King, the real &#34;signal of falling behind&#34; only began to emerge with the recovery of offline consumption in 2023.
Yum China and other leading companies keenly seized the window of opportunity presented by lower rental costs to accelerate store expansion; Wallace and Tastin built a channel barrier of tens of thousands of stores in the sinking market.
Although Burger King added 176 stores to reach 1,587 that year, it did not achieve the goal of opening 200 stores set for that year.
At the 2023 fiscal year performance meeting, RBI's CEO Josh Kobza pointed out that the expansion of stores in the Chinese market was below expectations. The company's outlook for international markets over the next five years is to open at least 7,000 new stores
At that time, Burger King China was still seen as a profitable business by RBI, but it needed to &#34;grow faster to compete with the largest players in the market.&#34;
What further plunged Burger King into trouble was its inadequate response to the price war that swept the restaurant industry in 2024.
That year, competition in the fast-food industry intensified, and the price war escalated. Not only did full-service brands like Haidilao and Xibei join in to boost single-store performance, but KFC and McDonald's also turned the &#34;Penny Pincher Meal&#34; into a daily choice for white-collar workers.
Burger King followed suit by launching the &#34;Thursday King Frenzy&#34; membership day event, introducing products at 9.9 yuan to join the fray.
However, for Burger King, which was already at a disadvantage in terms of supply chain and store scale, continuously lowering costs while maintaining profitability became a significant challenge.
Chief Marketing Officer Tang Junzhang admitted that 9.9 yuan was an almost &#34;crazy&#34; price, stating, &#34;The cost of a burger is 2 to 2.5 times that of coffee, and this price point definitely won't make money in the short term.&#34;
The company may have initially hoped to attract consumers to experience the products at a low price, fostering brand loyalty and thereby expanding market share.
But looking back, this was actually a misguided decision.
The duration and intensity of the price war far exceeded expectations, and Burger King failed to attract customers back, instead blindly following price cuts that eroded the basic profitability model of its stores.
Sources close to Burger King revealed that in 2024, the average revenue of its directly operated stores in China fell nearly 20% year-on-year, with stores nearing losses.
Data from the RBI Group further indicated that the average annual sales per store for Burger King China was about $400,000, ranking last among the group's top ten international markets; in contrast, the South Korean market, which is geographically close, had store efficiency three times that of the Chinese market.
That year, not only did the number of store closures soar for Burger King, but it also faced various public relations crises. Issues ranging from operational pressure and labor disputes to open conflicts with franchisees continuously fermented, and there were multiple food safety incidents reported by consumers.
Amid internal and external troubles, the RBI Group announced in November 2024 that it had issued a termination notice to Burger King's then-franchisee in China. A year later, it found a new local partner.
This time, Burger King finally caught up with the trend of foreign brands &#34;localizing.&#34;
<h2>How to Reshape</h2>
The development prospects for Burger King China remain promising.
First, since the RBI Group fully took over Burger King China in February this year, it has begun implementing a series of effective reform measures.
The group has not only invested over $100 million but has also accelerated localization by bringing in four executives from Yum China, McDonald's China, and Starbucks to take on key positions such as Vice CEO, Chief Supply Chain Officer, and Chief Transformation Officer.
The optimization of store structure is also being advanced simultaneously.
Since the beginning of this year, Burger King China has gradually closed inefficient, unprofitable stores with annual sales of less than $300,000 to improve overall operational quality.
The results have quickly become apparent: in the second quarter, same-store sales turned positive for the first time after several consecutive quarters of decline, with system sales increasing by 10% quarter-on-quarter to $162 million.
By the third quarter, despite a net reduction of about 200 stores, Burger King China's system sales further increased to $172 million, with same-store sales growing by 10.5%. With fewer stores, it earned more revenue
Secondly, Burger King still retains brand heritage and location advantages in the Western-style burger market.
The stores are highly concentrated in core areas such as Jiangsu, Zhejiang, Shanghai, Beijing, and Guangdong, with first-tier and new first-tier cities accounting for more than half. Although the overall new rhythm is not advantageous, its iconic &#34;flame-grilled burger&#34; still constitutes a unique product recognition.
In the future, whether it is to increase store density in first-tier cities or penetrate into the vast sinking market, Burger King has considerable expansion space. CPE Yuanfeng, which has previously invested in brands like Mixue Ice City and Siyu Hair Care, undoubtedly possesses the knowledge and experience for rapid store openings.
According to insiders close to Burger King China, the current ratio of directly operated stores to franchised stores in the Chinese market is about 4:1. In the short term, directly operated stores are likely to remain the main body of expansion.
According to the official disclosed plan, Burger King China intends to expand the number of stores from 1,250 to over 4,000 within 10 years and achieve sustainable same-store growth.
Although the store opening task in the next 10 years will be nearly more than twice that of the previous 20 years, this actually just continues the established plan of the RBI Group and is not considered overly aggressive.
Before accelerating expansion, Burger King still has issues to resolve:
On one hand, according to the information disclosed by the RBI Group in the third quarter, the evaluation and elimination of underperforming stores are still ongoing, and the dynamic adjustment of the existing store structure is far from over.
On the other hand, to support long-term development and regional expansion, Burger King needs to present a more competitive store model.
Lin Yue, chief consultant of Lingyan Management Consulting, pointed out that improving single-store efficiency and optimizing operational costs are the core issues that Burger King urgently needs to address.
&#34;For example, it can explore lightweight store types such as micro-stores and takeout stores to reduce initial investment and rental pressure, and strengthen private domain and membership operations in marketing, enhancing user interaction through membership days, community IPs, etc., to improve repurchase rates,&#34; Lin Yue said.
The current chain fast food market still has structural opportunities.
In 2024, the scale of China's Western fast food market is expected to reach 297.5 billion yuan, a year-on-year increase of 11%, with the growth rate ranking first among all segments of the snack fast food market.
The new round of reshuffling in the takeaway platform landscape also provides new possibilities for brand adjustment and channel expansion.
However, the most important thing is that, with the support of new local partners, the decision-making chain of Burger King China has been greatly shortened, enabling the brand to respond quickly whether in offense or defense.
It is worth the market's continued observation how much market share Burger King China can capture in this new round of changes

- CPE Yuanfeng and Burger King have formed a joint venture, "Burger King China," with an initial investment of $350 million to expand the brand's presence in China.  
- The partnership aims to increase the number of stores to over 4,000 within ten years, addressing past challenges in market penetration and competition.  
- Despite previous setbacks, the collaboration is seen as a pivotal moment for Burger King to leverage local expertise and capitalize on growth opportunities in the Chinese fast-food market.

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