New Operator Hopes to Re-Vamp Once Popular Fried Chicken Chain in China

A Popeyes fast food restaurant in Washington D.C., on Aug. 30, 2019. (Eric Baradat / AFP)

“A 200-meter-long queue, 8-hour-wait-time, just for a Popeyes fried chicken,” a Chinese news outlet described the huge fanfare at Popeyes’ flagship store in Shanghai on its opening day. Three years later, the once-sizzling brand has shuttered all its stores in China.

TH International announced in February that it will take over the operation of the fried chicken chain in China. Shares of the corporation, which owns donut and coffee giant Tim Hortons, rose dramatically after the news broke. However, it remains to be seen whether Tims China can breathe new life into the chain, says an expert.

Unexpected Headwinds

Popeyes, an American multinational fast food and fried chicken brand with about 4,000 stores worldwide, encountered strong headwinds in China in recent years. After failing to meet expectations, the chain discontinued all store operations in the country.

Lu Yuanxing, a U.S.-based political and economic analyst and former marketing executive said the failure of Popeyes’ stores in China was due to two reasons.

“First, Popeyes caught up with the timing of the epidemic in China, and the Shanghai city lockdown had a huge impact on it,” Lu told The Epoch Times on April 26.

Pedestrians in the Huangpu district in Shanghai on December 21, 2022. (Photo by Hector Retamal / AFP via Getty Images)

After the outbreak of COVID-19, the Chinese Communist Party (CCP)’s harsh zero-COVID policies, combined with urban lockdowns and disruptions in social activity, brought about an overall decline in the national economy.

“The second is that China’s economic downturn [exceeded] many people’s expectations after the lifting of the curbs. People had been expecting a rebound and recovery in spending, but that did not happen.”

In December 2022, China eased pandemic restrictions and the virus exploded. With consumers’ buying power shrinking further, the Chinese became frustrated with the country’s economic outlook.

“Now, the Chinese economy is in a state of depression and contraction,” Lu said.

A Sizzling Start

Popeyes’ flagship Chinese store debuted on bustling Huaihai Zhong Road in Shanghai, on May 15, 2020. Turkish company TAB Foods Investments, the Chinese partner of Popeyes owner Restaurant Brands International, hoped to copy the success of rival KFC, which had thousands of locations in China.

Popeyes’ future looked positive despite the burgeoning pandemic. According to a report by Chinese state media National Business Daily, people lined up as early as 5 a.m. for a taste of the brand’s signature Louisiana recipe. Customers stood for up to eight hours in a line that stretched for blocks.

The remarkable opening-day success became an industry case study in the food and beverage field.

COVID-19 Slows Popeyes’ Growth

With a vision of business prosperity in China, TFI set a goal to open 1,500 stores in the country within ten years. But over the next two years, due to the pandemic, Popeyes was unable to achieve a large-scale expansion, merely opening nine stores in Shanghai and the neighboring provinces of Jiangsu and Zhejiang.

In August of 2022, as Chinese local authorities maintained strict zero-COVID measures, TFI shut down seven stores. Its remaining two stores closed their doors in March and April of 2023, respectively.

This is not the first time Popeyes has suffered a setback in China.

As early as 1999, Popeyes opened a store in Beijing under the Chinese name “Pai Pai Si.” At one point, the brand planned to open 50 new stores in Beijing within two years and expand to the northeastern provinces.  However, in 2003 Popeyes announced the closure of its stores and its withdrawal from China.

Spending Slumps

“Before the epidemic, Popeyes was popular when it opened stores in Shanghai,” said Lu, adding that “Shanghai residents, especially the white-collar and high-income class,” were able to afford Popeyes’ prices, which were mid-to-high end for fast food.

“But unfortunately, the epidemic and the subsequent economic decline made this pricing [model] unsuccessful,” Lu said.

The CCP’s strict prevention and control policies in response to the epidemic heavily impacted the Chinese economy.

A man looks on from a shop in a locked-down neighborhood as a worker erects fencing in Shanghai's Changning district, on October 7, 2022. (Hector Retamal/AFP via Getty Images)

Almost two years after Popeyes’ flagship store opened in Shanghai, the city was suffering under a prolonged city-wide lockdown due to COVID-19. China’s economic and financial center and home to 25 million people, the city took a huge hit from the two-month-long lockdown. It is estimated that Shanghai lost at least 27.7 billion yuan (about $4 billion) in one month of the city lockdown, according to a report in the Chinese language of The Epoch Times on April 28, 2022.

Even after lockdowns were lifted, businesses continued to feel their effects. “It [was] difficult for a brand like Popeyes to succeed with the previous prices,” Lu said, adding that even after zero-COVID measures were lifted, the Chinese spent cautiously: “They are squeezing their spending, saving money, preparing for unpredictable risks, and have no confidence in the future.”

Hoping for a Comeback

On March 30, Popeyes closed a deal with TH International Limited (Tims China), which acquired the exclusive rights to develop and sub-franchise the Popeyes brand in China and Macau. Tims already operates the Tim Hortons donut and coffee chain in China.

Tims China is currently repositioning the brand, menu, and store layout and plans to relaunch the Popeyes brand in the second half of this year, according to the Chinese news portal Sina on April 24.

Whether the third time is the charm for Popeyes in China remains to be seen, Lu said. “It’s good if the new agent can fix a lower price, but if it keeps the same positioning, I think it’s still hard to succeed.”

Popeyes is a household fast-food name in the United States. For most Chinese, however, it is seen as a medium to high-price brand, and “quite different from what the Chinese masses can often afford to spend for now.”