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Daily news and analysis about the food tech revolution

China

Pizza Hut Sees Huge Runway for Growth in China, Plans to Add up to 1,500 Net New Stores by 2026 (Sponsored Post)

Pizza Hut is planning to rapidly expand its footprint across China in the coming three years as part of an ambitious growth strategy announced by Yum China Holdings Inc. (NYSE: YUMC; HKEX: 9987), at the company’s recent 2023 Investor Day in Xi’an, China.

Following its successful revitalization program, which strengthened the brand’s fundamentals and improved the payback period for new stores, Pizza Hut is poised for rapid growth. The brand is aiming to open 400-500 net new stores per year from 2024-2026, more than double its pace of the past three years, while continuing to maintain a healthy store payback of approximately 3 years.

Pizza Hut’s plans are part of the refreshed “RGM 2.0” strategy launched by Yum China, which also operates KFC, Taco Bell and other restaurant brands in the country. At its Investor Day, Yum China set an overall target to reach 20,000 total stores by 2026 and deliver double-digit CAGR for EPS in 2024-2026 while returning $3 billion to investors during the same period through quarterly dividends and share repurchases.

With a presence in China since 1990, Pizza Hut is a top player in China’s casual dining sector, operating 3,072 stores in over 650 cities. The brand dominates in all of its core categories: pizza, steak and pasta, with over 100 million pizzas and 20 million steaks sold over the last 12 months.

Pizza Hut General Manager Jeff Kuai commented, “As an absolute leader in the sector, our slice of the market is bigger than the next nine brands combined. Despite our leading position, there is still tremendous opportunity for us to gain an even larger share of the market.”

The brand’s strategy for footprint growth includes adding store density in existing cities while continuing to expand into new cities. China has vast untapped markets for Pizza Hut. There are more than 1,200 cities in China that have a KFC but do not yet have Pizza Hut, highlighting the opportunity to leverage Yum China’s infrastructure and resources to expand in many of those locations. Pizza Hut increases its penetration with flexible store models. Its satellite store model, which has a smaller dining area, focuses on off-premise occasions and requires lower capex. The store model has a 2-year payback, which is better than its traditional stores. The brand is also testing a fast-casual store model that aims to provide faster and lighter service while improving labor efficiency.

In addition to expanding its footprint, Pizza Hut has focused on improving its core menu offerings. In particular, the brand has been reinforcing its reputation as a “pizza expert” through product upgrades and new flavors. Its Super Supreme Pizzas and Durian Pizzas have been big hits with consumers. In the first half of 2023, pizza sales rose 56% compared to the same period in 2019.

As Pizza Hut continues to expand, it is aiming to capture more consumer segments through a wider range of food and beverage choices and providing more occasions to visit. The brand is preparing to launch a new line of made-to-order burgers. From September 2023, it also introduced premium Lavazza coffee at its restaurants. Pizza Hut has expanded individual meals, including its personal-size pizza, to cater to solo diners and office workers; as well as breakfast offerings to better serve customers while maximizing store utilization. In addition, the brand is broadening its previous focus on families to better cater to younger generations. Its partnership with Genshin Impact, for example, has attracted many young people and gamers.

Meanwhile, Pizza Hut remains focused on providing excellent value for money. Its popular “Scream Wednesdays”, “All You Can Eat”, and “Buy One Get One Free” value campaigns are huge draws for dine-in and delivery traffic. It is also broadening its price ranges to serve a wider range of customers on everyday needs.

Pizza Hut is also investing in building a best-in-class digital customer experience, an area that is critical to its future success, with approximately 92% of orders placed on digital channels. A key priority is improving its user interface and providing real-time order tracking for customers on its app. The brand is also boosting its member visit frequency through privilege programs and targeted offers based on members’ preferences.

Kuai says: “With continuing efforts to build on our core strengths and expand into new categories, improve value for money, drive delivery growth, and enhance our digital capabilities, we are confident that Pizza Hut will generate even stronger sales momentum and enhance our leading position in the market.”

This post is a sponsored post. See The Spoon’s advertising policy here.

Beyond Meat Opens Its First Manufacturing Facility Outside the U.S., in China

Beyond Meat announced today the opening of its new manufacturing facility in the Jiaxing Economic & Technological Development Zone near Shanghai, China. The plant is Beyond’s first facility outside of the U.S. and is expected to increase both the amount of product the company can manufacture in that region and the speed at which it can do so.

The new facility will produce Beyond’s beef, pork, and poultry products, including “Beyond Pork,” the company’s minced pork product made “specifically for the Chinese market.” The facility will also function as an R&D hub for the region that will develop new products.

