In a bold move defying economic downturn trends, Tims China (THCH) announced on Monday its plans to expand the Popeyes brand, aiming to launch 1,700 outlets across China in the next ten years. This ambitious project started with opening the first store in Shanghai and with ten more slated to open in the metropolis within the next quarter.
This expansion news resulted in a bullish outlook for Tims China on Wall Street, with its shares climbing 3.6% in New York. While Tims China is renowned as the principal operator of Tim Hortons coffee shops in the country, acquiring the Popeyes franchise signifies its diversifying portfolio.
Tims China CEO Yongchen Lu expressed his enthusiasm about the venture, stating, "We are thrilled to open our first Popeyes restaurant in China, a milestone in our longer-term strategy." He further emphasized the resilience of food service retail sales in China's post-Covid recovery landscape, calling it a "bright spot" despite broader economic challenges.
The company will focus on wooing younger customers by opening modern storefronts with jazz music and colorful art. While classic offerings like New Orleans-style spicy chicken and Cajun popcorn shrimp remain on the menu, the company is also crafting a localized experience. Their uniquely tailored menu for Chinese consumers features sweet chili chicken, golden cheese and chicken nuggets, and a novel Longjing tea-based pomelo milkshake.
Tims expansion into China is part of a broader trend of Western fast food chains entering the country. In June, Subway also announced plans to add thousands of new sandwich shops in China, increasing its footprint by more than seven times.
Several factors, including rising incomes and a growing appetite for international cuisine, are driving the increasing popularity of Western fast food in China. The country's young population is also a key driver, as they are more likely to be open to trying new things.
The expansion of Popeyes and Subway into China is a sign of the growing confidence of Western fast food chains in the country's market. It remains to be seen how successful these chains will be, but their entry into China is a significant development in the country's food and beverage industry.
Restaurant Brands International (RBI), the parent company of Popeyes, has had a turbulent relationship with the Chinese market. Previously under the umbrella of TFI Tab Food Investments based in Turkey, RBI withdrew from China in 2021 due to undisclosed "disputes" with its master franchisee. However, a strategic alliance formed last year between RBI and the private equity behemoth Cartesian Capital Group – the primary shareholder of Tims China – breathed new life into the brand's Chinese ambitions. Following this, Tims China strategically acquired PLKC International in March, gaining exclusive developmental rights for Popeyes in mainland China and Macao.
RBI'sRBI's CEO, Joshua Kobza, earlier this month hinted at Popeyes'Popeyes' Chinese revival, sharing the company's enthusiasm about reentering the market. Reaffirming this commitment, Tims has earmarked a robust $60 million investment to fortify the Popeyes brand presence in China in the coming years.
For commercial real estate stakeholders, this aggressive expansion by international brands such as Popeyes signifies lucrative opportunities and evolving consumer preferences in the Chinese marketplace.
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