Chinese fast-food companies will recover soon from virus crisis

China’s fast-food sector will recover soon, according to analysts, as life in major mainland cities slowly begins to return to normal, the peak of the coronavirus crisis there now over.

Anne Ling, an equity analyst at Jeffries, said strong growth in fast-food sales has boosted China’s delivery business during the crisis when many residents stayed at home rather than eat out to reduce the risk of virus transmission.

“We believe that for fast-food chains like KFC, its business will recover soon. Consumers’ change in behavior is likely to benefit bigger chains like KFC,” said Ling.

“For casual dining, like Pizza Hut or Haidilao, we believe it will take longer to recover depending on guidance from local governments on consumer safety.”

Local governments have issued guidelines to restaurant operators, requiring consumers to be spaced out in restaurants.

Ling says restaurants will need to reassure customers of the safety of eating on their premises. “There is a chance that operators might need to redesign the restaurant layout so there is more space between tables.”

Major fast-food chains in Mainland China have developed effective contactless-delivery procedures, or consumers have been asking delivery riders to drop food at the front gate of their residential complex, which helps efficiency, she said.