Beyond first announced its intent to build two facilities in China towards the end of 2020. The company already sells its plant-based beef products in that region via a deal with Starbucks. For a limited time in 2020, Beyond products were also available via Yum Brands restaurants, including KFC, Taco Bell, and Pizza Hut. 

In the Chinese market, it has competition from a handful of local players that includes Green Monday-owned Omnipork as well as HERO, which recently raised $850,000. Beyond CEO Ethan Brown said in a statement today that the opening of the new manufacturing facility will allow the company to “effectively compete” in China.

The U.S. still leads in terms of demand for plant-based meat alternatives, but the Asia region is catching up. China, meanwhile, is the world’s largest consumer of meat, particularly when it comes to pork. At the same time, though, the meat-replacement category is growing in that country, with Euromonitor predicting it to be worth $11.9 billion by 2023. 

Beyond’s news comes the same week its chief rival, Impossible, launched its first-ever ad campaign to sway meat eaters towards plant-based products. Impossible has yet to to start selling its wares in China, however. At last check, the company was still waiting on regulatory approval for that market.

China: HERO Raises $850,000 for its Plant-Based Meat

HERO, a Shanghai-based alternative protein company, announced today that it has raised an $850,000 pre-seed round of funding. Global commodities and co-manufacturing company, Cremer, as well as Lever China Fund and various restaurant executives all participated in the round.

According to the press announcement sent to The Spoon, HERO’s first product lineup will include a number of different plant-based beef and chicken products. HERO’s plant-based meats will be formulated specifically for the Chinese market. The company is made up of former R&D execs at Beyond Meat, Impossible Foods, Gardein, Lightlife and Morningstar (so, basically, all the big players in the North American plant-based meat space).

HERO is making its plant-based meat through the use of “high moisture extrusion technology,” which, the company says, is common in the West, but has not been used by Chinese brands. High moisture extrusion helps reproduce the juiciness and mouthfeel of meat.

China is a bit of a holy grail for alternative meat companies with its large consumer market and growing demand for protein. Beyond Meat is building two production facilities in China and launched a minced pork product there. Hong Kong-based Green Monday’s Omnifoods label has launched plant-based meats at retailers throughout China and raised $70 million to expand its efforts.

Plant-based meat experienced a surge in interest last year, thanks to the pandemic. COVID exposed problems with the meat supply chain, ethical issues around meat production, and the specter of zootropic disease associated with eating animals. At the same time, the technology for producing plant-based meat continues to get better at replicating the “real” thing, which makes eating plant-based burgers and such much more palatable.

With Self-Driving Delivery Vehicles, KFC’s International Brands Keep Pushing Us Into the Future

As with many posts we write about on The Spoon, there is the news and then there is the story.

The news rumbling across Twitter and as reported by Cnet’s Roadshow is that KFC-branded self-driving vehicles were spotted on the road in China bringing fried chicken to people outside. Roadshow reports that this “restaurant on wheels” looks like it’s a partnership between Yum Brands (which owns KFC) and a Chinese company called Neolix (though neither company confirmed that news). From Roadshow’s story:

As for how the little food pods work, it looks like customers make a selection via screens and pay via a QR code and then a door opens to reveal their order. It’s not clear what stops someone from taking more than what they ordered, but surely there’s some sort of system for that. There isn’t anyone inside preparing food as it happens.

Keeping people from taking food that isn’t theirs probably isn’t too big of an issue. This could be addressed either through cameras and computer vision or shelf sensors or both. If a person took more than they had ordered, they would probably just get charged more.

So the news is that China has self-driving cars acting as mobile restaurants. That’s cool. But the bigger story here is what the heck is going on with the international KFC brands? This rolling chicken stand is just the latest example of the company bringing its food into a sci-fi-style future. Consider other moves that KFC has done abroad:

  • A KFC in Moscow is using a system of conveyor belts and an articulating arm to shuttle food from the kitchen into a locker from which customers pick up their order.
  • In July, KFC Russia announced that it was “launching the development of innovative 3D bioprinting technology to create chicken meat in cooperation with the 3D Bioprinting Solutions research laboratory.”
  • Last month, KFC in Korea partnered with Hyundai to develop chicken frying robots.

I realize the grass is always greener on the other side, but it seems like the only thing KFC in the U.S. is working is… a better drive-thru (womp womp). I mean, that’s important, but come on! Where are our robots?

