In the midst of concerns about price competition in China for U.S. consumer brands, there are some success stories emerging. Domino’s Pizza’s China operator, DPC Dash, reported its 26th straight quarter of same-store sales growth in China, including during the pandemic. With revenue more than tripling in 2020 compared to 2019, analysts are predicting the company will turn net profit positive in 2025. Chinese President Xi Jinping recently met with U.S. executives to encourage foreign investment in China, despite ongoing tensions between the U.S. and China in areas like technology. However, both countries have expressed interest in cooperation in areas such as climate and tourism, and China’s large consumer market remains attractive to many U.S. businesses.
Pizza chains like Domino’s and Papa John’s are seeing strong growth in China. Domino’s has opened its 800th store in China and plans to open 200 more by the end of the year, while Papa John’s has seen its international revenue grow by 21%. Pizza is becoming increasingly popular in smaller Chinese cities, with new Domino’s stores in 13 cities outside of major metropolises performing well. Despite some cautiousness in consumer spending, both companies are optimistic about growth in the market, with Domino’s reporting that new growth markets outside of Shanghai and Beijing contributed to more than half of total revenue in the second half of the year.
DPC Dash is the third-largest pizza brand in China, and analysts see significant potential for growth in the market. With a focus on value for money and expansion in China’s new growth markets, DPC Dash remains a top pick in the catering sector. Despite some caution about the catering sector in the near future, analysts are optimistic about DPC Dash’s ability to gain market share and benefit from rapid growth in new markets. The company’s CEO highlighted the increasing acceptance of Western food in China as income levels rise, which bodes well for the future growth of pizza and other Western food chains in the country.
Yum China, which owns Pizza Hut among other brands, is also set to release earnings in late April, while McDonald’s is planning to expand its presence in China with a goal of reaching 10,000 stores by the end of 2028. While consumer sentiment in China may be under pressure, companies like McDonald’s are confident in continued good performance in the market as consumer wealth and GDP continue to grow. Despite some challenges, the overall outlook for U.S. consumer brands in China remains positive, with opportunities for growth and success in the expanding market. As Western food becomes more widely accepted in China, companies are optimistic about the future prospects for their brands and offerings in the country.