Beyond Meat Launches Minced Pork Product in China

Beyond Meat debuted its new plant-based pork product made specifically for the Chinese market yesterday, according to a report in Green Queen. Called Beyond Pork, the new offering is minced and meant to be used in a variety of Asian dishes including dumplings, spring rolls and on ramen.

Beyond Pork will be available at a number of different Shanghai restaurants including Egg, RAC and Solo X for a limited time between now and November 24.

The unveiling of Beyond Pork comes just days after Beyond announced the next versions of its signature Beyond Meat burger patty here in the U.S. But it’s also just the latest in a series of moves the company has made to expand into China. The company has signed deals to get on the menus of Starbucks, KFC, Taco Bell and Pizza Hut in China, as well as on retail shelves at Alibaba stores. More importantly, however, Beyond is building two production facilities in China (one of which is near Shanghai) that will go into full production next year.

But Beyond is going to be the away team in this particular game to get plant-based pork into the hands of Chinese consumers. Omnipork, which is operated by Hong Kong-based Green Monday, already has a number of plant-based pork products at market in China.

Plant-based pork is coming at an auspicious time. China is the world’s largest consumer of pork, but the country has been battling outbreaks of swine fever over the past two years reducing domestic herd counts and driving up prices. Plant-based meat products like those from Beyond and Omnipork can sidestep those issues.

Bits x Bites Closes $30 Million for Its New China Agrifood Tech Fund

Bits x Bites, a China-based agrifood tech venture capital fund, announced today that is has closed $30 million of a new $70 million fund.

Bits x Bites first launched in 2016 as a venture capital firm and accelerator focused on ag and food tech in China. The company has invested in a variety of future food themes ranging from cell-based meat (Future Meat) and Food AI (Analytical Flavor Systems) to CRISPR (Tropic Biosciences).

Over the past few years, China has made a concerted effort to foster investment into building out its digital marketplaces, next-gen retail and delivery, but has started to turn more towards fostering upstream agricultural innovation and sustainability. That’s historically been the main focus of Bits x Bites, so it’s not surprising in the year of COVID their new fund is putting an even greater emphasis on investing in companies that can help build a stronger, more self-sustaining foundation in the face of continued threats to the existing food system.

“With African Swine Flu, COVID, and uncertain trade relations, nothing else is more urgent in China today than growing the self-sufficiency and sustainability in food production,” said Matilda Ho, founder and managing director of Bits x Bites, in the announcement.

“Whether it is a discovery platform for novel agri inputs, bio-manufacturing of high-demand functional ingredients, or machine learning for farm automation, these process innovations are vital for raising our food system’s productivity and improving the nutritional and safety performance of our food product.”

The first portfolio investment for the new fund is China-based essential nutrients startup Mojia Bio. According to the release, Mojia Bio uses a “proprietary bio-manufacturing process increases yield and limits by-product and environmental pollution associated with conventional chemical synthesis.”

 The limited partners in the new fund include Singapore-based investment bank Temasek,  Heritas Capital Management and Henry Soesanto, CEO of Monde Nissin (the company behind Quorn).

The group intends to close the rest of the funding in the coming months.

Beyond Meat Will Build Production Facilities in China

Beyond Meat announced today that it will build two production facilities in China’s eastern province of Zhejiang, near Shanghai. According to a recent announcement from Beyond, this is the first time a fully plant-based, foreign company has expanded its facilities to China.

Beyond Meat already has roots in China; this year it launched its plant-based beef product in over 3,300 Starbucks throughout the country. Additionally, the company debuted a limited-time trial run of its plant-based burgers in several KFC, Taco Bell, Pizza Hut franchises throughout China at the beginning of summer.

China’s meat supply chain was greatly disrupted by the COVID-19 pandemic, which caused mass shortages and price inflation. China is an animal protein-hungry country with a growing population, and disruptions in the meat supply chain open up an opportunity for Beyond Meat to offer its plant-based alternatives to the country. Beyond Meat will face competition from already established plant-based meat companies in China, Omnipork and Starfield among them.

China and the U.S. are not the only markets that Beyond Meat has penetrated. Earlier this summer, the company acquired a new production site and opened a co-manufacturing facility in the Netherlands. Additionally, Beyond Meat is available in major Canadian grocery stores and has also recently launched a direct-to-consumer e-commerce site (that only serves the U.S., however).

Demand for plant-based meat alternatives us certainly not limited to one area of the world. The global plant-based meat market is expected to grow to be worth 4.2 billion by 2021, and Beyond isn’t the only major player in plant-based proteins expanding internationally. Eat JUST has several global partnerships at work, and Impossible Foods just announced today it is expanding into Canada.

The future Beyond Meat facilities in China will produce plant-based beef, pork, and chicken alternatives under the Beyond Meat brand. The facilities are expected to reach full-scale production by early 2021.

The Pandemic Made Self-Heating Instant Food Hot in China

Rather than inspiring bursts of creativity in the kitchen, the pandemic and continued lockdown has actually made me lazier when it comes to making food. Maybe that’s from working more hours, or feeling a constant state of stress over the state of the world, or just a general malaise. Whatever the reason, my meals are often whittled down into whatever I can stuff into a tortilla and cook in the panini press.

So when I read about how the pandemic has caused a surge in sales of self-heating packages of food in China, my first reaction was I get it. I mean, you don’t even need to stuff a tortilla or plug in the panini maker. My second reaction was where can I get self-heating packages of food?

Self-heating meals are pretty much what you think they are. Special packaging allows water to mix with powdered chemicals like magnesium and iron to create an exothermic reaction with the resulting steam heating the meal.

As the Mintel blog (h/t to Spoon contributor Stephen Bronner for forwarding) writes, in China the pandemic made self-heating meals hot:

The pandemic has seen sales of self-heating foods in China surge. Between late January and early February 2020, when the virus caused peak infections and China went into lockdown, sales of self-heating foods experienced the second-highest growth of all categories, year over year, according to Taobao, China’s largest online retailer. Sales of self-heating rice alone grew by 257%. They have enabled consumers to enjoy fuss-free dishes/hotpots/meals while restaurants were closed.

Mintel goes on to explain that even though these self-heating foods have a higher price point, they continue to be embraced by Chinese consumers, with Mintel projecting that the market for such products will double.

This type of self-heating technology is also attractive to brands. Mintel reports that hot pot chain HaiDiLao has its own line of self-heating packaged meals that offer an attractive alternative for consumers who can’t afford to eat at the actual restaurants more often.

We’ve covered similar technology here in the states from HeatGen, which uses chemical reactions for self-heating cans being used by La Colombe for individual servings of hot coffee on-the-go. You can also find a variety of self-heating meals when shopping for emergency preparedness or camping foods.

Given that I’ll be basically camping out at home for the foreseeable future, who knows, maybe self-heating meals will be added to my own pandemic menu.

Beyond Meat Deal Expands its China Footprint with KFC, Pizza Hut and Taco Bell

Yum China Holdings announced a deal yesterday to bring Beyond Meat’s plant-based burgers to select KFC, Pizza Hut and Taco Bell stores in mainland China for a limited time this month. The move expands Beyond’s presence in China, which has been a priority for the company.

As part of the deal, KFC and Pizza Hut will both offer the Beyond Burger, while the Taco Bell locations will offer a taco made with Beyond meat. All three restaurants are offering the plant-based alternatives for just a limited time.

The Yum deal follows a similar partnership Beyond announced in April, when Starbucks in China added three dishes made with Beyond’s meat product. Beyond has a particular focus on Asia and has a goal of producing its plant-based burgers in the region before the end of this year.

All of these QSR deals help Beyond establish a foothold in China before its rival, Impossible Foods has a chance to do the same. China is something of a holy grail for plant-based meat companies. As we explained last year:

  • China has the largest population in the world
  • China produces the most meat in the world
  • China consumes the most meat in the world, and its hunger for protein is growing

Additionally, pork is the most consumed meat in Asia, and earlier this year Impossible debuted its plant-based pork product at CES.

We can expect to see Beyond make more deals like the Yum one in the coming months. And for it’s part, Impossible has been ramping up production and its retail presence here in the U.S. over the past year, and seems to be prepping a direct to consumer sales channel.

Plant-based meal sales were already skyrocketing, and that trend isn’t likely to ease up as the COVID-19 pandemic has raised new questions about the health and safety of eating animal-based meat. The business of faux burgers is very much real.

Omnipork Launches Plant-based Alternatives to “Spam” and Pork Shoulder in Asia

Green Monday, the company behind plant-based Omnipork, announced today that it’s unveiling two new products: a vegan lunch meat similar to Spam and a plant-based pork shoulder.

According to a press release from the company, Omnipork Luncheon Meat will be “the world’s first luncheon meat made entirely from plants.” Both Omnipork Luncheon and Omnipork Strip, a plant-based alternative to pork shoulder, will launch tomorrow at Michelin-starred restaurant Ming Court in Hong Kong, as well as Green Monday’s own line of vegan restaurants called Kind Kitchen. The products will hit retail shelves in Hong Kong in July. Pricing was not disclosed.

Based in Hong Kong, Green Monday launched its first product, Omnipork, almost two years ago. The plant-based ground pork is made from shiitake mushrooms mixed with pea, soy and rice protein, and is meant to appeal to the Asian consumer palate. Thus far, Omnipork is sold in nearly 40,000 retail and foodservice locations in six countries, including mainland China. Less than a month ago, the company announced it would be on menus in Starbucks in China, alongside faux beef giant Beyond Meat.

Photo: Green Monday

Canned, processed meat is quite popular in Asia. It was brought there by soldiers in the Second World War and since has spread to incorporate into local dishes in Korea, Japan, China, Hong Kong, and more.

Despite its popularity, canned luncheon meat is, well, not the healthiest. A single can contains more than 1,000 calories, nearly 100 grams of fat, and double the daily recommended dose of sodium. “Luncheon meat is a food that everyone in Asia has a love-hate relationship with,” said David Yeung, CEO of Green Monday, in the aforementioned release.

In addition to health motivations, consumers around the world are turning to plant-based alternatives as COVID-19 disrupts slaughterhouses and meat processing plants, leading to higher meat prices. Considering the pandemic came just months after an outbreak of African Swine Fever, which decimated China’s pork population, it’s certainly an opportune time to debut a new alternative pork product. Or two.

Food Tech News: Kroger to Accept SNAP for Pickup, KFC China Goes Plant-based

It can be a bright spot to think that even when everything is turned upside down in the food world, companies are still coming up with creative ways to stay afloat and help folks have access to healthy food.

In this week’s food tech news roundup we’ve got stories on just that. There are bits about Kroger ramping up SNAP acceptance for pickup, healthy meal services pairing up with fitness classes, and KFC in China dipping its toe into plant-based meat. Enjoy!

Kroger to accept SNAP payments for grocery pickup
Kroger will accept Supplemental Nutrition Assistance Program (SNAP) payments at all 2,000 of its grocery pickup locations by the end of the month (h/t FoodDive). Consumers can select the “SNAP/EBT” option when ordering groceries online, then use their EBT card to pay for covered items when they pick up. Thus far, the service is only available at the chain’s Ohio stores. This comes as Kroger bulks up its pickup service, adding slots, hiring workers, and waiving pickup fees.

Photo: Trifecta

Meal service Trifecta partners with Basecamp Fitness
Trifecta, an organic premade meal delivery service, is teaming up with Basecamp Fitness to deliver healthy meals to their members’ doors. Per an email sent to The Spoon, Trifecta will offer subscribers six types of meals — keto, paleo, vegan, etc. — as well as an à la carte section that operates like a miniature online grocery store. Trifecta is already geared towards healthy, fit people looking to eat to sustain their workout, so it makes sense to partner with a fitness service that’s essentially a captive audience (literally and figuratively).

Photo: KFC

KFC to offer plant-based fried chicken in China
Yum China, the parent brand of KFC, announced this week that it would begin selling plant-based fried chicken at select KFC locations in China. The nuggets will come from Cargill, which only recently launched its own alternative meat brand, and will be available in three locations from April 28-30th. A five-pack of the nuggets will cost 1.99 yuan ($0.28 USD).

Robots Deliver Food to People Quarantined in China Hotel

One of the most useful things about robots, we are told by the companies developing them, is that they can do the work that is too manual, repetitive and dangerous for humans. That last part is being put to the test in China, where robots have been spotted delivering food to quarantined people amid that country’s rapidly escalating Coronavirus outbreak.

The UK’s Daily Star reports that a hotel in Hangzhou, China, more than 200 tourists were being isolated after a flight arrived carrying some passengers from Wuhan, the epicenter of the viral outbreak.

Staff at the quarantined hotel dispatched 16 robots, one for each floor of the building, to deliver food to people in an effort to limit cross contamination. A video posted to the China Trends YouTube channel two days ago shows the robot, calling itself “peanut,” rolling down the hotel hallway, announcing its presence as people pop out from their rooms to grab food.

#Coronavirus: Robots Deployed to Deliver Meals to Travelers in Isolation #Wuhan

One assumes/hopes that each robot is also getting a good scrubdown after each trip.

There are nearly 6,000 confirmed cases of the Coronavirus in mainland China, and 132 people have died. Roughly 60 million people are on lockdown in China.

The fact that robots are being put to use in this way would be pretty cool if it wasn’t so deadly serious. But it does highlight how robots can be used in situations that are hazardous to humans and help save lives (everyone needs to eat). Hopefully, more robots will be employed to limit human exposure to the virus, and we’ll be able to apply lessons learned here to help curb this and future outbreaks.